| Course | GF583 Treasury Management I |
|---|---|
| Unit | Unit 9 |
| Paper type | Bank relationship review |
| Length | About 840 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 9
Five Banks and a Fee Statement Nobody Read: A Unit 9 Bank Relationship Review for a Distributor
[Student Name]
Purdue University Global
GF583: Treasury Management I
Unit 9 Bank Relationship Review
[Instructor Name]
[Date]
The distributor, its banks and every balance, fee and rate are composite and illustrative; the articles and textbook cited are real.
The Account Map
Bank A holds the concentration account, the lockbox, the overnight sweep and the administrative agent role on the $250 million revolver. Average balances: $24.0 million. Monthly fees: $38,400.
Bank B runs the zero-balance disbursement account, positive pay fraud control and outgoing ACH. Balances: $6.2 million. Fees: $9,800 a month.
Bank C handles payroll. Balances: $2.1 million. Fees: $2,600 a month.
Bank D takes card settlement and four distribution-center deposit accounts. Balances: $2.5 million. Fees: $4,900 a month.
Bank E holds seven legacy distribution-center accounts opened before the last acquisition and has no role in the credit facility. Balances: $1.9 million. Fees: $3,100 a month.
Banks A to D are lenders in the revolver; Bank E is not.
How Banks Are Paid Now
Each bank's monthly analysis statement applies an earnings credit rate, here 2.00 percent at Bank A, to the company's average collected balances. The resulting credit offsets service fees. At Bank A, covering $38,400 a month of fees requires about $460,800 a year of credits, which at 2.00 percent means keeping about $23.0 million on deposit. The company's $24.0 million covers the fees with a little to spare, so the fee statement shows almost nothing owed and nobody had looked at it closely (Bragg, 2010).
What the Balances Could Earn Instead
A government money market fund yields about 4.15 percent. After the company's 25 percent tax rate, that is about 3.11 percent. Earnings credits are not taxed, but fees paid in cash are deductible, so a dollar of earnings credit is worth about 75 cents after tax. The earnings credit's after-tax value is about 1.50 percent.
On $23.0 million, earnings credits save the company fees worth about $345,600 a year after tax. Invested in the fund instead, the same balances would earn about $715,600 after tax, and the fees, now paid in cash, would cost the $345,600 the credits used to cover. Investing leaves the company about $370,000 a year better off, which is what the earnings credit arrangement has been costing.
The Relationship Constraint
Banks that lend expect deposits and fee business in return. Bank A, as agent on the revolver, has said it expects the company to keep its operating accounts there. Keeping about $5.0 million at Bank A for daily operations and moving about $18.0 million to the fund reduces the gain to about $290,000 a year after tax while preserving the relationship.
The fee statement looked harmless because earnings credits covered every charge, but those credits were the most expensive way to pay the bank: the same balances invested and the fees paid in cash would leave the company about $290,000 a year better off after tax, even after keeping a working balance with its lead lender.
Closing Bank E
Bank E provides no service the other banks cannot, holds no credit commitment and charges about $37,200 a year for seven accounts that receive small cash deposits from distribution centers. Moving those accounts to Bank D, which already serves four centers, saves the fees, simplifies daily concentration and releases about $1.9 million of balances. Research on banking relationships finds that firms gain from concentrating business with banks that lend to them, since lenders that see a firm's payment flows can price credit more accurately (Petersen & Rajan, 1994).
What Each Lender Earns
Lenders judge a relationship by its total revenue, not the loan alone.
1. Bank A: its share of revolver fees and interest, plus about $460,800 a year of cash management fees. The largest wallet, matching its role as agent.
2. Bank B: revolver share plus about $117,600 of disbursement and fraud-control fees.
3. Bank C: revolver share plus about $31,200 of payroll fees, the thinnest relationship.
4. Bank D: revolver share plus about $58,800 now, rising to about $90,000 with Bank E's accounts.
Bank C's small fee wallet makes it the lender most likely to reduce its commitment at renewal. Moving card settlement or some ACH business to Bank C would balance the group.
Risks of the Change
Hard-fee billing exposes the company to fee increases it may not have noticed before, so the treasury will review each bank's analysis statement quarterly. Moving balances out of the lead bank reduces the bank's deposit funding, which it may reflect in revolver pricing at renewal; keeping $5 million there and the full cash management business limits that risk.
Recommendations
1. Switch Bank A to hard-fee billing, keep $5.0 million there for operations and invest about $18.0 million in the government fund: about $290,000 a year after tax.
2. Close Bank E and move its accounts to Bank D: about $37,200 a year.
3. Offer Bank C additional services before the revolver renewal (Kallberg & Parkinson, 1993).
References
Bragg, S. M. (2010). Treasury management: The practitioner's guide. Wiley.
Kallberg, J. G., & Parkinson, K. L. (1993). Corporate liquidity: Management and measurement. Irwin.
Petersen, M. A., & Rajan, R. G. (1994). The benefits of lending relationships: Evidence from small business data. The Journal of Finance, 49(1), 3-37. https://doi.org/10.1111/j.1540-6261.1994.tb04418.x
GF583 Unit 9 instructions, in plain terms
The ninth GF583 unit asks you to review a company's banking relationships. Map each bank's services, balances and fees, and note which banks lend to the company. Explain how banks are paid, through earnings credits on balances or hard fees, and compute the balance needed to cover fees. Compare the after-tax value of keeping balances for credits with investing them and paying fees in cash. Account for relationship expectations, such as operating balances the lead lender requires. Identify banks that duplicate others or add no value, and price closing them. Show what each lender earns from the whole relationship and flag any whose share looks thin before a facility renewal. Recommend changes with their value and risks. Cite treasury texts and research on banking relationships in APA 7.
Inside the GF583 Unit 9 example
An account map lists five banks with services, balances and fees, and notes the four that lend. A section explains earnings credits and the $23.0 million needed at the lead bank, citing Bragg. A comparison values credits at about $345,600 after tax against about $715,600 of after-tax fund income, a gap of about $370,000. A relationship section keeps $5.0 million at the lead bank, cutting the gain to about $290,000, and the highlighted sentence explains why a zero-balance statement hid a real cost. A section on closing the fifth bank cites Petersen and Rajan on concentrated relationships. A lender wallet list shows the payroll bank's thin share. Risks of the change and three priced recommendations, citing Kallberg and Parkinson, close the review.
Where the points sit in the GF583 Unit 9 rubric
GF583 bank reviews earn the first share of points for a complete account map and correct calculation of the balances needed to cover fees. The larger share goes to the after-tax comparison of earnings credits with investing balances and paying fees, which is where most students go wrong. Graders reward balancing that gain against relationship expectations, especially with the lead lender. Identifying a redundant bank and pricing its closure shows practical judgment. Instructors in the MS in Finance program value a view of each lender's total wallet before a facility renewal. Priced recommendations, a note on risks and the relationship-lending study plus the treasury texts in APA 7 complete the rubric.
GF583 Unit 9 help: mistakes that cost points
The most common GF583 Unit 9 error is accepting a fee statement that shows nothing owed as proof that banking is free, missing the income the balances could earn. Others compare the earnings credit rate with a fund yield before tax, ignoring that fees are deductible and credits are not taxed. Relationship expectations are ignored, so the recommendation would anger the lead lender. Redundant banks are left open because no one owns the decision. Lender wallets are not examined before renewal. For any banking structure your case describes, keep the steps: map, how banks are paid, after-tax comparison, relationship limits, consolidation, lender wallets, recommendations and risks.
Get a GF583 Unit 9 example written to your instructions
Analysis statements, the account list and whatever credit facility details your Unit 9 case includes, plus the rubric, give the review its footing. A custom version maps every account, compares credits with a sweep bank by bank and scores each relationship; the turnaround is 24-48h and a first review costs nothing. 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.
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GF583 Unit 9 questions, answered
What is an earnings credit rate?
A rate a bank applies to a business customer's collected balances to produce a credit that offsets service fees. It is not interest: unused credits usually expire at the end of the month or year rather than being paid out. That makes it valuable up to the level of fees and worth nothing beyond it, which is why reviews compare it with what the same balances would earn swept.
Should the review recommend changing banks?
Only if the analysis supports it. Moving services involves notice periods, new documentation, customer and vendor communications and some operational risk. Consolidating where one bank duplicates another's function is often easier to justify than a wholesale change. Many rubrics reward a phased sequence with its costs stated over a sweeping recommendation that ignores how long the transition would take.
How much balance should stay at a bank to cover its fees?
Divide the bank's annual fees by its earnings credit rate. At 38,400 a month and 2.00 percent, that is about 23.0 million. Holding more earns nothing further, because credits beyond the fee total are usually forfeited. Holding less and paying fees outright often pays better when a sweep yields more than the credit rate, so what the relationship expects decides the rest.
Where can I find a free GF583 Unit 9 sample paper?
This page holds a complete GF583 Unit 9 bank relationship review of five banks, with earnings credit analysis, an after-tax comparison, a bank closure, lender wallets and APA 7 references.
Why are earnings credits an expensive way to pay bank fees?
Credits at 2.00 percent are worth about 1.50 percent after tax, while the same balances in a government fund would earn about 3.11 percent after tax. The difference on $18 million is about $290,000 a year.