Cash Concentration and Disbursement (CCD) Definition

What Is Cash Concentration and Disbursement (CCD)?

Cash concentration and disbursement is a type of electronic funds transfer typically used to transfer funds among commercial business accounts. Funds can be consolidated from various locations and so-called concentrated into a single collection account. Funds can also be quickly and easily disbursed to intra-accounts, vendors, or accounts payable entities. The National Automated Clearing House Association (NACHA) developed cash concentration and disbursement to facilitate electronic transfers for corporations as well as to help provide for an integrated invoicing system with business partners. CCD supports rapid, secure transactions. Disbursements can clear overnight through the Automated Clearing House (ACH) system.

Key Takeaways

  • Cash concentration and disbursement is a type of electronic funds transfer typically used to transfer funds among commercial business accounts.
  • CCD was developed by the National Automated Clearing House Association.
  • CCD supports rapid, secure transactions, with outgoing disbursements that clear overnight.

Understanding Cash Concentration and Disbursement

Cash concentration and disbursement can be a key component in a company’s accounting department. CCD is a corporate tool that companies can use for bill payment, bill collection, and cash account balance consolidation. The use of CCD can be useful for several reasons. Overnight payments can ease cash flow burdens, helping accountants disburse payments more quickly and easily than standard payment methods. Incoming payments can be accessed more quickly for immediate use. CCD can reduce the need to hold higher levels of cash and working capitalpotentially putting money to work in other areas. CCD may create a lower demand for credit, which leads to money saved on interest expenses.

CCD is often an option available for corporate clients through a bank. Banks may offer different terms and conditions, with some banks also offering interest on balances. Online banking also helps to create new opportunities for smaller businesses to access large-scale cash management technologies.

With CCD, cash can be concentrated from various business locations and banking accounts. Cash may be moved throughout the day and then disbursed for bill payment overnight.

Special Considerations and Applications

CCD is a tool that is usually integrateable with multiple aspects of a company’s recordkeeping. Different types of software systems, including all types of Treasury software and Intuit QuickBooks, are usually compatible with CCD. These systems may also involve CCD coding and modelingwhich can help improve efficiency. Typically, CCD will also be integrated into an invoicing system.

Overall, CCD can be a key factor in helping to maintain a company’s financial stability and solvency. For small and mid-sized business managers in particular, CCD can reduce the need for high-interest credit, also helping them potentially expand while keeping their cash management in control. Small businesses sometimes face significant upfront costs with lagging receivables and payroll obligations. If they have operations in multiple locations, CCD can consolidate cash inflows for more efficient cash outflows.

CCD entries are one form of managing time-sensitive cash transactions related to receivables. Usually integrated with invoicing systems, CCD can be involved when clarifying billing terms with customers, using an automated billing service to contact customers immediately, using electronic payment processing for collection purposes, and staying on top of collections with an aging receivables report.

In terms of payables in general, payable management solutions involving CCD typically facilitate direct payroll deposits, electronic payment processing for expenses, and a variety of disbursement controls.

CCD and CCD+

Expanding upon CCD entries, CCD+ transactions come with an addenda record. This addenda transmits information, often with details such as invoice and order numbers. CCD+ is a form of Electronic Data Interchange (EDI), which is also popular among commercial businesses.

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