What is the main purpose of a cash management agreement?

The primary function of a cash management agreement is to outline fees for bank services. Such agreements serve as a formal understanding between a business or organization and its financial institution regarding the various banking services provided and the costs associated with them. These services can include cash concentration, disbursement, wire transfers, and other treasury management services. By delineating the fees and terms associated with these services, companies can gain clearer visibility into their cash flow management costs. Understanding these fees is essential for effective cash management, as it aids organizations in budgeting and financial planning, enabling them to optimize their cash utilization and avoid unexpected expenses.

In contrast, the other options relate to different aspects of financial management. Investment strategies focus on how to allocate funds for growth, loan repayment terms deal with the specifics of borrowed funds, and managing employee payroll pertains to human resources functions rather than treasury management specifically. Thus, the emphasis of a cash management agreement aptly aligns with the articulation of service fees.