Cash concentration is the transfer of funds from diverse accounts into a central account to improve the efficiency of cash management. The consolidation of cash into a single account allows a company to maintain smaller cash balances overall, and to identify excess cash available for short term investments. The cash available in different bank accounts are pooled into a master account.The advantages of cash concentration are 1) Cash control 2) Cash visibility
For example, you have 2 bank accounts (i.e. Rizabank and Bank Islam). For each of these bank accounts, you set a minimum of RM10,000. In the actual account, it appears Rizabank has RM15,000 while Bank Islam has RM20,000. The difference RM5,000 (from Rizabank) and RM10,000 (from Bank Islam) will be transferred to Bank Account C. This increases the possibility of using the surplus for other uses.