Manage cash: what each role knows that the others do not

Treasury sees balances but rarely the reasons behind them. Payables and receivables hold the reasons. Accounting knows which items never cleared. The bank knows fees and returns first. Trouble starts wherever one group acts on a number whose story sits with another group.

Treasury sees the totals

The cash manager starts each morning with bank balances and a position sheet. That view is wide and current. It is also thin. A large credit lands and treasury knows the amount, the sending bank and perhaps a reference string. It does not know which invoice it settles, whether the customer meant to pay it, or whether a refund is already promised.

So the position looks healthy while receivables is still arguing about what the money is. Treasury may sweep it into an investment or use it to cover a payment run. Later the receipt gets reversed, or turns out to belong to a different entity, and the position was never what it seemed.

Receivables holds the meaning of incoming money

The people who apply cash know which receipts match an open invoice and which sit in suspense. They know the customers who pay in lumps against several bills. They know which deposits are really fees, penalties or amounts that must be passed on elsewhere. Where collections follow an allocation order, applying money first to penalties and then to interest before principal, only this team usually understands why a customer's balance moved the way it did.

They also hear about bounced cheques and recalled transfers, sometimes after treasury has already counted the funds. If the returned item notice goes to a shared mailbox nobody in treasury reads, the forecast carries cash that has left.

Payables and the payments desk know what is about to leave

Payables knows when the next run is scheduled and which suppliers are being held. The payments desk knows which wires were released by phone because a manager insisted, and which templates were changed last week. Neither group tends to tell treasury about the exception payment until it has gone.

The gap here is timing. Treasury forecasts outflows from the payables ledger. Urgent manual transfers never touched that ledger, so they surprise the position. Approval workarounds also live here, and they are the ones that matter for fraud.

Accounting knows what never cleared

Whoever reconciles bank to ledger knows the stale items. They know the deposit recorded twice, the fee nobody booked, and the transfer between accounts that appears on one side only. That knowledge often stays in a reconciliation workbook. Treasury rarely reads it, and the forecast keeps assuming those items will resolve.

Accounting also produces the cash journals. When the mapping from bank codes to ledger accounts breaks, they see it first, usually at close.

The relationship owner knows the deal; the analyst sees the bill

One person negotiated the fee schedule, the credit terms and the earnings rate on balances. Someone else receives the analysis statement and approves it. Without the agreed pricing beside them, the reviewer cannot tell an overcharge from a normal charge. Disputes go unraised, or get raised without the contract terms that would settle them.

The relationship owner also knows which banks expect more business in return for a credit line. That shapes where cash should sit, and it is seldom written into the process.

Business units know the big moves before anyone

A plant manager knows about the equipment deposit. A sales lead knows the customer that will pay early to secure a discount. Forecasts built only from ledgers miss these. The large deposits and disbursements that most need advance warning are exactly the ones held by people outside finance.

Where changes go wrong

Most redesigns move a task between teams without moving the knowledge that made the task work. Centralising cash application is a common case: the new team gets the bank file but not the customer habits. Automating reconciliation can hide the judgement an accountant applied to odd items. Any change should name, for each handoff, who holds the explanation and how it reaches the person acting on the number.

Questions to ask the people who run it

• Which payments go out without passing through the normal run, and who tells treasury when they do?
• Where do notices of returned cheques and recalled transfers arrive, and who opens them?
• What sits in unapplied cash today, and what usually stops it being matched?
• Which reconciling items keep reappearing month after month?
• Who has the signed fee schedule, and does the person approving bank charges ever see it?
• When the forecast is wrong, which kind of flow is usually to blame?
• Which business contacts call treasury directly about large movements, and which never do?
• What spreadsheet or mailbox would cause real damage if its owner left tomorrow?
• How do miscellaneous receipts get classified, and who decides when a receipt belongs to someone else?

APQC's Process Classification Framework® (PCF) is an open standard developed by APQC, a nonprofit that promotes benchmarking and best practices worldwide. To download the full PCF or to view definitions and measures, please visit www.apqc.org/pcf.