CTP (AFP) cheat sheet

Core treasury responsibilities: cash positioning, liquidity forecasting, funding and investing, FX and interest-rate risk management, bank relationship oversight, and payment control.

Cash conversion cycle = DIO + DSO − DPO; a rising CCC means more capital is tied up in operations.

DSO = (average receivables ÷ credit sales) × days; DPO = (average payables ÷ COGS) × days; DIO = (average inventory ÷ COGS) × days.

Net working capital = current assets − current liabilities; the current ratio = current assets ÷ current liabilities.

Quick (acid-test) ratio = (cash + marketable securities + receivables) ÷ current liabilities; inventory is excluded.

Treasury operating models: decentralized, centralized, shared service center, payment factory, and in-house bank; centralization improves visibility and netting opportunities.

Segregation of duties requires that payment initiation, approval, execution, and reconciliation sit with different individuals or systems.

An investment policy statement sets eligible instruments, maximum maturity, credit rating floors, and per-counterparty concentration limits.

Free cash flow = operating cash flow − capital expenditures; it funds debt service, dividends, and buybacks.

Ledger balance − availability float = collected (available) balance.

Notional pooling offsets debit and credit balances for interest calculation only; physical (zero-balance) pooling moves funds into a concentration account.

LCR = high-quality liquid assets ÷ 30-day net cash outflows ≥ 100%; NSFR = available stable funding ÷ required stable funding ≥ 100%.

Forecast horizons: daily (1–7 days) for positioning, weekly (2–6 weeks) for funding, monthly/quarterly for strategic liquidity planning.

Float components: mail float, processing float, clearing float, and availability float.

Target balancing sweeps each subsidiary account to a predefined balance and moves the excess to a header account.

Short-term investment order of priority per policy: safety, then liquidity, then yield; common vehicles are T-bills, commercial paper, repo, money market funds, and bank deposits.

Ending balance = opening collected balance + collected receipts − cleared disbursements ± transfers.

A book overdraft arises when outstanding checks exceed the ledger balance; it requires an intraday or short-term credit facility to fund.

Risk categories: market (FX, interest rate, commodity), credit/counterparty, liquidity, operational, fraud, and legal/regulatory.

FX exposures: transaction (committed cash flows), translation (accounting consolidation), and economic (long-run competitiveness).

Hedge instruments: forwards, futures, options, and swaps; hedge accounting under ASC 815 or IFRS 9 requires designation and documentation at inception.

VaR states a loss threshold at a confidence level and horizon; it does not quantify losses beyond that threshold (tail risk).

Derivative counterparty risk is mitigated with an ISDA Master Agreement, a credit support annex, collateral, and close-out netting.

Repricing gap = rate-sensitive assets − rate-sensitive liabilities in a maturity bucket; a positive gap benefits when rates rise.

Payment fraud controls: dual approval, call-back verification on new payees, positive pay, ACH debit filters/blocks, and daily reconciliation.

Counterparty exposure limits are set per bank by credit rating, tenor, and instrument type, then monitored against actual exposures.

Duration approximates price sensitivity: a 1% change in rates moves a bond's price by roughly duration × 1%.

Fedwire is real-time gross settlement for large-value USD: immediate, final, irrevocable; CHIPS is a multilateral net system for USD settling at end of day.

ACH is a batch, net-settlement system governed by Nacha rules; standard entries settle the next business day and Same-Day ACH settles within same-day windows.

RTP and FedNow are real-time, 24/7/365, credit-push-only rails with immediate and irrevocable settlement.

SWIFT transmits standardized messages (MT or ISO 20022 MX) between institutions; it is a messaging network, not a settlement system.

ISO 20022 examples: pain.001 payment initiation, pacs.008 FI-to-FI credit transfer, camt.053 bank statement.

Check 21 makes an image replacement document (substitute check) legally equivalent to the original paper check.

Rail selection rule: urgent high-value domestic → wire; high-volume low-value → ACH; instant 24/7 → RTP/FedNow; cross-border → SWIFT wire.

Each rail has cut-off times; missing a cut-off pushes the value date to the next business day and can create a daylight overdraft.

TMS core modules: cash positioning, forecasting, bank reporting, payments, reconciliation, debt and investment tracking, FX, and GL accounting interfaces.

Bank connectivity options: SWIFT SCORE/SIP, host-to-host links, EBICS, bank APIs, and portal-based file upload.

Earnings credit = eligible collected balance × ECR × (days in month ÷ 360) − reserve requirement.

Account analysis statements itemize service volumes, unit prices, and balance offsets used to settle bank fees monthly.

Standard statement formats for automated reconciliation: BAI2, SWIFT MT940, and ISO 20022 camt.053.

Bank relationship review inputs: credit commitment, fee competitiveness, service quality, innovation, and geographic coverage.

Account rationalization reduces the number of bank accounts, lowering fees, fraud exposure, and reconciliation effort.

Access controls for bank portals: multi-factor authentication, entitlement segregation, IP allow-listing, and periodic user recertification.