PART A · QUESTION 1
A client's payment instruction reaches the bank at 4:10pm on a Friday. The cut-off is 4:00pm. Monday is a public holiday.
// EXAM HALL24 QUESTIONS · 30 MINUTES
Transaction Banking Practice Test
How money moves through a client, one client's flows, and the calls the plumbing brings.
BY MICHAEL SHANG · SIXTEEN YEARS IN COMMERCIAL BANKING · UPDATED
// THE SHORT ANSWER
A transaction banking practice test asks whether you can see a business as a set of flows rather than a set of products. This paper has three parts: cut-offs, float and the margin on deposits; one exporter's accounts and collections set on an exhibit; and calls on letters of credit, guarantees, product decisions and a failed payment file. It also serves product managers. Every question is original, and none comes from any bank's test. Sit it against a thirty-minute clock with the reads held to the end, or take it as practice.
BASIS Practitioner judgment from sixteen years in commercial banking, set out in How Bankers Think (Highbank Press, 2026). Every borrower on this site is a composite constructed for teaching, not a client. The market is mid-market commercial lending as practised in New Zealand and Australia; where a convention differs elsewhere, the page says so.
// HOW TO SIT IT
Answer below as practice, and each read opens as you go. Or sit it as a test: 30 minutes, with every read held back until you finish.
PART A
Flows and products
How money moves through a business, and what the bank earns on the way.
PART A · QUESTION 2
A business keeps US$5m in an account paying 0.5%. The bank's treasury credits the branch 4.0% for that money.
What does the balance earn the bank in a year, before costs?
PART A · QUESTION 3
A contractor asks for a US$1m performance guarantee for a year, for a fee of 1.5%. No cash moves, and the contractor has no loan with you.
Why does it go to the credit team?
PART A · QUESTION 4
The bank advances 90% of a US$1m invoice for 60 days at 9% a year, and is repaid when the customer pays. Use a 360-day year.
What does the advance cost the client?
PART A · QUESTION 5
A wholesaler asks to size its working capital line.
- Debtor days
- 55
- Stock days
- 70
- Creditor days
- 40
- Sales a day
- US$100k
What is its cash conversion cycle?
PART A · QUESTION 6
A supplier offers its customers 2% off for paying in 10 days instead of 40.
Roughly what annual rate is the supplier paying to be paid early?
PART A · QUESTION 7
A borrower's customers have joined a supply-chain finance programme run by their banks. Its debtor days fell from 70 to 30 in one quarter. The relationship manager says it has 'fixed its collections'.
Signal or noise?
PART B
The client's flows
One group of companies, nine questions. See it as flows before you see it as products.
EXHIBIT F · THE CLIENT'S FLOWS
A family-owned fresh-food exporter: a holding company and two trading companies, all banking with you. Figures in US$000.
The finance manager has asked for a larger overdraft for Company 2.
| Balance | Rate | |
|---|---|---|
| Company 1 | 1,800 | earns 0.50% |
| Company 2 | (1,500) | pays 9.00% |
| Holding company | 300 | earns 0.50% |
| The group, net | 600 |
| Details | Figure |
|---|---|
| Customer receipts | 6,000 |
| Of which wires from overseas buyers, four days in transit | 30% |
| Receipts arriving with no usable reference | 1 in 3 |
| Supplier payments, by file upload | 1,100 items |
| Payroll, every second Friday, cut-off 3:00pm | 450 |
Coming up: a US$2m first order from a buyer the client does not know, in a country it has not sold to, on open account at 60 days. The bank values money internally at 4.00%.
PART B · QUESTION 8
From Exhibit F: the three accounts' average balances and rates.
What does the group pay in net interest a year?
PART B · QUESTION 9
The finance manager in Exhibit F says: 'Company 2 is always in overdraft. We need the limit raised.'
What are you hearing?
PART B · QUESTION 10
In Exhibit F, suppose a notional pool sets the credit balances against the overdraft, and the group earns 0.5% on the net US$600,000.
What does the group save a year?
PART B · QUESTION 11
On the Exhibit F figures and the bank's internal 4%, the pool costs the bank about the same US$128,000 the client saves.
What do you do?
PART B · QUESTION 12
In Exhibit F, wires from overseas buyers bring in 30% of the US$6.0m a month and take four days to arrive. Use a 30-day month.
On average, how much of the group's cash is in transit?
PART B · QUESTION 13
In Exhibit F, one receipt in three arrives with no usable reference, and staff match them by hand. The finance manager asks for faster payments.
What is the problem to solve?
PART B · QUESTION 14
The client in Exhibit F has a US$2m first order from a buyer it does not know, in a country it has not sold to. The buyer proposes open account at 60 days.
What do you suggest?
PART B · QUESTION 15
The client in Exhibit F takes a letter of credit. Its finance manager says: 'So once the goods arrive in good order, we get paid.'
What do you correct?
PART B · QUESTION 16
2:30pm on a Friday. The client's US$450,000 payroll file in Exhibit F has failed on upload, with a format error. The cut-off is 3:00pm. Nobody has told the client.
What is your first move?
PART C
The product and the plumbing
Trade documents, product decisions and the day something fails.
PART C · QUESTION 17
Documents under a letter of credit your bank issued describe 'frozen lamb'. The credit says 'chilled lamb'. Your client, the buyer, says: 'It is fine, just pay.'
What do you do?
PART C · QUESTION 18
A project owner demands payment under a US$1m on-demand guarantee you issued. The demand meets its terms. Your client says: 'The work is fine. They are trying it on. Do not pay.'
What do you do?
PART C · QUESTION 19
You own a business account. A new US$15 monthly fee would lift its revenue 9%. Your analysis shows the weight falls mostly on the smallest businesses, many of them sole traders.
What do you do?
PART C · QUESTION 20
A new business card is ready. Marketing has booked Monday's launch. Operations tells you the disputes process has not been tested, and that staff have not been trained on it.
Your move?
PART C · QUESTION 21
After your onboarding redesign, applications are up 30%. Completed accounts are flat, and calls to the contact centre about onboarding have doubled. The deck calls it a success.
Signal or noise?
PART C · QUESTION 22
Your largest client wants a bespoke reporting feature. Forty smaller clients have asked for a simpler payment approval screen. You can build one this year.
How do you decide?
PART C · QUESTION 23
An old savings product loses the bank money. It has 1,200 customers, many of them elderly and unlikely to read a letter. The plan is to close it by mail in 30 days.
What do you change?
PART C · QUESTION 24
Your payments portal was down for 90 minutes on a client's payroll day, and its payments went late. The service agreement offers a US$500 credit. The client's chief executive is on the line.
What do you do?
0 OF 24 ANSWERED · 0 WITH THE SENIOR READ · 0 STANDS UP · 0 OFF THE LINE
// THE REST OF THE ROUND
Every question here is original; none is any bank's real test. Written for: Transaction banker, Product manager.
- Transaction banker: the interview questions, against a two-minute clock.
- Situational judgement, for any seat.
- The assessment centre: a whole case in forty-five minutes.
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