Trends in Cash Management: Information and Cost Effectiveness

By Ferris, Tom | American Banker, January 4, 1985 | Go to article overview

Trends in Cash Management: Information and Cost Effectiveness


Ferris, Tom, American Banker


NEW YORK -- Cash management, the child of high interest rate and float, is growing up.

The last few years have seen the field become increasingly important to companies trying to maximize the use of funds and to banks trying to strengthen corporate relationships.

However, like a growing child, the features of cash management are changing rapidly. And before long it, too, will have to pay its own way.

Observers see two trends emerging in the field.

The first is a gradual shift in emphasis from the management of cash -- that is, transactions -- to the management of financial information. This is occuring because the factors that spawned cash management, including inflation, float, and inefficient paper-based payment mechanisms, are being negated, while technological advances are leading to the development of systems that can gather financial information from widespread sources, consolidate it within the treasurer's office, and then integrate it with internal accounting data.

While the transaction is expected to take some time, a hint of the possibilities can be seen in the treasury-management systems now on the market. Many banks and vendors are offering software packages that run on desktop computers and automatically contact a corporation's banks each morning for account balances. The resulting data can be analyzed, and the more-sophisticated systems provide modules for cash forecasting and investments.

The systems were actively marketed this year and a couple of banks reported business was thriving, but some observers doubt that more than a few hundred of the packages are now in use. Important Income Source

The second trend in evidence is occurring at some of the large banks that provide cash management services to companies. These institutions, worried about narrowing profit margins on loans, are looking to transactional services as an increasingly important source of income.

Whereas cash management products have traditionally been provided at subsidized prices to attract corporate business, more and more banks are starting to expect those services to be profitable in their own right.

This theme was discussed at a conference this fall by the president of Philadelphia National Bank, Richard S. Ravencroft. "There is a serious question in my mind whether banks in the future will be able to use cash management as a loss leader and realistically expect to make it up on their total relationships," he said.

Philadelphia National is now pricing its corporate services to cover actual costs and show a profit, and other insititutions have started to do the same, according to Mr. Ravencroft.

The trends toward information management and restructured pricing of services, however, have not yet affected most cash managers. Their jobs this year continued to have two primary functions: extending disbursement float (the amount of time between when a payment is due and the check actually clears) so that companies retain the use of funds for as long as possible, and limiting float on the collection side so that incoming payments can be used sooner. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Trends in Cash Management: Information and Cost Effectiveness
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.