Aspiring to be a Certified Treasury Professional (CTP) is a valuable goal for anyone seeking a career in corporate finance. Treasury professionals play a crucial role in managing a company’s financial activities, such as cash flow, investments, and risk. These activities are essential to keep a company’s finances balanced and profitable.

One key tool that treasury professionals must understand is the Account Analysis (AA) Statement. While this document may look like a simple bank statement, it is essential for managing a company’s cash flow and can have a significant impact on profits.

In this article, we’ll cover what the AA statement is, why it matters, and why mastering it is essential for future Certified Treasury Professionals.

What is an Account Analysis Statement?

An Account Analysis Statement is a monthly report banks provide to businesses, detailing services provided and associated fees. It breaks down all banking activities, including the balance in the account, transaction types, and service fees.

Typically, an account analysis statement includes:

• Balances: Daily and average ledger balances, collected balances, and reserve requirements.
• Earnings Credit Rate (ECR): A rate applied to balances that helps offset banking fees.
• Service Charges: A list of services like wire transfers, ACH transactions, and their fees.
• Net Position: The total fees minus any offset from the ECR.

For businesses, the account analysis statement is a “bill” from the bank. For treasury professionals, it’s a critical tool for optimizing a company’s financial resources and managing banking relationships.

Why the Account Analysis Statement Matters

The account analysis statement is much more than a billing summary. It helps treasury professionals understand how efficiently a business uses banking services and maintains balances. Here are some reasons why it matters:

Cost Management and Fee Optimization

Banks charge fees for services like transaction processing and account management. The account analysis statement lists these fees, allowing treasury professionals to track and manage costs.

With high transaction volumes, fees add up fast. A treasury professional can use this statement to spot areas where the company may be overpaying and potentially negotiate better terms with the bank.

Earnings Credit Rate (ECR) Utilization

Banks use the ECR to credit businesses for maintaining balances, which helps reduce service charges. This is helpful for companies with high cash balances.

A Certified Treasury Professional knows how to maximize the ECR. By managing balances strategically, they can earn enough credits to cover banking fees, reducing out-of-pocket expenses.

Cash Management and Liquidity Optimization

Managing a company’s liquidity is a top priority for treasury professionals. The account analysis statement shows daily and average balances, which are crucial for cash flow and liquidity decisions.

Treasury professionals can see how much cash sits in non-interest-bearing accounts and whether they could move excess cash into investments that pay interest.

Benchmarking and Bank Relationship Management

The account analysis statement is also useful for comparing the cost of banking services against industry standards or other banks. Treasury professionals analyze services and fees to see if they’re competitive or if they could negotiate.

For aspiring Certified Treasury Professionals, understanding the account analysis statement enables them to manage bank relationships more effectively. Knowledgeable treasury professionals can discuss fees, balances, and service needs to negotiate better terms with banks.

Audit and Compliance

Many businesses must keep records for audit and regulatory purposes. Treasury professionals use the account analysis statement to ensure all banking activities and fees align with company policies and regulations.

By analyzing the statement, they can identify unusual fees or incorrect charges, ensuring accurate transaction records.

Why Future Certified Treasury Professionals Must Master the Account Analysis Statement

Understanding the account analysis statement is crucial for anyone wanting to become a Certified Treasury Professional (CTP) because:

It’s a Treasury Management Foundation

Managing bank accounts, cash flow, and reducing costs are primary CTP responsibilities. Without understanding the account analysis statement, treasury management is far more challenging.

It’s Relevant to the CTP Exam

For CTP certification, the account analysis statement is directly relevant to the CTP Body of Knowledge. The exam covers cash and liquidity management, risk management, and other topics connected to banking services and cost control.

It Has Real-World Application

Treasury professionals must ensure that their company gets value from banking relationships. By understanding the account analysis statement, aspiring treasury professionals can make better decisions about banking services, balance management, and cost control.

It Builds Analytical Skills

Analyzing the account analysis statement builds attention to detail and analytical thinking. As a future CTP, you’ll need to interpret financial information, spot trends, and make data-based recommendations.

Practical Tips for Aspiring CTPs

Review Sample Statements: Look at real or sample account analysis statements to understand the format and key details.

Learn About ECR: Practice using the ECR to offset fees and manage balances.

Compare Service Fees: Analyze fees across banks to develop negotiation strategies.

Track Trends: Track monthly fees and services to understand usage patterns and reduce costs.

In Conclusion…

The account analysis statement is an essential tool for treasury professionals, and mastering it is a key step to becoming a Certified Treasury Professional. It provides insight into cash management, banking fees, and liquidity—all essential for corporate finance. By learning to analyze and optimize the account analysis statement, aspiring CTPs will be better equipped to manage finances, cut costs, and strengthen bank relationships, making them invaluable to their organizations.

Matt D.

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