| Course | GF583 Treasury Management I |
|---|---|
| Unit | Unit 3 |
| Paper type | Float analysis |
| Length | About 880 words, 6 pages double-spaced |
| Format | APA 7 student paper |
| School | Purdue University Global |
| Program | MS in Finance |
| Updated | October 2026 |
Free sample paper for GF583 Unit 3
4.8 Days From Mailbox to Spendable: A Unit 3 Float Analysis of a Distributor's Check Receipts
[Student Name]
Purdue University Global
GF583: Treasury Management I
Unit 3 Float Analysis
[Instructor Name]
[Date]
The distributor, its customers, the bank quotes and every figure are composite and illustrative; the articles and textbook cited are real.
The Receipts
Veterinary clinics pay about 34 percent of the distributor's invoices by check, about $809.2 million a year, or about $2.217 million per calendar day. On a business day the company receives about 1,651 checks averaging $1,960. The rest of its receipts arrive electronically or by card.
The Three Components of Float
Mail float. Checks travel from clinics across the central states to headquarters in Kansas City, averaging 2.6 days.
Processing float. Staff open envelopes, match payments to invoices and scan checks for remote deposit, taking an average of 1.2 days.
Availability float. After deposit, the bank makes funds available on its schedule, averaging 1.0 day.
Total check float. About 4.8 days. On $2.217 million a day, that is about $10.6 million of customer payments in transit at any time (Gitman et al., 1979).
Pricing the Float
The money tied up in float could reduce borrowing on the company's revolving credit line, which costs about 5.30 percent, or be invested at about 4 percent when the company has surplus cash. Using a blended rate of about 4.0 percent, the float costs about $10.6 million times 4.0 percent, roughly $426,000 a year.
Route A: The Current In-House Process
Cost: two staff members' time for remittance processing, about $110,000 a year, plus remote deposit fees of about $9,000. Float: 4.8 days. Practitioner guides note that in-house processing is often cheapest per item but slowest, which is why it is the baseline against which bank services are judged (Bragg, 2010).
Route B: A Bank Lockbox
The company's lead bank offers a wholesale lockbox with collection points in Kansas City and Dallas. Clinics would mail checks to the bank's post office boxes, where bank staff open, scan and deposit them the same day.
Float. Mail time falls to about 1.4 days, because the collection points are closer to most clinics; processing falls to about 0.3 days; availability stays at 1.0 day. Total: about 2.7 days, 2.1 days less than now.
Value. 2.1 days times $2.217 million times 4.0 percent: about $186,000 a year.
Cost. About $0.28 per item on about 412,750 items a year, about $115,600, plus $2,000 a month in fixed fees, $24,000 a year: about $139,600 in total. The company would redeploy one of the two processing staff, saving about $55,000.
Net. About $186,000 plus $55,000 less $139,600: roughly $101,000 a year.
Route C: Moving Clinics to Electronic Payment
About 40 percent of check dollars come from clinic groups that already pay other suppliers electronically. Offering them ACH debit with invoice data attached would cut their float to about 1.0 day, the settlement lag.
Value. 40 percent of $2.217 million a day times 3.8 days saved times 4.0 percent: about $135,000 a year.
Cost. About $0.12 per ACH item, roughly $20,000 a year, and a one-time setup effort.
Net. About $115,000 a year, rising as more clinics convert.
Electronic payment saves more float per dollar than any lockbox because it removes mail and processing time altogether, but it reaches only the clinics willing to change, so the lockbox remains the better tool for the checks that will keep coming.
Combining the Routes
The routes overlap: dollars moved to electronic payment no longer need a lockbox. If 40 percent of check dollars convert to ACH, the lockbox would handle the remaining 60 percent. Its float value on those dollars falls to about $112,000, and its fees, which are mostly per item, fall to about $93,000, leaving about $19,000 a year before staff savings. Together with the ACH savings of about $115,000 and the staff saving of about $55,000, the combined plan is worth roughly $189,000 a year, less than the $216,000 the two routes would appear to save if their stand-alone values were simply added.
Why Float Still Matters
Research on corporate cash management has long treated collection float as a measurable cost that location and payment method can reduce (Gitman et al., 1979). Even as payments shift to electronic channels, many business-to-business payments in health care still arrive by check, which keeps float a live question for distributors serving small practices (Kallberg & Parkinson, 1993).
What the Customers Gain
A lockbox and electronic payment help the clinics too. A lockbox address nearer to most clinics cuts the time their mailed checks spend in the post, and electronic payment with remittance detail means fewer disputes about which invoices were paid. Offering clinics the choice of ACH debit on the due date, with no change in terms, removes the main objection small practices raise, which is losing control of when money leaves their accounts.
Measuring Results
After each change, the treasury will track average days from invoice due date to available funds, by payment method, so that the float actually achieved can be compared with the estimates above.
Recommendation
Start the ACH program with the largest clinic groups this quarter, then add the lockbox for remaining check receipts once conversion stabilizes.
References
Bragg, S. M. (2010). Treasury management: The practitioner's guide. Wiley.
Gitman, L. J., Moses, E. A., & White, I. T. (1979). An assessment of corporate cash management practices. Financial Management, 8(1), 32-41. https://doi.org/10.2307/3665408
Kallberg, J. G., & Parkinson, K. L. (1993). Corporate liquidity: Management and measurement. Irwin.
Reading the GF 583 Unit 3 instructions
The third GF583 unit asks you to measure and price collection float and compare ways to reduce it. Describe the receipts: amount, share paid by check, daily value, item count and average size. Break float into mail, processing and availability components with days for each. Price the float using a rate that reflects whether freed cash would reduce borrowing or be invested. Then evaluate alternatives, such as a lockbox and electronic payment, with their float reductions, values, fees and staff effects. Explain how the alternatives overlap and compute their combined value rather than adding them. Consider effects on customers. Recommend a sequence and how results will be measured. Cite treasury texts and research on cash management practice in APA 7.
How this GF583 Unit 3 example is built
Receipts by check, daily value and item counts open the sample. The three float components are measured and priced at about $426,000 a year. Route A describes the in-house process, citing Bragg. Route B prices a two-city lockbox, with float value, per-item and fixed fees, and a redeployed staff position. Route C prices moving 40 percent of check dollars to ACH. The highlighted sentence explains how the routes complement each other. A combining section computes their joint value and shows the overlap, and a section citing Gitman, Moses and White and Kallberg and Parkinson explains why float still matters. Sections on what customers gain and on measuring results precede a recommendation to sequence ACH before the lockbox.
Reading the GF583 Unit 3 grading rubric
Float analyses in GF583 earn their first points for correct measurement of each component and a defensible rate for pricing it. Graders check that daily receipts, item counts and fees are consistent and that each alternative's value is computed from the float days it removes. The largest analytical share rewards recognizing that alternatives overlap and computing their combined effect directly. Attention to customer effects and to staff savings shows completeness. Instructors in the MS in Finance program value a recommendation that sequences actions sensibly and sets up measurement of results. Clear organization, with Gitman, Moses and White and the treasury texts in APA 7, completes the scoring.
GF583 Unit 3 help from the desk
Many GF583 Unit 3 analyses report total float without separating mail, processing and availability, which hides where improvement is possible. Others price float at an arbitrary rate without saying whether freed cash reduces borrowing or earns interest. Lockbox fees are compared with float value but staff savings are forgotten, or the reverse. The biggest error is adding the savings of two alternatives that act on the same checks. Effects on customers are ignored. For any receipts your case supplies, keep the steps: describe receipts, measure each float component, price it, evaluate alternatives with full costs, net the overlap and recommend a sequence.
Get a GF583 Unit 3 example written to your instructions
Collection volumes, average item size, the delays your Unit 3 case reports and any bank price list it supplies, plus the rubric, feed the analysis. Within 24-48h a custom version prices each day of float at a stated rate and weighs every route against its own fees; a first request is free. The paper above is an original model document written by our desk, not a submitted student paper and not an official Purdue University Global document.
More GF583 papers and MS in Finance samples
- GF583 Unit 1: Where Company Cash Sits Discussion Post
- GF583 Unit 2: Distributor Cash Cycle Exercise
- GF583 Unit 4: Disbursement Timing Memo
- GF583 Unit 5: Weekly Cash Forecast
- GF583 Unit 6: Seminar Reflection
- GF583 Unit 7: Surplus Investment Plan
- GF583 Unit 8: Borrowing Arrangement Comparison
- GF583 Unit 9: Bank Relationship Review
- GF583 Unit 10: Treasury Operations Report
- GF582 Unit 3: Lending Probability Problem Set
- GF581 Unit 3: Transaction Exposure Register Analysis
- GF570 Unit 3: Foundation Investment Policy Statement
- GF561 Unit 3: Forward Pricing and Margin Problem
GF583 Unit 3 questions, answered
Which interest rate should price the float?
The rate the released money would actually earn or save. If the firm holds surplus cash, that is its short-term investment yield; if it is borrowing, the line of credit rate is the better measure. State which applies to the period in your case and why. Some analyses show both, which also reveals how sensitive the recommendation is to that choice.
Is float still relevant when so many payments are electronic?
Less than it once was, but rarely zero. Business payments in many industries still include checks, and card settlements and some transfers carry a day or two before funds are released. The same arithmetic applies to those channels. A course question on float usually expects the check case worked in full, with a note on where electronic methods shorten it.
Does disbursement float work the same way in reverse?
Partly. Checks a firm writes take time to clear, and that delay keeps money in its account longer. Deliberately stretching the delay, for example by paying from distant banks, is widely viewed as poor practice and can strain supplier relations. Most analyses treat disbursement float as something to measure and forecast accurately rather than something to engineer.
Where can I find a free GF583 Unit 3 sample paper?
This page carries a full GF583 Unit 3 float analysis for a distributor's check receipts, with three float components, a lockbox and an electronic payment route, a combined value and APA 7 references.
Why not simply add the lockbox and ACH savings?
Checks that move to electronic payment no longer pass through a lockbox. With 40 percent of check dollars converted, the lockbox handles fewer items, so the combined value, about $189,000, is less than the separate figures added.