1 april 23, 2005 managing cash using treasury management tools presented by: erin reardon cohn...

1

April 23, 2005

Managing Cash Using Treasury Management Tools

Presented by:

Erin Reardon Cohn

LaSalle Bank

2

AgendaAgenda

What is Treasury Management?

Why is Treasury Management Important?

How Does Treasury Management Work?

Case Study 1

Cash Conversion Cycle

Collections

Disbursements

Electronic Banking/CP Web Demo

E-Commerce

Global Treasury Management

Recent Legislation: Check 21

Conclusion

3

Cash Management is the management of the inflows and outflows of cash. It has the following objectives: Maintain Liquidity

Optimize Cash Resources

Finance Capital Needs

Manage Risk

Coordinate Financial Functions

What is Treasury Management?What is Treasury Management?

4

What is Treasury What is Treasury Management?Management?

TREASURY MANAGEMENT

Speed up cash inflow

Slow down cash outflow

Why is Treasury Management Why is Treasury Management Important?Important?

5

What can happen if an entrepreneurial firm does not properly manage its cash?

Why is Treasury Management Why is Treasury Management Important?Important?

6

Case Study 1Case Study 1

Continental Glass & Mirror Co. is a young start-up company that manufactures commercial glass & mirrors

they currently collect checks in-house and drop off at the bank, they are large $ checks

they overdraw their account about twice a week and pay OD and NSF charges

they have a location in Ohio that receives cash

they don’t know what their daily balances are; sometimes they are OD and sometimes they have excess funds in their account

What cash management tools would you recommend to Continental Glass & Mirror?

7

Cash Conversion CycleCash Conversion Cycle

Accounts Receivable(Collection)

Cash(Control)

Pay for goods/materials(Disbursements)

Sell goods or services

Produce goods or services for sale

8

Cash Conversion Cycle and Treasury Cash Conversion Cycle and Treasury Management Management

Accounts Receivable(Collections)

LockboxOTC

Electronic PaymentsDeposit Consolidation

Cash VaultComprehensive Receivables

Cash(Control)

Online reportingForecasting

ACHWire Transfer

Sweep Investment ProductsPay for goods/materials

(Disbursements)Controlled Disbursement

ARPPositive Pay

CD ROMZBA

Stop PaymentsComprehensive Payables

Purchasing Card

EDIDocument Outsourcing

Electronic Bill Payment & Presentment



Web-based Banking Platform

9

COLLECTIONS

10



LockboxOTC

ElectronicDeposit Consolidation


Cash(Control)


ACHWire Transfer


(Disbursements)



11

Electronic Wires

ACH (Automated Clearing House)

EDI (Electronic Data Interchange)

Paper Wholesale Lockbox

Retail Lockbox

Invoice Generation

OTC (Over the Counter)

Vault Services

Deposit Consolidation

Comprehensive Receivables

CollectionsCollections

12

Payments mailed by remitters

Wholesale Lockbox Process

Post Office sorts by unique zip code Bank picks up mail from P.O., finesorts to individual lockbox numbers,and opens the mail

Work is broken down and prioritizedaccording to pre-determined deadlines

Checks are processed per customerinstructions. Payees and dollaramounts are verif ied

Invoice information is data keyedand made available via CashPro,Transmission, Fax, and/or E-Mail

Remittance Packages areprepared and mailed out tocustomers

60674

Checks are imaged and photocopiesgenerated. Dollar amounts are re-verified,checks are encoded and delivered to ItemProcessing for clearing

Checks and documents are imagedand made available via the internet.The images are burned onto CD’sand sent to customers

13

Wholesale versus Retail LockboxWholesale versus Retail Lockbox

Wholesale: •Corporate to Corporate •Small number of large dollar checks

Retail: •Consumer to Corporate •Larger number of small dollar checks•Checks come with a standard invoice/coupon

14

Why use a Lockbox?

BENEFITS: Save time, save money, make money•reduces mail float: time check is in the mail•reduces processing float: time to process the check•reduces availability float: time for check to clear banking system.

All of the above accelerate the deposit’s availability so a customer can use their cash quicker.

Collections: LockboxCollections: Lockbox

15

Vault Services

Deposit Consolidation Daily deposits at various locations

Night deposits

Account for every location’s deposits

Consolidation of funds into one single account

Information viewed online via CP Web

OTC - Over the Counter

Invoice Generation Printing of Invoices

Bank expertise

Other Types of CollectionsOther Types of Collections

16

Comprehensive Receivables as a Comprehensive Receivables as a SolutionSolution

Product highlights include:

Supports check, ACH, and wire payments

General Ledger integration

File status information via Transmission

A receivables service that allows customers to receive a single file from the Bank to

consolidate all receivable types.

A receivables service that allows customers to receive a single file from the Bank to

consolidate all receivable types.

17

Collections: Comprehensive Collections: Comprehensive ReceivablesReceivables

LOCKBOX

WIRES

EDI

ABN AMRO

A/R System

Receiver

18

DISBURSEMENTS

19



LockboxOTC



Cash(Control)

Online reporting (CashPro Web)Forecasting

ACHWire Transfer

Sweep ProductsPay for goods/materials


ARPPositive Pay

CD ROMZBA


Purchasing Card



Electronic Banking Platform

20

Funds Disbursed

• Checks

• Cash

• Wires

• ACH

• Purchasing/Corporate Cards

Disbursements – Funds OutflowsDisbursements – Funds Outflows

21

Controlled Disbursement is a service which provides early morning notification of the total dollar amount of checks presented against that account each day

Information available through an Electronic Banking Platform

What is Controlled Disbursement?What is Controlled Disbursement?

22

Account Reconcilement Service

Defined: A check service where the bank performs part or all of a companies reconciliation by electronically providing check paid information.

This can be done daily, weekly or monthly.

Services include:

Partial

Full

Positive Pay

Reverse Positive Pay

DisbursementsDisbursements

23

Benefits:

Accelerates month end reconciliation process

Reduces cost of temp (or employee) to reconcile manually

Eliminates need to manually key in check paid data

Reduces exposure to fraud

Disbursements: Reconciliation Disbursements: Reconciliation BenefitsBenefits

24

Billions lost every year, according to FBI

Positive Pay with Teller Services

Image Positive Pay

Reverse Positive Pay

ACH Block

ACH Receipt Authorization

Disbursements: Fraud Control Disbursements: Fraud Control ServicesServices

25

• Full Recon Service with Fraud Prevention

• Client sends issue file day prior to checks being issued

• Bank maintains database of all issued checks

• Paid checks compared to database and any items that do not match exactly reported

Disbursements: Positive Pay ServicesDisbursements: Positive Pay Services

26

Service that ties accounts together

Parent account either funds or receives funds from child account

Child account always ends day with zero

Used to consolidate funds within same bank

Zero Balance Account (ZBA)Zero Balance Account (ZBA)

27

Disbursements: Purchasing/Commerical Disbursements: Purchasing/Commerical CardsCards

Commercial Cards Cards used to pay for goods/services

Eliminates petty cash

Float advantages

Stored Value Cards Pre-funded credit cards

Cash withdraws at ATM machines

Ideal for ‘unbankable’ employees

Suitable for projects

Used for budget purposes

28

ELECTRONIC BANKING

29

Cash Conversion Cycle and Treasury Cash Conversion Cycle and Treasury Management Management


LockboxOTC

Electronic PaymentsRetail Lockbox

Deposit ConsolidationCash Vault

Cash(Control)

Online reporting (CashPro Web)Forecasting

ACHWire Transfer



ARPPositive Pay

CD ROMZBA


Purchasing Card


Electronic Bill Payment & PresentmentWeb Payment Engine




30

Electronic Banking:Electronic Banking:

Web-Based Treasury Management Tool

Access to: Information Reporting

Stop Payments

Imaging

Initiation of Wires/ACH

Funds Transfer

Upgrades are transparent to clients

‘Push’ Technology

31

Anytime, Anywhere Notifications.Flexibility and Customization

32

Check the status of the alert, including the date

and time of delivery

Forward messages to additional contacts

33

E-COMMERCE

34



LockboxOTC



Cash(Control)


ACHWire Transfer



ARPPositive Pay

CD ROMZBA


Purchasing Card


Electronic Bill Payment & Presentment (EIPP)




35

Electronic Commerce Electronic Commerce

EIPPEIPP Electronic Invoice and Presentment Program

Web Presentment of Invoices

Electronic Settlement

Eliminates Printing and Distribution Costs

36

GLOBAL

TREASURY MANAGEMENT

37

Account Structures (backbone of any structure)

Collection/Disbursement accounts

Concentration accounts

Treasury account structures

Electronic Banking

Netting

Cash Pooling

International Lockbox

Bulk Payments

Global SolutionsGlobal Solutions

38

The Check Clearing Act for the 21st Century

October 28, 2004

“Check 21” aims to improve check-clearing efficiency by reducing the clearing systems need to transport the original check from the point of deposit to the paying bank. Legalizes use of “substitute check”- the image of the front and back of the check.

Recent LegislationRecent Legislation

39

CONCLUSION

40



LockboxOTC


Cash Vault

Cash(Control)


ACHWire Transfer



ARPPositive Pay

CD ROMZBA


Purchasing Card


Electronic Bill Payment & Presentment (EIPP)




41

Case Study 1Case Study 1

Continental Glass & Mirror Co. is a young start-up company that manufactures commercial glass & mirrors

they currently collect checks in-house and drop off at the bank, they are large $ checks (Lockbox – Wholesale or Retail?)

they overdraw their account about twice a week and pay OD and NSF charges (Controlled Disbursement, ZBA)

they have a location in Ohio that receives cash

they don’t know what their daily balances are; sometimes they are OD and sometimes they have excess funds in their account (Electronic Banking Platform, Daily Sweep Investments)

What cash management tools would you recommend to Continental Glass & Mirror?

42

QUESTIONS?

1 april 23, 2005 managing cash using treasury management tools presented by: erin reardon cohn...

Documents