April 23, 2005

1. Managing Cash Using Treasury Management Tools Presented by: Erin Reardon Cohn LaSalle Bank April 23, 2005

2. Agenda • What is Treasury Management? • Why is Treasury Management Important? • How Does Treasury Management Work? • Case Study 1 • Cash Conversion Cycle • Collections • Disbursements • Electronic Banking/CP Web Demo • E-Commerce • Global Treasury Management • Recent Legislation: Check 21 • Conclusion

3. What is Treasury Management? • Cash Management is the management of the inflows and outflows of cash. It has the following objectives: • Maintain Liquidity • Optimize Cash Resources • Finance Capital Needs • Manage Risk • Coordinate Financial Functions

4. What is Treasury Management? Speed up cash inflow TREASURY MANAGEMENT Slow down cash outflow Why is Treasury Management Important?

5. Why is Treasury Management Important? • What can happen if an entrepreneurial firm does not properly manage its cash?

6. Case Study 1 • Continental Glass & Mirror Co. is a young start-up company that manufactures commercial glass & mirrors • they currently collect checks in-house and drop off at the bank, they are large $ checks • they overdraw their account about twice a week and pay OD and NSF charges • they have a location in Ohio that receives cash • they don’t know what their daily balances are; sometimes they are OD and sometimes they have excess funds in their account • What cash management tools would you recommend to Continental Glass & Mirror?

7. Cash Conversion Cycle Cash (Control) Pay for goods/materials (Disbursements) Accounts Receivable (Collection) Sell goods or services Produce goods or services for sale

8. Cash Conversion Cycle and Treasury Management Cash (Control) Online reporting Forecasting ACH Wire Transfer Sweep Investment Products Pay for goods/materials (Disbursements) Controlled Disbursement ARP Positive Pay CD ROM ZBA Stop Payments Comprehensive Payables Purchasing Card Accounts Receivable (Collections) Lockbox OTC Electronic Payments Deposit Consolidation Cash Vault Comprehensive Receivables Web-based Banking Platform Sell goods or services Produce goods or services for sale EDI Document Outsourcing Electronic Bill Payment & Presentment

9. COLLECTIONS

10. Cash Conversion Cycle Cash (Control) Online reporting Forecasting ACH Wire Transfer Sweep Investment Products Pay for goods/materials (Disbursements) Accounts Receivable (Collections) Lockbox OTC Electronic Deposit Consolidation Cash Vault Comprehensive Receivables Sell goods or services Produce goods or services for sale

11. Collections • Electronic • Wires • ACH (Automated Clearing House) • EDI (Electronic Data Interchange) • Paper • Wholesale Lockbox • Retail Lockbox • Invoice Generation • OTC (Over the Counter) • Vault Services • Deposit Consolidation • Comprehensive Receivables

13. Wholesale versus Retail Lockbox • Wholesale: • Corporate to Corporate • Small number of large dollar checks • Retail: • Consumer to Corporate • Larger number of small dollar checks • Checks come with a standard invoice/coupon

14. Collections: Lockbox Why use a Lockbox? • BENEFITS: Save time, save money, make money • reduces mail float: time check is in the mail • reduces processing float: time to process the check • reduces availability float: time for check to clear banking system. • All of the above accelerate the deposit’s availability so a customer can use their cash quicker.

15. Other Types of Collections • Vault Services • Deposit Consolidation • Daily deposits at various locations • Night deposits • Account for every location’s deposits • Consolidation of funds into one single account • Information viewed online via CP Web • OTC - Over the Counter • Invoice Generation • Printing of Invoices • Bank expertise

16. Comprehensive Receivables as a Solution A receivables service that allows customers to receive a single file from the Bank to consolidate all receivable types. • Product highlights include: • Supports check, ACH, and wire payments • General Ledger integration • File status information via Transmission

17. Collections: Comprehensive Receivables A/R System LOCKBOX WIRES EDI ABN AMRO Receiver

18. DISBURSEMENTS

19. Cash Conversion Cycle Cash (Control) Online reporting (CashPro Web) Forecasting ACH Wire Transfer Sweep Products Pay for goods/materials (Disbursements) Controlled Disbursement ARP Positive Pay CD ROM ZBA Stop Payments Comprehensive Payables Purchasing Card Accounts Receivable (Collections) Lockbox OTC Electronic Payments Deposit Consolidation Cash Vault Comprehensive Receivables Electronic Banking Platform Sell goods or services Produce goods or services for sale

20. Disbursements – Funds Outflows • Funds Disbursed • Checks • Cash • Wires • ACH • Purchasing/Corporate Cards

21. What is Controlled Disbursement? • Controlled Disbursement is a service which provides early morning notification of the total dollar amount of checks presented against that account each day • Information available through an Electronic Banking Platform

22. Disbursements • Account Reconcilement Service • Defined: A check service where the bank performs part or all of a companies reconciliation by electronically providing check paid information. • This can be done daily, weekly or monthly. • Services include: • Partial • Full • Positive Pay • Reverse Positive Pay

23. Disbursements: Reconciliation Benefits • Benefits: • Accelerates month end reconciliation process • Reduces cost of temp (or employee) to reconcile manually • Eliminates need to manually key in check paid data • Reduces exposure to fraud

24. Disbursements: Fraud Control Services • Billions lost every year, according to FBI • Positive Pay with Teller Services • Image Positive Pay • Reverse Positive Pay • ACH Block • ACH Receipt Authorization

25. Disbursements: Positive Pay Services • Full Recon Service with Fraud Prevention • Client sends issue file day prior to checks being issued • Bank maintains database of all issued checks • Paid checks compared to database and any items that do not match exactly reported

26. Zero Balance Account (ZBA) • Service that ties accounts together • Parent account either funds or receives funds from child account • Child account always ends day with zero • Used to consolidate funds within same bank

27. Disbursements: Purchasing/Commerical Cards • Commercial Cards • Cards used to pay for goods/services • Eliminates petty cash • Float advantages • Stored Value Cards • Pre-funded credit cards • Cash withdraws at ATM machines • Ideal for ‘unbankable’ employees • Suitable for projects • Used for budget purposes

28. ELECTRONIC BANKING

29. Cash Conversion Cycle and Treasury Management Cash (Control) Online reporting (CashPro Web) Forecasting ACH Wire Transfer Sweep Products Pay for goods/materials (Disbursements) Controlled Disbursement ARP Positive Pay CD ROM ZBA Stop Payments Comprehensive Payables Purchasing Card Accounts Receivable (Collections) Lockbox OTC Electronic Payments Retail Lockbox Deposit Consolidation Cash Vault Electronic Banking Platform Sell goods or services Produce goods or services for sale EDI Document Outsourcing Electronic Bill Payment & Presentment Web Payment Engine

30. Electronic Banking: • Web-Based Treasury Management Tool • Access to: • Information Reporting • Stop Payments • Imaging • Initiation of Wires/ACH • Funds Transfer • Upgrades are transparent to clients • ‘Push’ Technology

31. Anytime, Anywhere Notifications. Flexibility and Customization

32. Check the status of the alert, including the date and time of delivery Forward messages to additional contacts

33. E-COMMERCE

34. Cash Conversion Cycle Cash (Control) Online reporting Forecasting ACH Wire Transfer Sweep Products Pay for goods/materials (Disbursements) Controlled Disbursement ARP Positive Pay CD ROM ZBA Stop Payments Comprehensive Payables Purchasing Card Accounts Receivable (Collections) Lockbox OTC Electronic Payments Deposit Consolidation Cash Vault Comprehensive Receivables Electronic Banking Platform Sell goods or services Produce goods or services for sale EDI Document Outsourcing Electronic Bill Payment & Presentment (EIPP)

35. Electronic Commerce • EIPP • Electronic Invoice and Presentment Program • Web Presentment of Invoices • Electronic Settlement • Eliminates Printing and Distribution Costs

36. GLOBAL • TREASURY MANAGEMENT

37. Global Solutions • Account Structures (backbone of any structure) • Collection/Disbursement accounts • Concentration accounts • Treasury account structures • Electronic Banking • Netting • Cash Pooling • International Lockbox • Bulk Payments

38. Recent Legislation • The Check Clearing Act for the 21st Century • October 28, 2004 • “Check 21” aims to improve check-clearing efficiency by reducing the clearing systems need to transport the original check from the point of deposit to the paying bank. Legalizes use of “substitute check”- the image of the front and back of the check.

39. CONCLUSION

40. Cash Conversion Cycle Cash (Control) Online reporting Forecasting ACH Wire Transfer Sweep Investment Products Pay for goods/materials (Disbursements) Controlled Disbursement ARP Positive Pay CD ROM ZBA Stop Payments Comprehensive Payables Purchasing Card Accounts Receivable (Collections) Lockbox OTC Electronic Payments Deposit Consolidation Cash Vault Electronic Banking Platform Sell goods or services Produce goods or services for sale EDI Document Outsourcing Electronic Bill Payment & Presentment (EIPP)

41. Case Study 1 • Continental Glass & Mirror Co. is a young start-up company that manufactures commercial glass & mirrors • they currently collect checks in-house and drop off at the bank, they are large $ checks (Lockbox – Wholesale or Retail?) • they overdraw their account about twice a week and pay OD and NSF charges (Controlled Disbursement, ZBA) • they have a location in Ohio that receives cash • they don’t know what their daily balances are; sometimes they are OD and sometimes they have excess funds in their account (Electronic Banking Platform, Daily Sweep Investments) • What cash management tools would you recommend to Continental Glass & Mirror?

42. QUESTIONS?