October 27, 2015
Authored by: Jerry Blanchard
Everyone has that pile of objects in the basement or the attic that over the years just keeps growing in size. It could be old toys no longer used but saved for use by the grandchildren, old clothes you think you might wear again someday, or the furniture from your parents’ house that you hated to give up but really had no room for in your own house. In the banking context, the pile of objects closely resembles the cash management agreements many banks use. Many of these agreements were first put in use years ago when the bank decided to offer ACH services in addition to the normal commercial deposit account. Eventually the bank added wire transfer and a money market sweep account to the suite of options. Oftentimes banks use a separate form for each of the available services, some of which may or may not conflict with the other forms that were developed over a 10- or 20-year period.
Technology, cyber-risks and the ways people initiate transfers of funds have changed over time and will continue to change in the near future. If you haven’t updated your cash management agreements in several years, now may be a good time to review that pile of documents and agreements and consider what items needs to be addressed. A good way to handle such a review is to combine the separate agreements into one master agreement. Consolidating the documents in such a manner ensures that all of the definitions are consistent and any security processes are addressed across the entire platform.