Cash Management Agreement

A cash management agreement is the contract between a company and its bank that governs the treasury services the bank provides. It usually takes the form of master terms plus schedules for each service: account opening and signatories, bulk payment files, collections and lockbox services, balance and transaction reporting, sweeping and cash pooling, and access to the bank's online platform or file connections. The agreement allocates responsibilities for security procedures, such as who may approve payments and how instructions are authenticated, and it sets out liability when a payment is made on a fraudulent but properly authenticated instruction. Fees are normally listed in a separate pricing schedule and reported on an account analysis statement. In groups, cash pooling schedules also cover cross-guarantees and rights of set-off between participating companies. Also see cash management and transaction banking.