Many business owners focus most of their attention on growing their business. One of the best ways to ensure their companies remain on an even keel is by managing their finances well.
It’s not as easy as it sounds though. Coordinating the finances of a business is already a challenge. It becomes even more difficult if you have different locations. It’s also a big undertaking if the company is expanding across the country. An organized financial department and a central accounting arm can help. They can assist a company manage their money.
A company also needs to use the right financial tools. The Depository Transfer Check is one such tool. It is an effective way to manage a business’ cash output. This article will give a brief overview of what a DTC transfer check is and how it works.
What is a DTC Transfer?
Companies use a depository transfer check or DTC to deposit the receipts of a company every day. The money deposited comes from different locations. For example, the company has several retail shops across the city.
The company appoints a collection bank to handle the deposits. These checks help ensure better cash management for the company. A DTC looks like a personal check. But the term Depository Transfer Check is also printed on the center of the check’s face. These checks don’t have a signature and they’re non-negotiable.
Depository Transfer Checks are different from overnight deposits. The latter entails the company using a secure drop box. The company will place the money for depositing in a bag. They will include deposit slips in the bag. These are then dropped off in the drop box at the end of the business day. The bank will open the box and get the deposit bag. The money is then deposited in the company’s checking account.
How Does a DTC Transfer Work?
Various industries use DTCs to collect revenue from different locations. A manager at each location will collate data about the revenue for that day. They will then send the receipt to a transfer company. This third-party service provider will gather the receipts from all the locations. The service provider will then transfer the data on the receipts. They will send it to a designated collection bank. This is also known as the organization’s primary bank.
The designated or concentration bank will make and issue DTCs for each location. This will depend on the data found on the receipts. The collection bank will deposit the checks into the company’s account.
The company won’t be able to use the money even if it’s already deposited in their account. It will depend on the bank and the amount of money deposited.
How Does It Compare to ACH Systems?
Many companies are moving away from DTC transfer systems. They’re now choosing to use an Automatic Clearing House. An automatic clearing house is an electronic funds-transfer system run by Nacha. It’s often used to manage payroll, direct deposit, and tax refunds. ACH systems are also used for consumer bills and various payment systems.
It’s a system that’s gaining traction among companies. One survey showed that 78% of companies use automatic clearing houses. They prefer this system for debit and credit transactions. It’s because a clearing house is reportedly faster.
There have been changes to ACH policies as well. The amendments ensure transactions are always clarified on the same working day. Clearing houses are more efficient and affordable. Despite the attraction, many companies still use DTCs.
DTCs are a vital financial element. It allows businesses to manage their cash flows better. A DTC transfer company ensures large deposits are secure every business day. DTCs also help keep finances organized. Companies can track their cash inflows with ease.
Before You Go
Navigating the business world is easier with Legacy Stock Transfer. We’re one of the top stock transfer companies in the country. We serve both public and private companies. We can simplify your stock transfers. We do this by providing you with customized transfer solutions. We have a team of expert transfer agents ready to launch those solutions.
They can streamline your systems and automate tasks. We also offer full transfer service support. We also help with direct registration and restriction removals. We can also issue new stock certificates and replace old and damaged ones. Give us a call at 972-612-4120 and let’s talk about what you need. You can also message us or email us at info@legacystocktransfer.com.