What are Corporate Credit Cards? – Different Types of Cards
February 12, 2025
Setting up a startup company can require a lot of paperwork. It is common for startup founders to spend a lot of their time and effort putting these papers in order. It may seem like a mundane chore and even counterproductive. However, the reality is that the company needs to have all its legal documents […]
In the previous articles, we have already seen how the use of securitization has grown in sports. We also know that the increasing use of securitization is because of certain benefits that are provided by this method of raising capital. However, it is important to note that securitization is a part of structured finance. Structured […]
Governments across the world have stepped up their fight against cash. Cash is being increasingly viewed as a curse that mankind needs to rid itself of. The goal is to move towards a cashless economy. The closer an economy is towards this goal, the more successful it is considered to be. However, the concept of […]
Bankruptcy is one of the natural states which a company may find itself in. Entrepreneurship is primarily about taking risks. When companies take risks, some of them succeed, whereas others fail. Hence failure is a natural part of the business. However, many critics of bankruptcy laws believe that there isn’t a need for an elaborate […]
In the previous articles, we have already studied the aggregator as well as the marketplace business models. These two types of business models have taken the start-up community by storm in recent years. Many start-ups which have become successful and have gone on to become unicorns are using some variants of this model in different […]
In terms of products and service coverage, the commercial banking ecosystem is much larger than the retail banking ecosystem. Corporations have a wide variety of business needs and commercial banks being their financial partners are expected to take care of these needs. In this article, we will have a closer look at the various categories of products that are offered by commercial banks. Details about the various types of products will be discussed in later articles.
There are many commercial banks across the world that provide treasury and cash management services to their clients. Corporations find it effective to outsource their treasury tasks to banks since banks have expertise in treasury operations and are able to manage the money more effectively. This service is used by many cash-rich corporations in the world.
The money is received by the banks in the form of checks or electronic payments. As a result, commercial banks in many parts of the world process these transactions on behalf of their clients. This is because instead of every company processing its own transactions, the bank can process transactions on behalf of everybody and reap the benefits of economies of scale. They can offer cheaper services to their clients and can still generate a profit in the process.
Payroll processing is another service that is commonly provided by commercial banks to their clients. Once again, this is because of the fact that the bank is intricately involved in the process of disbursing payroll payments.
Commercial banks actually have no interest in owning this equipment. This is because leasing is a complicated business and banks do not have to know how to manage the same. They generally purchase these assets on behalf of their clients and use the lease agreement as a way to finance the equipment. This helps corporations take on more debt without showing the same on their balance sheet and hence without impacting their debt-to-equity ratios.
Foreign trade transactions require the intervention of a creditworthy third party. Here is where banks help their clients conduct their business seamlessly. Commercial banks help corporations by issuing letters of credit which facilitate the movements of goods and services overseas.
Neither party pays money to the other. Instead, they keep paying money to an escrow account in a commercial bank. The commercial bank takes the responsibility of disbursing this money only when the terms of the contract have been met. Hence, both parties are able to use the bank’s reputation in order to facilitate deal-making between each other.
The bottom line is that commercial banks provide a wide variety of services to their clients. The coverage of these services is much wider as compared to the services which are provided to individuals.
Your email address will not be published. Required fields are marked *