Learn · Corporate treasury
Corporate treasury and cash management: know the cash, then move it.
A company’s treasury makes sure the business can pay what it owes every day, at the lowest cost and risk. Cash management is the daily part of that job: knowing how much cash is in every bank account, matching the bank’s records with the company’s books, paying suppliers safely and forecasting what is coming. This guide walks through each step, the way you practise it in TrezCap’s simulated corporate treasury.
The daily cash position across banks
A group company holds accounts with several banks. Each morning treasury builds one cash position: the opening balance in every account, the receipts and payments expected today, and the closing balance. Cash that is idle in one account may be needed in another, so treasury sweeps or pools it within each bank’s limits rather than borrowing while money sits elsewhere.
Bank statements and reconciliation
Treasury imports each bank’s statement and reconciles it with the company’s own ledger, line by line. Every difference is a break: a receipt the bank has but the books do not, a payment booked twice, or a bank charge nobody recorded. A break is investigated, explained and cleared, never simply written off, because an unexplained break is how errors and fraud stay hidden.
Payments with approvals and screening
Supplier payments go out in batches. One person prepares the batch and a second person checks and approves it (maker-checker), so no one can both create and release a payment. Before release, each payee is screened against watch lists, and a payee whose bank details changed recently is held for checking, because changed bank details are the most common route for payment fraud.
Cash forecasting: forecast against actual
A cash forecast projects receipts and payments week by week, often thirteen weeks ahead. Its value comes from comparing it with what actually happened: a forecast that keeps missing the same customer’s receipts tells treasury to change the assumption, not to keep a bigger buffer for ever. The forecast shows when the business will need to borrow and when it will have cash to invest.
Hedging, bank accounts, bank charges and covenants
- Hedge accounting for FX forwards: when a company uses a forward to protect a foreign-currency purchase or sale, hedge accounting lets the accounts show the forward and the item it protects together, if the hedge is documented and effective.
- A bank account register: every account, who may sign on it and up to what amount, with any change checked by a second person.
- Bank charges against the agreed tariff: each bank’s fees are checked against what was agreed, and an overcharge is claimed back.
- Debt and covenants: loans come with conditions such as a maximum debt-to-EBITDA, and treasury tests them before each reporting date, not after.
A worked example: a bank reconciliation break
A company in TrezCap’s simulated world reconciles one current account at month end (illustrative figures, in lakh rupees):
| Item | Lakh rupees |
|---|---|
| Balance as per bank statement | 482.40 |
| Balance as per company ledger | 479.15 |
| Difference to explain | 3.25 |
| Customer receipt credited by the bank, not yet booked in the ledger | +4.00 |
| Bank charges debited by the bank, not yet booked | −0.75 |
| Unexplained after both items | 0.00 |
Both items are booked in the ledger with their evidence, and the bank charge is then checked against the agreed tariff. Had a difference remained, it would stay open as a break with an owner and a date until it was explained.
Key terms
- Cash position: The day’s opening balance in every account, plus expected receipts, less expected payments.
- Reconciliation: Matching the bank’s statement with the company’s ledger and explaining every difference.
- Break: A difference between the two that has not yet been explained.
- Maker-checker: One person prepares, a second checks and approves.
- Covenant: A condition in a loan agreement, such as a maximum debt-to-EBITDA, that the borrower must meet.
Practise it in TrezCap
Reading is the start. In TrezCap you do the job in FinTreasury Bank, our virtual bank: the platform calculates every figure, you take the decision and see the consequence. Free to try.
Cash forecast: choose the model, read the band
Pick the forecasting model and act on its range.
Open in TrezCap →Group cash: sweep, pool and the bank limit
Move group cash and stay inside the bank limit.
Open in TrezCap →Questions
What is cash management in corporate treasury?
It is the daily work of knowing how much cash the company has in every bank account, matching the bank's records with the books, paying safely and forecasting what is coming, so the business can always pay what it owes.
What is a bank reconciliation break?
A difference between the bank statement and the company's ledger that has not yet been explained. Each break is investigated and cleared with evidence, never simply written off.
Why do payments need two people?
So that no one person can both create and release a payment. One prepares the batch and a second checks and approves it, after each payee has been screened.
Can a company run its real treasury on TrezCap?
No. TrezCap is a practice platform: the companies, banks and figures are simulated, so you can learn the steps and the controls safely.
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