What is the transfer of funds?
The price of fund transfer, often identified as FTP, is a strategy used to measure each source of financing associated with a specific project or source. The aim is to find out how many of these sources actually contribute to overall profits by a generated company or other entity. From there it is possible to find out whether this particular source is worth maintaining as it is, it should be overwhelmed or abandoned in some way. Therefore, the prices of the transfer of funds can be considered a valuable tool for ensuring the permanent profitability of the organization.
The concept of fund transfer prices is most often associated with the banking industry. In this FTP setting, it helps in the identification and evaluation of strengths and weaknesses related to the financing process in the financial institution itself. The evaluation can focus attention on profits generated by each product offered by the institution or as a means of evaluating the contributing employee involved in the overall operation of the organization. IsEven can use the same basic approach to comparing products or employees.
One of the common applications of the transfer of funds is to assess the value of the company's operating location. As far as the bank is concerned, it would mean closely examining the contribution that a specific branch of the bank brings the total profitability of the financial institution. If the evaluation finds that a branch has decreased in the number of customers they serve, does not write too much in the way of loans or does not take into account an acceptable amount of deposits, it may be the decision to close the equipment and transfer the accounts to a nearby branch that can adequately accommodate the remaining customers. It helps to reduce operating costs for the bank and thus increases its profit margins.
Calculation of financial transfer prices usually involves the establishment of a curve. The curve allows you to render relationships between relevant factors and reveals data that may not be easyAbout obvious. For example, looking at banking transactions that involve the maturity rate, the curve can take into account both the due date and the remaining time remains to the maturity, and then compare this with the current borrowing needs of a specific branch. If the curve indicates that the branch is unable to generate sufficient return to justify its ongoing operation, it is closed and the assets are transferred to another branch that demonstrates a more profitable curve when the transfer is completed.