Benefits of Using a Single‐Account Cash Management Structure

Date01 November 2015
Published date01 November 2015
© 2015 Wiley Periodicals, Inc.
Published online in Wiley Online Library (
DOI 10.1002/jcaf.22097
Benefits of Using a Single-Account
Cash Management Structure
Kurt Fanning
Proper cash man-
agement for
firms is an important
concern for treasur-
ers. The treasurers are
responsible for deal-
ing with their many
subsidiaries and their
corresponding mul-
tiple bank accounts
and currencies. This
complex treasury
structure is expensive
and burdensome. One
area that can provide
major cost reduc-
tions is the use of a
single‐account cash
management system
for collection and payments.
Firms will be able to change
from complex banking struc-
tures, encompassing thousands
of accounts at hundreds of
banks and a wide range of
currencies, into a cash manage-
ment structure using just one
account. Currently, firms need
to invest significant time and
effort to create and operate a
single‐account cash manage-
ment structure. Firms attempt-
ing to create a single‐account
cash management structure
face many legal, tax, and tech-
nology obstacles. Realistically,
it will be several years before
most firms are able to opera-
tionalize a single‐account cash
management structure. How-
ever, several recent changes in
the world’s legal and political
environment are helping the
creation of a single‐account
cash management system.
Further, the creation of infra-
structure for a single‐account
cash management
system is occurring
in the developments
such as in‐house
banks (IHBs) and
shared service cen-
ters (SSCs). Couple
these developments
with advances in
enterprise resource
planning (ERP)
software and other
technologies, and
single‐account cash
management systems
are moving closer to
a practical reality.
Treasurers should be
watching these devel-
opments closely and
exploring ways to move their
firms toward a single‐account
cash management system.
A major change aiding
the development of the single‐
account cash management
system is the Single Euro Pay-
ments Area (SEPA) initiative.
The SEPA initiative attempts
to create a single market for
The implementation of single-account cash man-
agement systems provides corporate treasurers
with better visibility and greater control over cash.
Firms should reexamine their internal processes
and look for opportunities to implement a pay-
ments-on-behalf-of (POBO) and collections- on-
behalf-of (COBO) as part of a single-account cash
management system. It provides significant cost
savings and reduces risks associated with cash
management. Many financial institutions such
as banks have set up the services needed to
do single-account cash management. Therefore,
treasurers should look to single-account cash
management systems as a means to achieve
the next level of efficiency in cash management.
© 2015 Wiley Periodicals, Inc.
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