For many companies, the idea of employing cash and treasury management consultants is new to them. To provide you with a better understanding of why this type of counsulting is required, we would like to answer some frequently asked questions.

My company is making money now, why do I need a better cash and treasury management system?
Being profitable from an accounting standpoint does not necessarily mean that your cash flow is positive. Also, it may be hiding serious flaws and weaknesses in your present system that could eventually be the demise of your business. Cash is a vital commodity to all companies and how well it is controlled directly impacts a company’s financial well being. Even if your company has cash on hand, cash needs change as companies grow (cash is needed for expansion). An expanding company requires cash for additional staff and new assets. However, it may take several months or longer before the benefit of the expansion generates higher revenue and is eventually turned back into cash. Therefore, it will be advantageous to have a system that will alert you to periods when cash is minimal or negative. This will allow you to delay non-essential purchases or even borrow funds. Also, there are perfectly legal ways to speed up collections and slow down disbursements that can be incorporated into an improved cash management system.

A simple example of where having a decent cash management system can save your company money involves discounts offered by your suppliers. We will assume that a supplier offers a 2% 10 net 30-day discount. If cash is mismanaged so that this supplier is not paid until the end of the 30 day period (instead of within 10 days), it is equivalent to borrowing money at an annualized rate of 37%. You would never borrow money at such a high rate (if so, your business is in serious trouble), so it is incumbent on your company to adequately manage cash in order to be in position to take advantage of any discounts offered.

As your company grows, it will become more difficult over time to take these discounts if your cash management system is inadequate. Therefore, systems need to be constantly improved.


Why can I not just get my cash and treasury management advice from my accountant (either on-staff or outside)?
Your accountant will be able to provide acceptable advice for some of the more traditional cash and treasury management products and services provided by banks. However, the available products and services (including e-commerce issues) are constantly changing and improving. Therefore, it requires someone to understand and monitor what is best for your company and what will help you maintain a competitive advantage (or put you in that position). There are several reasons why a full-time treasury professional such as Bayberry Associates is better able to serve you:

• Keeping up with the technological improvements in the types of products and services now offered by banks as well as non-bank vendors.
• Understanding and reacting to the ever-increasing number of legal and regulatory issues specifically related to cash and treasury management.
• Ability to put together the most cost effective cash and treasury management system based on competition among the providers and new products and services.
• Larger companies have realized the importance of separating the accounting and treasury functions. You gain the benefit of this separation (by using a consultant) at a fraction of the cost.
• Ability to focus on cash and treasury issues exclusively without being distracted by accounting matters.
• Independently and objectively review (as an outsider) the capabilities of your existing system.
• Providing a better understanding of e-commerce issues and the impact on your cash and treasury management needs.
• Having the benefit of someone with a CCM (Certified Cash Manager) designation so you can be assured that whomever you hire is a true treasury professional.

Why can I not just get cash and treasury management services from my local bank?
The quick answer is that you can, but that might not be in your company’s best interest. This is especially true as local banks merge creating larger, more impersonal and more unfriendly banks who do not understand your business or care who you are. There are several advantages to using a treasury professional such as Bayberry Associates for cash and treasury management services rather than just going to your local bank:

• We are completely objective (with no conflicts of interest) as we will design you the best cash management system for your specific business without regard to which bank or non-bank vendor sells that product or service (your local bank will only offer the products or services that they handle).
• Ability to analyze the banks and other service providers so that we can steer you clear from those with poor reputations and products (your bank will not "knock" themselves).
• Impeccable customer service (we have been on your side of the table when dealing with banks and their customer service is no match for us).
• You will be treated as our most important customer (not like a little fish in a big pond).
• Adding value by finding you the most cost effective products or services (unlike your bank, whose compensation is based on what product or service you are provided).
• Adding value by reviewing the fees for existing products or services (the banks do not have any incentive for reducing fees).
• Ability to have one person handle a project from start to finish and know the status of any part of the engagement (unlike a bank, you will not be passed off to different product specialists).
• Over 25 years treasury experience (how long has your local banker been selling cash management products).

We want to point out that your bank may be a lender to your business and require that you use their cash and treasury management services. However, this should not prevent you from utilizing other service providers for at least some of your cash management needs, especially if it will improve the overall efficiency of your operation. Also, it will still allow you to comparison shop and renegotiate fees if your bank’s costs are out of line with competing banks or with other service providers.