The document discusses corporate cash and treasury management solutions, emphasizing their importance for businesses in optimizing capital access and improving financial operations. It distinguishes between cash management, which deals with operational cash flow, and treasury management, focused on financing and investment activities, while exploring various strategies for effective cash flow management, tax strategies, and accounting practices. Additionally, it highlights the significance of risk management and thoughtful financial decision-making in enhancing overall business performance and shareholder value.

1. Moneycation
Published by Moneycation™
Newsletter: January 20, 2015
Volume 3, Issue 2
Corporate cash and treasury solutions
Cash and treasury solutions provide money related alternatives to
businesses seeking greater access to capital, lower cost of debt and
efficient internal financial operations; they are a part of the formula that determines how well run a
business is. As businesses develop, simplified internal policies do not necessarily benefit investors
as much as elaborate, sophisticated and fluid financial decision making allows for. Additionally,
corporate finance tends to get more complicated as companies become larger. This is because
expanded operations require greater financial management.
Cash solutions differ from treasury solutions because they represent two different areas of finance.
The former tends to concern business operations, while the latter is more focused on the result of
financing and investment related activities. In terms of the statement of cash flow, cash
management deals with cash from operations whereas treasury management pertains to cash flow
from financing and investments.
Sometimes, cash and treasury management are used interchangeably when the functions of both are
classified under one or another of the two terms. The meaning of these two terms also changes
based on the industry it pertains to. For example, in banking treasury management involves
regulatory oversight that does not apply to corporations, but the functions remain similar.
A few of the objectives of cash and treasury solutions are the following:
• Risk management
• Fiscal strategy
• Transaction coordination
• Investment oversight
• Financial operations
Since small changes in financial management often lead to large effects, proper cash management
and treasury management is a key aspect of business performance. For instance, if financing option
A costs just .2% less than financing option B, the cost of a million dollars has a nominal difference
of $2,000. When compounding, underwriting costs and banking fees are involved, this number can
increase even more. Since finance seeks to optimize the use of money, that $2,000 is important
because it can be used in a number of ways. It can become collateral for a lower cost loan, it can be

2. used to purchase a piece of business equipment that will increase operational efficiency and profit
margin or it can be held in a cash account to help maintain cash flow and company credit rating.
Those are a lot of potential benefits that would not be available had a less desirable treasury
management solution been utilized. Thus, cash and treasury management solutions represent
financial opportunities that are valuable to businesses and their shareholders.
Cash management
Cash management optimizes available liquid capital in addition to the income producing
possibilities of that money, but techniques differ based on business size. Factors that influence
available options include predictability of cash flow, consistency of revenue, and cash account
value. According to Inc., overnight sweep accounts offer businesses a chance to convert cash into
yield at the end of each day rather than not earning via a business checking account. However,
depending on the stability of cash flow, investment options for excess cash are a notable
consideration.
Another aspect of improving cash flow involves expediting cash-conversion or the speed at which
accounts receivable are collected. This is because, money held up in slow receivables reduces
available cash flow and potential return on investment from that cash. Entrepreneur magazine
recommends extending liability payments to the full extent that creditor terms allow as well as
carefully considering how creditor terms, price agreements and communication affect overall cash
flow. In other words, the net benefit of financial decisions such as discounts on earlier payments
should be weighed against the advantages of delaying payment to the due date via electronic
withdrawal.
Projecting cash flow
A key part of effective cash management is creating accurate cash flow projections. Doing so
ensures sufficient available cash for unhindered daily operations. If cash flow is likely to, or
suddenly undergoes a deficit, then knowing the best available financing options ahead of time helps
minimize cash related operating costs from fees, interest charges and asset related opportunity cost.
For instance, if a vendor offers a line of credit that costs 2 percent of the balance charged in full
over a period of one month, but a business line of credit costs 3 percent compounded periodically
over a year, then the total cost would be higher for the vendor due to the speed at which the
financing cost is calculated.
Forecasting sales
Numerous forms of cash management offer businesses a wide array of financial tools, techniques
and options. Inventory management is another way to streamline cash availability and potentially
reduce operating costs. For example, if sales of widgets have never exceeded 1,000 units per
month, nor are forecasted to based on market demand, past sales, competitor sales etc., then paying
for overstock may not be worth the cost of having extra inventory on hand for the possibility of
increased sales. Comparing vendors and service suppliers, negotiating new terms and locking in to
lower prices for longer-term contracts are additional ways to improve inventory management for
better cash flow.

3. Evaluating POS systems
Analyzing or evaluating point-of-sale conversion and work order process also helps ensure no
costly redundancy is reducing cash management potential. For example, if a sales procedure can be
automated with no negative effect to sales, or if A/B split testing demonstrates online sale
conversions can be increased via website alteration, then an operational audit is worthwhile,
especially if not costs are incurred from carrying out the assessment. Moreover, a speedier online
payment system may prove to be beneficial for a slightly higher cost than a slightly less effective
service provider; this is particularly relevant in the case of small-unit sales that occur on a frequent
basis.
Factoring accounts receivable
Sometimes not enough cash is on hand to meet day-to-day operations; this may be due to slow
payment of credit revenue, expenditures and investments. One way to mitigate this problem is via
accounts receivable factoring, a form of collection for accounts that are generally non-delinquent or
not in default. This is a way of liquidating or expediting credit payments in exchange for a fee. The
Wall Street Journal summarizes the key features of factoring in the excerpt below:
"Companies that use factoring like it because they get money quickly rather than waiting the
usual 30 or 60 days for payment. After sending an invoice to a factoring firm, a business can
have money in its hands within 24 to 48 hours…Some businesses use factoring to get
started...Some companies use it to meet cash-flow needs as a stop-gap measure. Others prefer
factoring to banks, which often require more paperwork, or other outside investors, who may
want a piece of the business…Factoring isn’t likely to be economical for a firm that sends out
thousands of small-denomination invoices, because of the service fees a factor may assess for
reviewing each one for risk."
Accounts receivable factoring has its advantages and disadvantages and is not the only method of
managing cash flow. Since it is more suitable for larger accounts, the cost of revolving a line-of-
credit at a financial institution may cost less than factoring and also establishes business credit in a
way that factoring is not capable of.
Tax strategies
Tax strategy is an important aspect of cash management that can substantially effect available cash
for operations and investments. Numerous business activities involve taxation and are complicated
by differences in tax account versus accounting under generally accepted accounting principles,
employee turnover and ongoing adjustments to benefits items such as 401(K)s. The following list
indicates just a few of the business related functions that influence tax expenses.
• Payroll tax management
• Corporate income tax allocations
• Tax deductible transactions
• Tax deferred financial instruments
• Tax avoidance mechanisms
• Tax accounting techniques

4. Effective tax strategy not only saves money, but also frees up money. Since tax is a significant
aspect of business financial management, being aware of the methods used to minimize tax and
maximize financial opportunity is a vital component of cash management. Fortunately, many
different tax planning mechanisms exist to assist chief financial officers with their design and
implementation of tax management strategy. A few of those tools are pointed out below:
• Investment in tax-free bonds
• Capital loss carryover from previous years
• Charitable contributions
• Placing corporate funds in tax deferred trusts
• Creation of subsidiary companies
The number of tax management solutions are as numerous as creative accounting within the
Internal Revenue Code and generally accepted accounting principles allow. Furthermore, in effect,
the difference between tax and book accounting allow for two benefits instead of one. For instance,
since depreciation is deductible from taxable income in a more generous way via revenue code than
GAAP, a corporation may weight its asset portfolio with real estate in order to take advantage of the
tax reducing advantages it has while retaining a significantly less depreciated asset via GAAP that
itself has financial benefits such as collateral, overhead reduction and risk management.
Accounting practices
Accounting techniques are another way to improve cash and treasury management, especially when
it comes to enhancing a company's financial performance on paper. For example, a special purpose
entity registered in a foreign country may be used to transfer liability. Moreover, if that liability
lowers credit utilization or total debt-to-income, then not only may financing options be expanded,
but also cost less. Several potentially advantageous accounting techniques are described below:
“...Decisions regarding the capitalization of expenses, the recognition of revenue, the
creation of reserves against losses, and write-off of assets are examples of just a few of the
factors that may vary from firm to firm. Many of these issues are factors that relate to the
“quality” of a firm’s earnings. For example, cash used to build up inventory will not be
reflected as an expense on the income statement until the inventory is sold...Prepaid expenses
such as income taxes and software development costs may not flow through the income
statement when the payments are actually made.”
In terms of cash management, the cost and availability of financing will reflect the accounting
criteria used by lenders be they hard money lenders, securities underwriters, investors or financial
institutions. For instance, an investment bank assisting with the issuance of equity may be more
concerned with projected revenue and income than how liquid a company's operating cash flow is
due to the nature of stock as an investment product.
Fixed income investments
Depending on how business responsibilities are structured, fixed income investing is either part of
the cash management or treasury management function. An advantage of fixed income investments
such as annuities and bonds are that they often provide a stable cash flow from investments with

5. relatively low risk. A disadvantage is that the return on investment is quite possibly lower than
alternative investments.
Depending on how necessary the fixed income cash flow is to daily operations should indicate the
level of risk taken on. For example, if a business A depends on its cash flow from investments to
finance monthly liability payments, then a low risk, guaranteed yield fixed income investment is
more suitable than bi-annual dividends from stocks.
Dividends
Dividends are another form of income investing that allow for cash flow without having to sell
financial instruments and incur capital gains or losses. Dividends are paid via multiple investments
such as real estate investment trusts, exchange traded funds, index funds, company stock in addition
to certificates of deposits and bonds. Dividends have the potential to yield a higher ROI than
dividends from government treasuries, investment grade corporate bonds and CDs, and if they are
chosen well, they can do so with minimal risk and even capital appreciation.
Leasing vs buying
In the past, assets and liabilities from leases were not required to be reported as such under
generally accepted accounting principles. This has been under review by the Financial Accounting
Standards Board and the International Accounting Standards Board and may change in the future.
Until then, the accounting rules for leases provide an advantage to businesses seeking to improve
their financial metrics while gaining the benefits of leases simultaneously. Even with revised
accounting standards, there are several advantages to leasing. Some of these benefits are listed
below:
• Lower capital outlays
• Deductible operating expensing
• Investment tax credit
• Technical assistance
• Reduced or no investment risk
For companies that prefer to utilize assets for project management, non-depreciable investments or
lower cash flow costs, leasing is a viable option. What is more, the money saved from interest on a
line of credit, or gained from return on investment may outweigh the benefits of depreciating assets
in terms of taxable income, especially when leased equipment is also deducted as an operating
expense.
Although leasing may lower total asset value and/or raise liabilities, the effect on financial metrics
are negligible under current accounting reporting requirements. Even without the benefits of
recording leases as assets, with or without disclosure of such, the leasing of equipment or property
that is not likely to resell at a higher price than purchased or that is from a fast evolving technology
soon to become obsolete is notable.

6. Treasury management
Some companies are more likely to engage in treasury management more than others. Specifically,
companies with more liquid assets and extra cash for investing are not only more likely to want to
grow, but are also more likely to grow. This makes having a more objective focused long-term
financial strategy all the more important. Treasury management helps with that. Depending on the
type of industry a specific company is in, available financial options vary. There are a wide array of
choices, some of which involve low cost financing, and others that have high growth potential.
Financing
Financing is an important aspect of treasury management because it affects operating costs, debt
structure and other financing choices such as equity underwriting. As with other aspects of treasury
management, the best financing solution, if any, will vary based on available options, financial
needs and strategic consequences such as mergers and acquisitions, project management and
investments. In any case, the need for financing or the use of financing as a method to retain cash
for other purposes is a value judgment made by treasurers. The resulting financial decisions will
either improve company performance or fall short of optimal outcomes. The table below illustrates
the range of financing and investing activities that help generate money for cash flow, asset
building, strategic planning project management and investing.
Sample Financial Management Matrix
Transaction 1 Benefit Transaction 2 Benefit
Financing Loan swap Net free cash flow Line-of-credit Free/low-cost short-
term financing
Investing Fixed-income Guaranteed income Acquisition Horizontal integration
Trading Carry trade Leveraged risk Stock option
collar
Leveraged risk
management
Alternative Employee insurance Risk management Risk purchasing
group
Lower cost insurance
Asset securitization
Asset securitization is a method of generating corporate cash flow for purposes such as expansion,
lowering the cost of debt and increasing shareholder returns on investment. The reason why this
method of financial management is used is because of the advantages it has over other forms of
business financing. A primary benefit is the effect on business balance sheets per Deloitte & Touche
LLP.
“The desired alternative in most securitization transactions is to structure the transaction
that will result in off-balance sheet treatment for the existing assets. If the securitization is a
sale under FASB 125 - Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities, cash and proceeds are added to the assets and the transferred
or sold assets are taken off balance sheet.”

7. The advantages of off-balance sheet transactions are that liability arising from the securitization of
assets will not be recorded as a debit to liability accounts. This helps keep the debt-to-equity ratio
low, which affects corporate credit rating, and therefore the cost of debt, equity investing and future
financing opportunities.
Alternative financing and securities
In addition to inter-company loans and factoring, corporations may find commercial paper,
derivative securities and business lines of credit to be preferable. Businesses in high risk industries
such as full-load logistics can also take out employee life insurance policies with themselves as
beneficiaries. The compensation for which serves as a business hedge or financial security to cover
disruptions in labor supply and contracts related to that workforce.
Differences between revolving credit and periodic loans, interest rates, duration, term and pricing
all influence how worthwhile a particular type of financing is. For instance, a line-of-credit is
typically useful for purchases not intended to effect cash flow. Moreover, taking advantage of
monthly grace period on such debt is a way to achieve short-term financing at little or no cost.
To woo investors who seek the same return on investment for less risk, corporate notes or preferred
shares provide an alternative to common stock and bonds. Collateralized debt obligations or CDOs
are another security that's risk is ameliorated with underlying assets. However, the cost of
underwriting such securities should also be factored in to the overall benefit formula. For example,
a company seeking to go public may be able to include underwriting costs as a premium on the
initial public offering price, especially if the securities issuance is guaranteed to be filled.
Financing from a wide range of investing activities provide additional treasury management
alternatives. For instance, a company investment portfolio with fixed-income investments, higher
risk derivative contracts and active trading profiles in addition to strategic investments, mergers and
acquisitions may be able to provide cash-flow for financing. Additionally, financing swaps where a
company takes out loans, but also issues loans with higher net returns may use the difference in
financing to provide in-house financing for cash flow, expenditures or investments.
Carry trades
Carry trades are a form of forex market transaction that involves purchasing one currency with
money obtained from the sale of another currency. The difference in values helps leverage
investment opportunities at no cost unless those investments lose value. This process can be
described as currency market arbitrage, which means buying low and selling high within a market.
High frequency trades and other transactions such as carry trades also occur with time intervals in
between. The makings of an ideal carry trade are described by the Investopedia excerpt below.
“For an ideal carry trade, you should be long a currency with an interest rate that is in the
process of expanding against a currency with a stationary or contracting interest rate. This
dynamic can be true if the central bank of the country in which you are long is looking to
raise interest rates or if the central bank of the country in which you are short is looking to
lower interest rates.”

8. For a scenario such as the above to occur, global economies would have to be less integrated or
unpegged. This is because more connected currencies or currencies pegged to the dollar such as the
would also be more likely to have values that move in tandem or with more correlated beta
coefficients. An example of a resource with which carry trades are carried out include brokers with
multi-functional banking services. Companies adept at and knowledgeable of the effect of macro-
economic policies on currency values may be able to leverage such opportunities.
Risk management
Risk management is very important to businesses because a company can fail if it does not properly
mitigate any number of risks including financial risk. Examples of financial risk include,
investment risk, liquidity risk and market risk. If risk is too high, then company worth may declines
via capital loss or unanticipated revenue shortfalls. Being prepared for these risks is the role of
treasury management and in terms of operational risk, cash management. According to Treasury
and Risk, overly-complicated or inefficient banking services, data storage, financial analysis and
reporting systems are all risks. This is because of the potential for repeated work, reporting error
and even fraud.
Treasury risk related to inaccurate forecasting and quantification of investment portfolio risk can be
mitigated via more robust and comprehensive data storage and analysis systems. This type of
software package or treasury management system, whether customized for specific company needs
or standardized for primary financial management tasks may be well worth the cost in terms of
better evaluating counter-party risk, reducing inaccurate financial analysis and increasing
operational efficiency. SunGard, a financial software corporation, states the advantages of a
treasury management system (TMS) by contrasting it to traditional spreadsheet and task based
methods:
“The use of spreadsheets for risk measurement and monitoring, while widely prevalent, can
introduce an element of operational risk into the system and open the door to user error.
Corporations using a TMS can not only reduce operational risk, but also increase accuracy
and efficiency by managing risk across the organization rather than on a piecemeal basis.”
To illustrate further, financial risk is measured using financial models such as Monte Carlo
simulations, the Black-Scholes model and the capital asset pricing model. Depending on the
financial management tasks being carried out, some models are better suited to specific situations
than others. Thus, identifying the correct and most accurate model to use is a relevant aspect of
treasury management.
To illustrate the use of financial modeling in treasury risk management, in an industry such as
utility services, where revenue is typically consistent and based on relatively predicable
demographics, historical data is suitable for forecasting future financial risk. However, for
businesses that are in highly volatile markets or that have not yet established a steady revenue base,
different analytic models are not only necessary, but helpful in determining the best course of
action.
Randomized simulations that contrast a range of possible outcomes against dependent variables is
one way to forecast and evaluate future financial scenarios for less predictable industries. In other

9. words, by testing sales results under a number of simulated conditions, treasury managers can
prepare their financial strategy so as to incorporate a realistic number of adverse scenarios.
Treasury management systems that identify the best simulations to use in addition to carrying out
and interpreting the simulation results in an integrated way with other corporate financial
information provides a lot of valuable analytic horsepower to treasury management.
For smaller businesses with fewer financial variables, the use of complex and expensive TMS
software packages may not be worth the cost because forecasting with fewer factors is easier. For
instance, a tax preparation business or private office accountant is likely to have a specific range of
clients and services. Forecasting business demand is based partly on the type of service, but also the
demand for that service. Enough market data should be available for the business treasurer or
accountant to determine the most likely scenarios without a TMS.
Insurance contracts
Business insurance can mean the difference between costly litigation and even insolvency and
sustainable business practices. Numerous ways of mitigating risk, maintaining financial profile and
reducing cost exist within the world of business insurance. For example, companies within a related
industry are allowed to form or participate in a risk purchasing group. According to DeWitt Stern,
this type of insurance arrangement is beneficial because it increases coverage for less cost.
Other insurance options that may be beneficial are insurance securitization, fronting and captive
insurance. For example, according to the National Association of Insurance Commissioners, captive
insurance is an insurance company owned by insured. Since the insured parties own the insurance
company, the costs of insurance are preserved within the insurance subsidiary and used only if
necessary. This type of insurance arrangement improves liability or expense ratios for businesses
that treat such insurance costs as off-balance sheet items. If sufficient capital is not available,
fronting provides an added off-balance sheet mechanism that transfers credit risk in a similar way to
a co-signer on a loan does.
Making sure a business is properly insured involves assessing and prioritizing risks and then
ranking them among other expenditures by order of importance to business continuity. After risk
has been appropriately categorized, finding the optimal financial instrument helps ensure the best
deal.
To explain further, in an era of increasing reliance on technology, data breach insurance is gaining
relevance as a real consideration, especially if the price of information system re-design is not
worth the cost in terms of risk reduction over more affordable network monitoring software. In
other words, data breach insurance bridges the gap between security software and technological
infrastructure such as a privately owned virtual private network cluster. This is because the potential
for lost revenue, customer lawsuits and internal financial loss is closer to an all-or-nothing prospect
than a low gradient risk. Naturally, the extensiveness of insurance will vary between businesses and
should focus on the risks or threats with the highest likelihood and potential loss.
Insurance contracts also provide an opportunity to hedge finances. More specifically, just as with
individual insurance policies, business insurance polices with cash value are not only creditor
protected, but can be used to raise coverage alongside inflation without additional cost if the cash

10. value portion of the policy can be applied to paying for premium and/or coverage increases.
Treasury and cash management architecture
Since each business entity is likely to be different, the cash and treasury management solutions that
will have the best financial effect are not necessarily the same. Even if the same method is used,
how that technique or set of techniques are implemented may also differ. For instance, in the
following enterprise life cycle management diagram, the same seven step process is utilizable
across numerous businesses, but the way each individual step is carried out is essential to the
success of the methodology. To illustrate further, step two involves “updating business
architecture”; this is a catch all phrase that can mean a lot of things and may involve re-configuring
parts of a business model to more efficiently manage key accounts or overhauling the way a
business functions altogether.
Enterprise Lifecycle Management
PD-USGov
The quality and implementation of a treasury management system has the potential to streamline
the accuracy of financial analysis in addition to lowering costs via cloud based data storage. This is
an example of improvement of business process in step two of enterprise lifecycle management and
may also be defined as system(s) development. Essentially, as long as steady revenue exists within

11. a corporation, problem solving and troubleshooting financial issues is more a matter of cleaning
house. A greater challenge for any business is maintaining revenue and profit margin, and not
necessarily financial management strategy.
Capital structure
The capital structure of a company affects the ability and price with which securities such as equity
can be financed. This influenced by information symmetry or how investors are informed about the
company via the financing choice. Thus, at times issuing bonds before equity is often less ideal than
the other way around since bonds affect corporate debt ratios whereas equity shows investor
confidence in a company.
To restate the above in different terms or in other words, when the cost of financial information
associated with equity issuance or certain underwriting expenses are higher, the potential
equilibrium price, or the maximum price which securities can be issued and bought will decline. In
a separate study in the Journal of Political Economy, bank lending is considered to have higher
intermediary or financing costs than bonds, which makes it the least desirable option of equity,
bond and loan financing in some cases.
“Firms face informational dilution costs when they issue equity; they attempt to reduce that
cost by issuing bonds or taking out a bank loan. (ii) Bank lending is more flexible and more
expensive than bond financing (because of intermediation costs); as a result, only those firms
with a sufficiently high demand for flexibility choose bank lending over bond financing.”
What this means is that a balance of bonds and equity help reduce financing costs based on the
perceived affect or informational symmetry of the quality of investment; naturally the accuracy of
this perception is more likely to be higher for informational asymmetry. In both cases, this makes
an equilibrium of the two forms of obtaining capital all the more important. Moreover, too much
equity financing and not enough bond financing is sometimes considered more of an investment
hazard than a balance of the two. However, when a high quality firm with strong financial
fundamentals issues equity in an information sensitive market, then equity weighted financing is the
better choice per the Journal of Financial Economics:
“...when investors may produce information on the quality of the underlying firm, insiders
may prefer to issue a more information-sensitive security such as equity, rather than a less
information-sensitive one such as risky debt. The use of an information-sensitive security
increases the amount of informed trading in the market, making security prices more
informative about the value of the underlying firm.”
Bond and equity financing is generally for larger corporations, and even bigger firms may have
other options that may be more manageable, fiscally sustainable, and affordable. For instance, low
cost inter-corporate loans and even crowd-funding may be viable alternatives. Instead of seeking
financing, additional sources of revenue could serve the same purpose with no interest.
Examples of revenue generating alternatives to financing are opportunities within horizontal
integration. To illustrate, an accounting services firm that specializes in corporate tax accounting
could expand its service scope to include GAAP compliance audits for a net gain over any

12. additional costs incurred from the expansion. Although revenue generation may be more a product
of marketing efforts than treasury management, a coordinated or inter-departmental arrangement is
possible via the appropriate executive authorization of such.
Capital management
Capital structure is an aspect of broader capital management. Many factors integral to a business'
financial success are related to the effectiveness of capital management. These include the impact
of financing on valuation, the affect on on free-cash flow and corporate credit rating. For instance,
according to Matt H. Evans, CPA, CMA, CFM and in reference to the Journal of Financial
Economics, changes in capital structure send market signals to investors.
The nature of capital management signals are capable of inspiring positive or negative sentiment
among investors and influence equity valuation. In other words, financial management has a
domino effect where efficient markets evaluate performance via the strength of financial decision
making. This however, would require substantially intimate financial awareness and knowledge
about the inner workings of a company. Additionally, financial decision making is potentially
subject to inclusion, exclusion or adaptation in terms of disclosures to potential private equity
investors in the case of private companies. This allows some opportunity to frame capital
management decisions in the best possible way.
Capital costs costs are another factor of capital management that is not only attributable to an
investor signal, but also corporate valuation. If the weighted average cost of capital is used to
evaluate capital structure or financial decisions, multiple financing simulations can be compared
side by side in terms of resulting WACC. An advantage of using this approach to financing prior to
making financial decisions includes the identification of the lowest cost structure and a chance to
integrate financial management ideas into a presentable and adaptable model for future use.
Simulating financial structure also helps reduce errors in financial decision making and serves as a
quality control mechanism to ensure better capital cost structuring. The consideration of capital cost
in financial decision making places further emphasis on the potential benefits of an effective
treasury management system.
Conclusion
Cash and treasury management is about optimizing financial resources so they provide the best
return on capital in terms of cash flow, financing and investing. Ensuring sufficient cash flow and
generating extra free cash flow are possible results of improved cash management techniques.
Lower cost or reduced need for financing and capital expenditures into financial operations that
streamline processes such as workflow management have short term and long term benefits.
Utilization of financial instruments, financial management techniques and market opportunities
provide additional ways by which cash and treasury managers can maximize the availability,
utilization and functionality of financial resources.
Businesses are unique entities despite having similar legal structures. Capital management
approaches, creditor relationships and financial health all play a role in how to best oversee cash
and treasury solutions. Effective identification of financial problems, analysis of them and testing
solutions provide financial managers with the raw data and mechanisms to boost performance. Wise

13. use of tools and resources, whether they be information technology systems, corporate strategy or
in-house consultation are also valuable in the productive use of cash and capital.
In any case, cash and treasury management, whether it be small business tax planning or large scale
subsidiary accounting and valuation techniques, is often vital to businesses' fiscal sustainability.
Without acknowledgment of this and the potential benefits improvements to financial operations
and structuring have, companies risk opportunity cost, market risk and leaner operations at the
expense of maintaining a financial status quo. This is the case no matter how stable or efficient and
existing financial management operation is because there is always room for improvement via
collaborative project management, debt and capital restructuring and updates or adaptations to
changing market and regulatory conditions.
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24. “Wilmington Trust”; Captive Insurance Companies; What to Consider When Establishing and Operating Captives;
Richard F. Klumpp, JD, CPA
25. “Score Association”; Should You Lease or Buy Equipment?; U.S. Small Business Administration; Paul Lerman
26. “Financial Accounting Standards Board”; Project Update: Leases-Joint Project of the FASB and the IASB;
September 8, 2014
27. “Columbia University”; Equity, Bonds and Bank Debt: Capital Structure and Financial Market Equilibrium Under
Asymmetric Information; Journal of Political Economy, Volume 108, Number 2; Patrick Bolton and Xavier Freixas
28. “University of Houston, Bauer College of Business”; Information Production, Dilution Costs, and Optimal Security
Design; Journal of Financial Economics, 61; Paolo Fulghieri and Dmitry Lukin, 2001.
29. “Matt H. Evans, CPA, CMA, CFM”; Course 6: The Management of Capital; Excellence in Financial Management;
Matt H. Evans.

14. 30. “KPMG Holding AG/SA”; Treasury Management Services
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