Treasury Management and Cash Positioning
Scope and objectives
Treasury management safeguards liquidity, ensures funding, and optimizes cash. A candidate must distinguish book, ledger, collected, and available balances; understand value dating, cut-off times, deposit float, disbursement float, and target or minimum balances; and know account structures such as concentration accounts, zero-balance accounts (ZBAs), notional pooling, in-house banking, and payment factories. Cash positioning is a daily, often intraday, process: consolidate bank-reported balances, adjust for in-transit items and known disbursements, then compare investable cash with the target balance.
Traps
Questions frequently confuse ledger balance with available balance, or book balance with bank balance. Transfers between the company's own accounts change legal ownership but not consolidated cash, so never double count them. Deposits in transit raise book cash but not bank available cash; outstanding checks lower book cash but not yet bank cash. Compensating balances and minimum operating balances reduce investable funds. Time zones and bank cut-offs can make a payment initiated today settle tomorrow.
Worked example
Bank ledger balance is $2,000,000; deposit float is $120,000; outstanding checks are $400,000; target minimum is $300,000. Available after deposit float is $1,880,000. Projected end-of-day available after checks clear is $1,480,000. Investable surplus is $1,480,000 minus $300,000, or $1,180,000. If a $500,000 intercompany transfer is scheduled, do not subtract it from consolidated cash; reflect only fees and timing effects.