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Simple English definitions for legal terms
concentration account
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A quick definition of concentration account:
A concentration account is like a big piggy bank where money from different places is put together. It's easier to keep track of the money in one place instead of many different places.
A more thorough explanation:
A concentration account is a single bank account that is used to collect funds from various out-of-area locations. This account is periodically transferred to the centralized account.
For example, a company may have multiple branches in different cities. Each branch collects money from customers, but instead of keeping the money in separate accounts, the money is transferred to a concentration account. This account is then used to pay bills or make investments.
Another example is a non-profit organization that collects donations from various sources. Instead of keeping the donations in separate accounts, the money is transferred to a concentration account. This account is then used to fund various programs or initiatives.
The concentration account helps to streamline the financial management of an organization by consolidating funds into a single account. This makes it easier to manage cash flow and make financial decisions.