TP TMI cheat sheet

Float = ledger balance − collected (available) balance; positive float means the bank has credited funds not yet collected from the payer.

Disbursement float = available balance − book balance; collection float = book balance − available balance. Total float = disbursement float + collection float + net processing float.

Miller-Orr model: return point Z = 3Z* − 2L, where Z* = (3Fσ²/4i)^(1/3) + L; F = fixed transaction cost, σ² = variance of daily cash flows, i = daily opportunity rate, L = lower control limit.

Baumol model optimal cash transfer: C* = √(2FT/i), where T = annual cash need, F = fixed cost per transfer, i = opportunity cost rate.

Cash conversion cycle = DIO + DSO − DPO, where DIO = 365/(COGS/avg inventory), DSO = 365/(revenue/avg receivables), DPO = 365/(COGS/avg payables).

Payment rails: ACH same-day windows settle in defined batches; RTGS/wire settles individually and irrevocably intraday; RTP/FedNow settle 24/7 with immediate finality and no recall.

Positive pay: company transmits issued-check file to bank; bank rejects items not matching issue date, amount, or serial number. Reverse positive pay shifts matching duty to the company.

Segregation of duties requires that payment initiation, approval, and reconciliation sit with different individuals; dual authorization thresholds are set by board-approved policy.

Value at Risk (parametric): VaR = portfolio value × z × σ × √t; z = 1.645 for 95% one-tailed, 2.326 for 99%. VaR is a loss threshold not exceeded with the stated probability over the horizon.

Expected shortfall (CVaR) = average loss conditional on loss exceeding VaR; it is subadditive and therefore coherent, unlike VaR.

Duration: modified duration = Macaulay duration / (1 + y/m); price change ≈ −MD × Δy × price, with convexity adding +½ × convexity × (Δy)² × price.

Interest rate swap value = PV of fixed leg − PV of floating leg (payer swap); a payer swap gains when rates rise.

FX forward rate: F = S × (1 + i_quote × t)/(1 + i_base × t) (covered interest parity); the currency with the higher rate trades at a forward discount.

Hedge accounting under IFRS 9 requires documented risk management objective, economic relationship, and a hedge ratio free of imbalance; effectiveness assessed prospectively and retrospectively.

Cash flow at risk (CFaR) measures the deviation of operating cash flow from budget at a confidence level; it captures transaction and commodity exposure better than earnings VaR.

Credit exposure on derivatives = max(market value, 0) + potential future exposure; netting and collateral (CSA) reduce both components.

WACC = (E/V) × Re + (D/V) × Rd × (1 − tax rate); use market values of debt and equity, not book values.

CAPM: Re = Rf + β × (Rm − Rf). Unlever and relever beta: βL = βU × [1 + (1 − t) × D/E].

NPV = Σ CFt/(1 + r)^t − initial outlay; accept when NPV > 0. IRR is the rate at which NPV = 0; IRR can mislead when project scale or cash flow timing differ.

Trade credit cost of forgoing a discount: cost = [d/(1 − d)] × [365/(N − D)], where d = discount %, N = net terms, D = discount period.

Operating lease (IFRS 16): lessee recognizes a right-of-use asset and a lease liability at PV of lease payments; the expense becomes depreciation plus interest, front-loaded relative to straight-line rent.

Debt covenants: maintenance covenants are tested each period; incurrence covenants are tested only on defined actions such as new borrowing or dividends.

Dividend policy irrelevance (Modigliani-Miller) holds only with no taxes, no transaction costs, and fixed investment policy; in practice taxes on dividends versus capital gains drive preference.

Working capital funding mix: match asset maturity to liability maturity - permanent working capital with long-term debt, seasonal peaks with short-term lines.

Bond price-yield relationship is convex: price rises more for a given yield fall than it falls for an equal yield rise.

Money market yields: discount yield = (discount/face) × (360/days); add-on (investment) yield = (interest/price) × (360/days); bond equivalent yield converts to a 365-day simple basis.

Yield curve shapes: normal (upward) reflects term premium and growth expectations; inverted curves have preceded recessions; expectations hypothesis says forward rates equal expected future spot rates.

Commercial paper is unsecured short-term debt, typically ≤ 270 days in the US (to avoid SEC registration), issued at a discount, and usually backed by a committed backup line.

Repo: cash lender buys securities with agreement to resell; repo rate = (price difference/initial price) × (360/days). Haircut protects the cash lender against collateral price moves.

Equity valuation: Gordon growth P0 = D1/(r − g), valid only when r > g; the model is highly sensitive to g and breaks down for non-constant growth.

Credit ratings and spreads: spread ≈ expected loss + risk premium + liquidity premium; expected loss = PD × LGD.

Portfolio risk for two assets: σp² = w1²σ1² + w2²σ2² + 2w1w2ρσ1σ2; diversification benefit rises as correlation falls.

TMS core modules: cash positioning, bank relationship and account management, payments factory, debt and investment management, FX and hedge accounting, and reporting/analytics.

SWIFT MT vs ISO 20022: MT101 (payment initiation), MT940 (end-of-day statement), MT942 (intraday report), camt.053 (statement), camt.052 (intraday), pain.001 (payment initiation), pain.002 (status report).

Host-to-host and API connectivity differ in latency and error handling: batch host-to-host runs on schedule; APIs support real-time status queries and event-driven reconciliation.

ERP-to-bank integration requires mapping of chart of accounts to bank transaction codes; unmatched codes are the leading cause of auto-reconciliation failure.

Straight-through processing (STP) rate = payments processed without manual intervention / total payments; target thresholds are typically above 95%.

Business continuity for treasury: documented payment alternate paths, dual bank connectivity, pre-approved manual signatory procedures, and tested recovery time objectives (RTO).

Access controls: role-based entitlements, maker-checker, token-based multifactor authentication, and periodic entitlement recertification against HR records.

Data integrity controls include hash totals, record counts, duplicate payment detection on invoice number and amount, and reconciliation sign-off before ledger close.

KYC/CDD: identify beneficial owners at 25% or more ownership thresholds (FATF standard), verify identity, and apply enhanced due diligence for PEPs and high-risk jurisdictions.

Sanctions screening: match against OFAC SDN, EU consolidated, and UN lists; false positives require documented disposition, and screening must occur before payment release.

AML red flags include structuring below reporting thresholds, rapid movement of funds through dormant accounts, and payments to/from unrelated third parties in high-risk countries.

Market abuse: insider dealing, unlawful disclosure, and market manipulation are prohibited under MAR (EU) and equivalent regimes; treasury must maintain restricted lists and deal with approved counterparties.

Code of ethics elements: conflicts of interest disclosure, gifts and entertainment thresholds, confidentiality of non-public information, and whistleblowing channels.

Record retention: treasury must retain transaction records and supporting documentation per local statute; common minimums are 5 years (EU AML) and 7 years (US tax/BSA).

Segregation of duties and four-eyes approval are control requirements, not optional practices; auditors test that policy limits are enforced in systems, not just documented.

Data protection: personal data in payments falls under GDPR and similar laws; cross-border transfers require a lawful basis and vendor due diligence.

Treasury operating models: centralized (single treasury center), decentralized (business-unit control), and payment/collection factory hybrids; the choice trades control and netting benefit against local responsiveness.

In-house bank (IHB): treasury acts as internal counterparty to subsidiaries, enabling multilateral netting, internal funding, and reduced external bank spread.

Cash pooling: notional pooling offsets balances without physical transfer (may face regulatory or accounting limits); zero-balance and target-balance sweeps physically move cash.

Netting: bilateral or multilateral netting reduces gross settlement volume; savings = gross flows − net flows, and FX conversion costs fall proportionally.

Treasury KPIs: forecast accuracy (actual/forecast variance), STP rate, bank fee per transaction, days cash on deposit, counterparty concentration, and cost of liquidity buffer.

Counterparty risk policy sets minimum ratings, per-name exposure limits, and tenor limits for deposits and derivatives; limit breaches require documented escalation.

Treasury policy framework: board-approved policy, delegated authority matrix, counterparty and instrument lists, and periodic review cycle with internal audit assurance.

Bank relationship management: scorecards track credit commitment, pricing, service quality, and innovation; concentration limits cap reliance on any single provider.

Float = ledger balance − collected (available) balance; positive float means the bank has credited funds not yet collected from the payer.

Disbursement float = available balance − book balance; collection float = book balance − available balance. Total float = disbursement float + collection float + net processing float.

Miller-Orr model: return point Z = 3Z* − 2L, where Z* = (3Fσ²/4i)^(1/3) + L; F = fixed transaction cost, σ² = variance of daily cash flows, i = daily opportunity rate, L = lower control limit.

Baumol model optimal cash transfer: C* = √(2FT/i), where T = annual cash need, F = fixed cost per transfer, i = opportunity cost rate.

Cash conversion cycle = DIO + DSO − DPO, where DIO = 365/(COGS/avg inventory), DSO = 365/(revenue/avg receivables), DPO = 365/(COGS/avg payables).

Payment rails: ACH same-day windows settle in defined batches; RTGS/wire settles individually and irrevocably intraday; RTP/FedNow settle 24/7 with immediate finality and no recall.

Positive pay: company transmits issued-check file to bank; bank rejects items not matching issue date, amount, or serial number. Reverse positive pay shifts matching duty to the company.

Segregation of duties requires that payment initiation, approval, and reconciliation sit with different individuals; dual authorization thresholds are set by board-approved policy.

Value at Risk (parametric): VaR = portfolio value × z × σ × √t; z = 1.645 for 95% one-tailed, 2.326 for 99%. VaR is a loss threshold not exceeded with the stated probability over the horizon.

Expected shortfall (CVaR) = average loss conditional on loss exceeding VaR; it is subadditive and therefore coherent, unlike VaR.

Duration: modified duration = Macaulay duration / (1 + y/m); price change ≈ −MD × Δy × price, with convexity adding +½ × convexity × (Δy)² × price.

Interest rate swap value = PV of fixed leg − PV of floating leg (payer swap); a payer swap gains when rates rise.

FX forward rate: F = S × (1 + i_quote × t)/(1 + i_base × t) (covered interest parity); the currency with the higher rate trades at a forward discount.

Hedge accounting under IFRS 9 requires documented risk management objective, economic relationship, and a hedge ratio free of imbalance; effectiveness assessed prospectively and retrospectively.

Cash flow at risk (CFaR) measures the deviation of operating cash flow from budget at a confidence level; it captures transaction and commodity exposure better than earnings VaR.

Credit exposure on derivatives = max(market value, 0) + potential future exposure; netting and collateral (CSA) reduce both components.

WACC = (E/V) × Re + (D/V) × Rd × (1 − tax rate); use market values of debt and equity, not book values.

CAPM: Re = Rf + β × (Rm − Rf). Unlever and relever beta: βL = βU × [1 + (1 − t) × D/E].

NPV = Σ CFt/(1 + r)^t − initial outlay; accept when NPV > 0. IRR is the rate at which NPV = 0; IRR can mislead when project scale or cash flow timing differ.

Trade credit cost of forgoing a discount: cost = [d/(1 − d)] × [365/(N − D)], where d = discount %, N = net terms, D = discount period.

Operating lease (IFRS 16): lessee recognizes a right-of-use asset and a lease liability at PV of lease payments; the expense becomes depreciation plus interest, front-loaded relative to straight-line rent.

Debt covenants: maintenance covenants are tested each period; incurrence covenants are tested only on defined actions such as new borrowing or dividends.

Dividend policy irrelevance (Modigliani-Miller) holds only with no taxes, no transaction costs, and fixed investment policy; in practice taxes on dividends versus capital gains drive preference.

Working capital funding mix: match asset maturity to liability maturity - permanent working capital with long-term debt, seasonal peaks with short-term lines.

Bond price-yield relationship is convex: price rises more for a given yield fall than it falls for an equal yield rise.

Money market yields: discount yield = (discount/face) × (360/days); add-on (investment) yield = (interest/price) × (360/days); bond equivalent yield converts to a 365-day simple basis.

Yield curve shapes: normal (upward) reflects term premium and growth expectations; inverted curves have preceded recessions; expectations hypothesis says forward rates equal expected future spot rates.

Commercial paper is unsecured short-term debt, typically ≤ 270 days in the US (to avoid SEC registration), issued at a discount, and usually backed by a committed backup line.

Repo: cash lender buys securities with agreement to resell; repo rate = (price difference/initial price) × (360/days). Haircut protects the cash lender against collateral price moves.

Equity valuation: Gordon growth P0 = D1/(r − g), valid only when r > g; the model is highly sensitive to g and breaks down for non-constant growth.

Credit ratings and spreads: spread ≈ expected loss + risk premium + liquidity premium; expected loss = PD × LGD.

Portfolio risk for two assets: σp² = w1²σ1² + w2²σ2² + 2w1w2ρσ1σ2; diversification benefit rises as correlation falls.

TMS core modules: cash positioning, bank relationship and account management, payments factory, debt and investment management, FX and hedge accounting, and reporting/analytics.

SWIFT MT vs ISO 20022: MT101 (payment initiation), MT940 (end-of-day statement), MT942 (intraday report), camt.053 (statement), camt.052 (intraday), pain.001 (payment initiation), pain.002 (status report).

Host-to-host and API connectivity differ in latency and error handling: batch host-to-host runs on schedule; APIs support real-time status queries and event-driven reconciliation.

ERP-to-bank integration requires mapping of chart of accounts to bank transaction codes; unmatched codes are the leading cause of auto-reconciliation failure.

Straight-through processing (STP) rate = payments processed without manual intervention / total payments; target thresholds are typically above 95%.

Business continuity for treasury: documented payment alternate paths, dual bank connectivity, pre-approved manual signatory procedures, and tested recovery time objectives (RTO).

Access controls: role-based entitlements, maker-checker, token-based multifactor authentication, and periodic entitlement recertification against HR records.

Data integrity controls include hash totals, record counts, duplicate payment detection on invoice number and amount, and reconciliation sign-off before ledger close.

KYC/CDD: identify beneficial owners at 25% or more ownership thresholds (FATF standard), verify identity, and apply enhanced due diligence for PEPs and high-risk jurisdictions.

Sanctions screening: match against OFAC SDN, EU consolidated, and UN lists; false positives require documented disposition, and screening must occur before payment release.

AML red flags include structuring below reporting thresholds, rapid movement of funds through dormant accounts, and payments to/from unrelated third parties in high-risk countries.

Market abuse: insider dealing, unlawful disclosure, and market manipulation are prohibited under MAR (EU) and equivalent regimes; treasury must maintain restricted lists and deal with approved counterparties.

Code of ethics elements: conflicts of interest disclosure, gifts and entertainment thresholds, confidentiality of non-public information, and whistleblowing channels.

Record retention: treasury must retain transaction records and supporting documentation per local statute; common minimums are 5 years (EU AML) and 7 years (US tax/BSA).

Segregation of duties and four-eyes approval are control requirements, not optional practices; auditors test that policy limits are enforced in systems, not just documented.

Data protection: personal data in payments falls under GDPR and similar laws; cross-border transfers require a lawful basis and vendor due diligence.

Treasury operating models: centralized (single treasury center), decentralized (business-unit control), and payment/collection factory hybrids; the choice trades control and netting benefit against local responsiveness.

In-house bank (IHB): treasury acts as internal counterparty to subsidiaries, enabling multilateral netting, internal funding, and reduced external bank spread.

Cash pooling: notional pooling offsets balances without physical transfer (may face regulatory or accounting limits); zero-balance and target-balance sweeps physically move cash.

Netting: bilateral or multilateral netting reduces gross settlement volume; savings = gross flows − net flows, and FX conversion costs fall proportionally.

Treasury KPIs: forecast accuracy (actual/forecast variance), STP rate, bank fee per transaction, days cash on deposit, counterparty concentration, and cost of liquidity buffer.

Counterparty risk policy sets minimum ratings, per-name exposure limits, and tenor limits for deposits and derivatives; limit breaches require documented escalation.

Treasury policy framework: board-approved policy, delegated authority matrix, counterparty and instrument lists, and periodic review cycle with internal audit assurance.

Bank relationship management: scorecards track credit commitment, pricing, service quality, and innovation; concentration limits cap reliance on any single provider.

Float = ledger balance − collected (available) balance; positive float means the bank has credited funds not yet collected from the payer.

Disbursement float = available balance − book balance; collection float = book balance − available balance. Total float = disbursement float + collection float + net processing float.

Miller-Orr model: return point Z = 3Z* − 2L, where Z* = (3Fσ²/4i)^(1/3) + L; F = fixed transaction cost, σ² = variance of daily cash flows, i = daily opportunity rate, L = lower control limit.

Baumol model optimal cash transfer: C* = √(2FT/i), where T = annual cash need, F = fixed cost per transfer, i = opportunity cost rate.

Cash conversion cycle = DIO + DSO − DPO, where DIO = 365/(COGS/avg inventory), DSO = 365/(revenue/avg receivables), DPO = 365/(COGS/avg payables).

Payment rails: ACH same-day windows settle in defined batches; RTGS/wire settles individually and irrevocably intraday; RTP/FedNow settle 24/7 with immediate finality and no recall.

Positive pay: company transmits issued-check file to bank; bank rejects items not matching issue date, amount, or serial number. Reverse positive pay shifts matching duty to the company.

Segregation of duties requires that payment initiation, approval, and reconciliation sit with different individuals; dual authorization thresholds are set by board-approved policy.

Value at Risk (parametric): VaR = portfolio value × z × σ × √t; z = 1.645 for 95% one-tailed, 2.326 for 99%. VaR is a loss threshold not exceeded with the stated probability over the horizon.

Expected shortfall (CVaR) = average loss conditional on loss exceeding VaR; it is subadditive and therefore coherent, unlike VaR.

Duration: modified duration = Macaulay duration / (1 + y/m); price change ≈ −MD × Δy × price, with convexity adding +½ × convexity × (Δy)² × price.

Interest rate swap value = PV of fixed leg − PV of floating leg (payer swap); a payer swap gains when rates rise.

FX forward rate: F = S × (1 + i_quote × t)/(1 + i_base × t) (covered interest parity); the currency with the higher rate trades at a forward discount.

Hedge accounting under IFRS 9 requires documented risk management objective, economic relationship, and a hedge ratio free of imbalance; effectiveness assessed prospectively and retrospectively.

Cash flow at risk (CFaR) measures the deviation of operating cash flow from budget at a confidence level; it captures transaction and commodity exposure better than earnings VaR.

Credit exposure on derivatives = max(market value, 0) + potential future exposure; netting and collateral (CSA) reduce both components.

WACC = (E/V) × Re + (D/V) × Rd × (1 − tax rate); use market values of debt and equity, not book values.

CAPM: Re = Rf + β × (Rm − Rf). Unlever and relever beta: βL = βU × [1 + (1 − t) × D/E].

NPV = Σ CFt/(1 + r)^t − initial outlay; accept when NPV > 0. IRR is the rate at which NPV = 0; IRR can mislead when project scale or cash flow timing differ.

Trade credit cost of forgoing a discount: cost = [d/(1 − d)] × [365/(N − D)], where d = discount %, N = net terms, D = discount period.

Operating lease (IFRS 16): lessee recognizes a right-of-use asset and a lease liability at PV of lease payments; the expense becomes depreciation plus interest, front-loaded relative to straight-line rent.

Debt covenants: maintenance covenants are tested each period; incurrence covenants are tested only on defined actions such as new borrowing or dividends.

Dividend policy irrelevance (Modigliani-Miller) holds only with no taxes, no transaction costs, and fixed investment policy; in practice taxes on dividends versus capital gains drive preference.

Working capital funding mix: match asset maturity to liability maturity - permanent working capital with long-term debt, seasonal peaks with short-term lines.

Bond price-yield relationship is convex: price rises more for a given yield fall than it falls for an equal yield rise.

Money market yields: discount yield = (discount/face) × (360/days); add-on (investment) yield = (interest/price) × (360/days); bond equivalent yield converts to a 365-day simple basis.

Yield curve shapes: normal (upward) reflects term premium and growth expectations; inverted curves have preceded recessions; expectations hypothesis says forward rates equal expected future spot rates.

Commercial paper is unsecured short-term debt, typically ≤ 270 days in the US (to avoid SEC registration), issued at a discount, and usually backed by a committed backup line.

Repo: cash lender buys securities with agreement to resell; repo rate = (price difference/initial price) × (360/days). Haircut protects the cash lender against collateral price moves.

Equity valuation: Gordon growth P0 = D1/(r − g), valid only when r > g; the model is highly sensitive to g and breaks down for non-constant growth.

Credit ratings and spreads: spread ≈ expected loss + risk premium + liquidity premium; expected loss = PD × LGD.

Portfolio risk for two assets: σp² = w1²σ1² + w2²σ2² + 2w1w2ρσ1σ2; diversification benefit rises as correlation falls.

TMS core modules: cash positioning, bank relationship and account management, payments factory, debt and investment management, FX and hedge accounting, and reporting/analytics.

SWIFT MT vs ISO 20022: MT101 (payment initiation), MT940 (end-of-day statement), MT942 (intraday report), camt.053 (statement), camt.052 (intraday), pain.001 (payment initiation), pain.002 (status report).

Host-to-host and API connectivity differ in latency and error handling: batch host-to-host runs on schedule; APIs support real-time status queries and event-driven reconciliation.

ERP-to-bank integration requires mapping of chart of accounts to bank transaction codes; unmatched codes are the leading cause of auto-reconciliation failure.

Straight-through processing (STP) rate = payments processed without manual intervention / total payments; target thresholds are typically above 95%.

Business continuity for treasury: documented payment alternate paths, dual bank connectivity, pre-approved manual signatory procedures, and tested recovery time objectives (RTO).

Access controls: role-based entitlements, maker-checker, token-based multifactor authentication, and periodic entitlement recertification against HR records.

Data integrity controls include hash totals, record counts, duplicate payment detection on invoice number and amount, and reconciliation sign-off before ledger close.

KYC/CDD: identify beneficial owners at 25% or more ownership thresholds (FATF standard), verify identity, and apply enhanced due diligence for PEPs and high-risk jurisdictions.

Sanctions screening: match against OFAC SDN, EU consolidated, and UN lists; false positives require documented disposition, and screening must occur before payment release.

AML red flags include structuring below reporting thresholds, rapid movement of funds through dormant accounts, and payments to/from unrelated third parties in high-risk countries.

Market abuse: insider dealing, unlawful disclosure, and market manipulation are prohibited under MAR (EU) and equivalent regimes; treasury must maintain restricted lists and deal with approved counterparties.

Code of ethics elements: conflicts of interest disclosure, gifts and entertainment thresholds, confidentiality of non-public information, and whistleblowing channels.

Record retention: treasury must retain transaction records and supporting documentation per local statute; common minimums are 5 years (EU AML) and 7 years (US tax/BSA).

Segregation of duties and four-eyes approval are control requirements, not optional practices; auditors test that policy limits are enforced in systems, not just documented.

Data protection: personal data in payments falls under GDPR and similar laws; cross-border transfers require a lawful basis and vendor due diligence.

Treasury operating models: centralized (single treasury center), decentralized (business-unit control), and payment/collection factory hybrids; the choice trades control and netting benefit against local responsiveness.

In-house bank (IHB): treasury acts as internal counterparty to subsidiaries, enabling multilateral netting, internal funding, and reduced external bank spread.

Cash pooling: notional pooling offsets balances without physical transfer (may face regulatory or accounting limits); zero-balance and target-balance sweeps physically move cash.

Netting: bilateral or multilateral netting reduces gross settlement volume; savings = gross flows − net flows, and FX conversion costs fall proportionally.

Treasury KPIs: forecast accuracy (actual/forecast variance), STP rate, bank fee per transaction, days cash on deposit, counterparty concentration, and cost of liquidity buffer.

Counterparty risk policy sets minimum ratings, per-name exposure limits, and tenor limits for deposits and derivatives; limit breaches require documented escalation.

Treasury policy framework: board-approved policy, delegated authority matrix, counterparty and instrument lists, and periodic review cycle with internal audit assurance.

Bank relationship management: scorecards track credit commitment, pricing, service quality, and innovation; concentration limits cap reliance on any single provider.