Legal Definitions - concentration account

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.