Question

a) Describe briefly the operations of a centralized payment process. What are the benefits of a centralized payment process?

b) Describe briefly the disadvantages of a centralized payment process.

c) Describe briefly the operations of a decentralized payment process. What are the benefits of decentralized payment processes?

Answer 1

a to c)

Centralisation is the process where all the activities mainly related to the organizational planning and decision-making are centralized and concentrated at the Corporate or Head Office of the organization. This activity brings all the important decision making and all planning process is kept at the center of the organization.

The process of the centralization starts with the delegation of the authority at the center point and all decisions taken and planning done will flow down to branches. The decisions so transmitted to the branches are implemented and results derived are analysed.

The concentration of the decision making authority at the center has following advantages :

1. Proper responsibilities and duties are placed to the people according to the authority.
2. Decision making is very directive, clear and perfect.
3. Expertised and well concentrated decisions will bring better results.
4. Centralized decision making will not bring duplicacy of the decision making.

The disadvantages of the centralization of the authority are :

1. The decisions could be misunderstood and the clarification can make the implementation of the decision.
2. Various departments and branches will not support the decisions taken at center.
3. Loss due to no decision taken at appropriate time.
4. The differences between the center and branch level will make centralized decision of no result.
5. More expenses at center of experts and economists to have always good decisions.

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