Impact of electronic funds transfer upon the cash management of a public utility

Thesis/Dissertation · Fri Jan 01 04:00:00 EST 1982

OSTI ID:5451348

Hinton, III, W V

Electronic funds transfer (EFT), the newest innovation in the exchange of value, results in money being moved from one account to another virtually instantaneously. Since this will have an impact upon cash flows, it will have impact upon cash management. The purposes of this study were: (1) to determine how gradual implementation of EFT would affect cash management, and (2) to determine how full implementation of EFT would affect cash management. The data used in this study were collected by examining the cash flows of Memphis Light, Gas and Water (MLGW). The use of EFT will eliminate a payment's float, the time between the day a check is written and the day a check clears the check writer's account. During the float the check writer still has use of the funds and can earn interest on these funds. Therefore MLGW would gain interest on its payments but would lose interest on its receipts. In analyzing the impact of EFT it was first assumed that MLGW would use EFT but their customers would not. Under these conditions MLGW would lose the interest gained and the interest lost, a total of $483,584.87. The next step in the analysis was to assume that all parties adopted EFT. This would result in MLGW gaining the interest lost and losing the interest gained. The net effect was a $180,163.69 loss of interest to MLGW. Since the use of EFT results in MLGW losing money, several strategies designed to offset this loss were examined. All strategies used EFT for small payments and checks for large payments. The results of this analysis indicated that by using a strategy MLGW could use EFT for the majority of its payments and still maintain most of its interest gained.

• OSTI ID: 5451348
• Country of Publication: United States
• Language: English

Related Subjects

29 ENERGY PLANNING, POLICY, AND ECONOMY
290200* -- Energy Planning & Policy-- Economics & Sociology
ACCOUNTING
CHARGES
COST
INCOME
MANAGEMENT
PUBLIC UTILITIES