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Managing Cash Using Treasury Management Tools

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1 Managing Cash Using Treasury Management Tools
Presented by: Erin Reardon Cohn LaSalle Bank Personal introductions Include current role; backgrounds; professional, educational, time at LaSalle etc. April 23, 2005

2 Agenda 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 What is Treasury Management: Pamela Why is Treasury Management Important: Pamela How does Treasury Management work: Cash Conversion Cycle: Pamela Collections: Lisa Disbursements: Pamela Electronic Banking: Lisa (include CP Freedom recording) CPW DEMO Future Developments: Lisa (Web Payment Engine; EIPP) Global Treasury Management: Pamela Case Study: #1 Lisa; #2 Pamela Conclusion: ? Summary of Services; how TM sales works with RMS and other groups e.g.. FX, Funds Management, ABL)

3 What is Treasury Management?
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

4 What is Treasury Management?
Speed up cash inflow TREASURY MANAGEMENT What is Treasury Management: Pamela Why is Treasury Management Important: Pamela How does Treasury Management work: Cash Conversion Cycle: Pamela Collections: Lisa Disbursements: Pamela Electronic Banking: Lisa (include CP Freedom recording) Future Developments: Lisa (Web Payment Engine; EIPP) Global Treasury Management: Pamela Case Study:? Conclusion: ? (industry analysis – where LaSalle fits in; how TM sales works with RMS and other groups e.g.. FX, Funds Management, ABL) Slow down cash outflow Why is Treasury Management Important?

5 Why is Treasury Management Important?
What can happen if an entrepreneurial firm does not properly manage its cash?

6 Case 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 Pay for goods/materials
Cash Conversion Cycle Cash (Control) Accounts Receivable (Collection) Pay for goods/materials (Disbursements) What is Treasury Management: Pamela Why is Treasury Management Important: Pamela How does Treasury Management work: Cash Conversion Cycle: Pamela Collections: Lisa Disbursements: Pamela Electronic Banking: Lisa (include CP Freedom recording – confidentiality reminders) Future Developments: Lisa (Web Payment Engine; EIPP) Global Treasury Management: Pamela Case Study:? Conclusion: ? (industry analysis – where LaSalle fits in; how TM sales works with RMS and other groups e.g.. FX, Funds Management, ABL) Sell goods or services Produce goods or services for sale

8 Cash Conversion Cycle and Treasury Management
(Control) Online reporting Forecasting ACH Wire Transfer Sweep Investment Products Accounts Receivable (Collections) Lockbox OTC Electronic Payments Deposit Consolidation Cash Vault Comprehensive Receivables Pay for goods/materials (Disbursements) Controlled Disbursement ARP Positive Pay CD ROM ZBA Stop Payments Comprehensive Payables Purchasing Card Web-based Banking Platform What is Treasury Management: Pamela Why is Treasury Management Important: Pamela How does Treasury Management work: Cash Conversion Cycle: Pamela Collections: Lisa Disbursements: Pamela Electronic Banking: Lisa (include CP Freedom recording – confidentiality reminders) Future Developments: Lisa (Web Payment Engine; EIPP) Global Treasury Management: Pamela Case Study:? Conclusion: ? (industry analysis – where LaSalle fits in; how TM sales works with RMS and other groups e.g.. FX, Funds Management, ABL) Sell goods or services Produce goods or services for sale EDI Document Outsourcing Electronic Bill Payment & Presentment

9 COLLECTIONS

10 Cash Conversion Cycle Cash (Control) Online reporting Forecasting ACH
Wire Transfer Sweep Investment Products Accounts Receivable (Collections) Lockbox OTC Electronic Deposit Consolidation Cash Vault Comprehensive Receivables Pay for goods/materials (Disbursements) What is Treasury Management: Pamela Why is Treasury Management Important: Pamela How does Treasury Management work: Cash Conversion Cycle: Pamela Collections: Lisa Disbursements: Pamela Electronic Banking: Lisa (include CP Freedom recording – confidentiality reminders) Future Developments: Lisa (Web Payment Engine; EIPP) Global Treasury Management: Pamela Case Study:? Conclusion: ? (industry analysis – where LaSalle fits in; how TM sales works with RMS and other groups e.g.. FX, Funds Management, ABL) Sell goods or services Produce goods or services for sale

11 Collections Electronic Paper Comprehensive Receivables 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

12

13 Wholesale versus Retail Lockbox
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 Collections: Lockbox 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.

15 Other Types of Collections
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

16 Comprehensive Receivables as a Solution
A receivables service that allows customers to receive a single file from the Bank to consolidate all receivable types. Product highlights include: Supports check, ACH, and wire payments General Ledger integration File status information via Transmission

17 Collections: Comprehensive Receivables
A/R System LOCKBOX WIRES EDI ABN AMRO Receiver

18 DISBURSEMENTS

19 Pay for goods/materials Controlled Disbursement Comprehensive Payables
Cash Conversion Cycle Cash (Control) Online reporting (CashPro Web) Forecasting ACH Wire Transfer Sweep Products Accounts Receivable (Collections) Lockbox OTC Electronic Payments Deposit Consolidation Cash Vault Comprehensive Receivables Pay for goods/materials (Disbursements) Controlled Disbursement ARP Positive Pay CD ROM ZBA Stop Payments Comprehensive Payables Purchasing Card Electronic Banking Platform What is Treasury Management: Pamela Why is Treasury Management Important: Pamela How does Treasury Management work: Cash Conversion Cycle: Pamela Collections: Lisa Disbursements: Pamela Electronic Banking: Lisa (include CP Freedom recording – confidentiality reminders) Future Developments: Lisa (Web Payment Engine; EIPP) Global Treasury Management: Pamela Case Study:? Conclusion: ? (industry analysis – where LaSalle fits in; how TM sales works with RMS and other groups e.g.. FX, Funds Management, ABL) Sell goods or services Produce goods or services for sale

20 Disbursements – Funds Outflows
Funds Disbursed Checks Cash Wires ACH Purchasing/Corporate Cards

21 What is Controlled Disbursement?
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

22 Disbursements 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

23 Disbursements: Reconciliation 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

24 Disbursements: Fraud Control Services
Billions lost every year, according to FBI Positive Pay with Teller Services Image Positive Pay Reverse Positive Pay ACH Block ACH Receipt Authorization

25 Disbursements: Positive Pay Services
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

26 Zero Balance Account (ZBA)
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

27 Disbursements: Purchasing/Commerical Cards
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 Management
(Control) Online reporting (CashPro Web) Forecasting ACH Wire Transfer Sweep Products Accounts Receivable (Collections) Lockbox OTC Electronic Payments Retail Lockbox Deposit Consolidation Cash Vault Pay for goods/materials (Disbursements) Controlled Disbursement ARP Positive Pay CD ROM ZBA Stop Payments Comprehensive Payables Purchasing Card Electronic Banking Platform What is Treasury Management: Pamela Why is Treasury Management Important: Pamela How does Treasury Management work: Cash Conversion Cycle: Pamela Collections: Lisa Disbursements: Pamela Electronic Banking: Lisa (include CP Freedom recording – confidentiality reminders) Future Developments: Lisa (Web Payment Engine; EIPP) Global Treasury Management: Pamela Case Study:? Conclusion: ? (industry analysis – where LaSalle fits in; how TM sales works with RMS and other groups e.g.. FX, Funds Management, ABL) Sell goods or services Produce goods or services for sale EDI Document Outsourcing Electronic Bill Payment & Presentment Web Payment Engine

30 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 Pay for goods/materials Electronic Bill Payment & Presentment (EIPP)
Cash Conversion Cycle Cash (Control) Online reporting Forecasting ACH Wire Transfer Sweep Products Accounts Receivable (Collections) Lockbox OTC Electronic Payments Deposit Consolidation Cash Vault Comprehensive Receivables Pay for goods/materials (Disbursements) Controlled Disbursement ARP Positive Pay CD ROM ZBA Stop Payments Comprehensive Payables Purchasing Card Electronic Banking Platform What is Treasury Management: Pamela Why is Treasury Management Important: Pamela How does Treasury Management work: Cash Conversion Cycle: Pamela Collections: Lisa Disbursements: Pamela Electronic Banking: Lisa (include CP Freedom recording – confidentiality reminders) Future Developments: Lisa (Web Payment Engine; EIPP) Global Treasury Management: Pamela Case Study:? Conclusion: ? (industry analysis – where LaSalle fits in; how TM sales works with RMS and other groups eg. FX, Funds Management, ABL) Sell goods or services Produce goods or services for sale EDI Document Outsourcing Electronic Bill Payment & Presentment (EIPP)

35 Electronic Commerce EIPP Electronic Invoice and Presentment Program
Web Presentment of Invoices Electronic Settlement Eliminates Printing and Distribution Costs 5

36 GLOBAL TREASURY MANAGEMENT

37 Global Solutions Account Structures (backbone of any structure)
Collection/Disbursement accounts Concentration accounts Treasury account structures Electronic Banking Netting Cash Pooling International Lockbox Bulk Payments Account Structures ABN AMRO Branch Network Electronic Banking BankStation International Report Station Pay Station Cash Pooling ZBA Cross Border ZBA Notional Pooling ‘the euro’ Netting NettingStation Bulk Payment GlobalGateway 8 26 8

38 Recent Legislation 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.

39 CONCLUSION

40 Pay for goods/materials
Cash Conversion Cycle Cash (Control) Online reporting Forecasting ACH Wire Transfer Sweep Investment Products Accounts Receivable (Collections) Lockbox OTC Electronic Payments Deposit Consolidation Cash Vault Pay for goods/materials (Disbursements) Controlled Disbursement ARP Positive Pay CD ROM ZBA Stop Payments Comprehensive Payables Purchasing Card Electronic Banking Platform What is Treasury Management: Pamela Why is Treasury Management Important: Pamela How does Treasury Management work: Cash Conversion Cycle: Pamela Collections: Lisa Disbursements: Pamela Electronic Banking: Lisa (include CP Freedom recording – confidentiality reminders) Future Developments: Lisa (Web Payment Engine; EIPP) Global Treasury Management: Pamela Case Study:? Conclusion: ? (industry analysis – where LaSalle fits in; how TM sales works with RMS and other groups eg. FX, Funds Management, ABL) Sell goods or services Produce goods or services for sale EDI Document Outsourcing Electronic Bill Payment & Presentment (EIPP)

41 Case 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?

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