CTP (AFP) key terms

The corporate function that oversees cash, liquidity, funding, bank relationships, and financial risk so the organization can meet obligations, deploy surplus funds, and support its strategic objectives.

The difference between a company's current assets and current liabilities; it shows the short-term resources available to run day-to-day operations and signals how tightly cash is tied up.

The number of days between paying suppliers for inventory and collecting cash from customers; a shorter cycle means cash stays tied up in operations for less time.

The average number of days it takes to collect payment after a sale is made; a key measure of how quickly receivables convert into usable cash.

Splitting tasks so no single person can both initiate and approve a payment, or record a transaction and reconcile it; a core internal control against error and fraud.

A written framework that sets the company's approved objectives, instruments, limits, counterparties, and approval authorities for cash, investment, debt, and risk activities.

A centralized entity, often a subsidiary, that manages intercompany funding, payments, and currency conversion between group companies on behalf of the parent, reducing external bank transactions.

The daily process of determining each account's opening balance, expected receipts and disbursements, and resulting end-of-day balance so funds can be invested or borrowed.

A projection of expected cash receipts and payments over a chosen horizon, from days to months, used to plan borrowing, investing, and overall liquidity needs.

The gap between when a payment is recorded in the company's books and when it actually clears the bank, creating temporarily usable or unavailable balances.

The portion of an account balance a bank will let the customer use immediately, after subtracting holds and deposits that have not yet cleared.

A disbursement or collection account set to sweep to zero at end of day into a master account, simplifying funding and reducing idle balances.

An automated transfer that moves surplus or needed funds between linked accounts at a scheduled time, often overnight, to concentrate cash or cover disbursements.

A predetermined amount of cash a company wants to keep in an operating account after sweeping, sized to cover expected outflows and any compensating balance requirements.

A bank arrangement that combines balances across group accounts, either physically by sweeping funds or notionally for interest calculation, so deficits and surpluses offset each other.

Cash and high-quality, quickly sellable assets held to cover unexpected outflows or temporary disruptions in access to funding.

Short-term, low-risk debt such as Treasury bills, commercial paper, and certificates of deposit, used to invest surplus cash for periods of days or months.

The chance that changes in market interest rates will raise borrowing costs or reduce returns on invested cash and other rate-sensitive positions.

The effect of currency movements on a company's cash flows, assets, or reported earnings when it transacts or holds balances in currencies other than its functional currency.

The risk that a bank, customer, or trading partner fails to pay or perform as agreed, causing a loss on deposits, derivatives, or credit extended.

The risk that a company cannot meet its obligations when due, or can only do so by selling assets at a loss or borrowing at excessive cost.

Taking an offsetting position, often with a derivative, to reduce the impact of price, interest rate, or currency changes on the value of an existing or expected exposure.

A customized agreement to buy or sell a currency, security, or commodity at a set price on a future date, locking in terms today and settled directly between the two parties.

The amount and type of risk an organization is willing to accept in pursuit of its objectives, expressed through limits, tolerances, and approved instruments.

The risk of loss from failed internal processes, human error, system outages, or external events such as fraud, affecting treasury and payment operations.

An electronic batch payment network, such as the U.S. Automated Clearing House, that moves funds between bank accounts using files of debit and credit instructions.

An irrevocable electronic transfer of funds sent bank to bank, typically used for large or urgent payments where same-day settlement and finality matter.

Payment systems that clear and settle individual credit transfers continuously, around the clock, with immediate confirmation to the payer and near-instant availability to the payee.

A fraud control in which the company sends the bank a file of issued checks or electronic payments; the bank compares items presented for payment against it and flags exceptions.

Offsetting amounts two parties owe each other and settling only the net difference, reducing the number of transactions, currency conversion costs, and settlement risk.

A corporate payment card, such as purchasing, travel, or virtual card, that routes spend through the card network and provides control, transaction data, and a short interest-free float period.

An international standard for financial messaging that uses structured, data-rich formats for payments and reporting, improving straight-through processing and the detail carried with each payment.

A centralized unit that processes payments for the whole group through shared systems and bank connections, improving control, standardization, and visibility over outflows.

Software that consolidates cash positions, forecasts, debt, investments, and payments across accounts and currencies, and connects to banks and the company's accounting system.

A direct, often automated connection between a company's treasury or accounting system and a bank's systems for sending payment files and receiving balance and transaction information.

A cooperative messaging network used by financial institutions and corporates to exchange standardized payment, reporting, and trade messages securely across borders.

The discipline of opening, documenting, monitoring, and closing bank accounts, and keeping signatories, mandates, and account records accurate and current.

Reviewing account analysis statements to verify that charges for services, balances held, and earnings credit are accurate and consistent with the agreed pricing.

A contract term or document specifying measurable service standards, such as cut-off times, error rates, or response times, that a bank or vendor must meet.

The ongoing process of selecting, monitoring, and reviewing banking providers, balancing service quality, credit strength, pricing, and the number of relationships needed for resilience.