Automating treasury management to maximize liquidity.

• Author: Kane, Jay
• Position: Treasury

Electronic treasury management solutions are giving companies efficient new ways to control and manage their cash. Company treasurers who strategically combine traditional treasury management services, such as information reporting and lock box processing, along with new electronic remittance and disbursement solutions, can help their businesses achieve greater liquidity, operational efficiency and cash control.

Going paperless is one route to consider. While paper checks are subject to delays, uncertainty and fraud, automated methods of fund collection and payment provide companies with more control over when their payments are disbursed and faster access to receivable funds. By automating their accounts payable and receivable systems, companies may also realize opportunities to reduce errors and costs associated with manual processing of checks and decrease their exposure to the possibility of check fraud.

If a company's needs or operating environment isn't suited for fully automated remittance and disbursement, there are intermediary options. For instance, some treasury services enable companies receiving paper checks to convert them so that they become electronic payments that no longer depend on being physically transported and presented to the paying banks.

Electronic Payment Solutions

Instead of using paper checks, companies can take advantage of the Automated Clearinghouse (ACH) network, a nationwide credit and debt transfer processing tool. Companies rely on the ACH network for payroll and employee expense reimbursements and vendor payments. Organizations using the service can send a file with ACH payment information to their treasury services provider, allowing them to more easily forecast cash flows by controlling the settlement dates.

Purchase cards are another alternative to paper checks. Similar to corporate credit cards, they have built-in controls such as where they can be used, who can use them or how much can be charged daily. Depending on the employee cardholder, items purchased may be limited to office supplies, or they may cover travel and entertainment.

These transactions can be verified online, assigned to the appropriate cost centers and posted to the general ledger automatically. Reconciliation occurs daily, enabling the company to manage its credit exposure more efficiently.

Faster Deposits

A company that typically had to rush to the bank by 4 p.m. now has until 7 p.m. to make deposits. How? It eliminated the need...