Sorry to use rather an old-fashioned term here. By "Treasury" we mean how you handle and take care of the money you have or have borrowed. This is all about interest rates and the like.

When it comes to our relationship with our bank we all tend to feel slightly on the defensive. They have so much power over our businesses that we tend to feel we should be grateful for whatever we get. BUT don't! Your bank sees you as as chance to make money. They want your business and they make money out of you, either obviously by charging fees or more subtly by charging too much interest on borrowings or paying too little on deposits. Be as ruthless as you can when you are looking at your deal with your bank and get other banks in from time to time - they will be delighted to pitch for your accounts and you may get better terms. Even if you don't want to switch you may still get a valuable stick to beat your own bank with.

First of all: Client Account. You may forgo a little of this as part of the overall deal but you should be able to achieve interest on client of around 0.75% under base rate (which of course was 5.0% in December 2006). If you are getting less than this, and many many firms are, re-negotiate! And don't take their first offer. I recently re-negotiated terms for a four-partner firm in North Yorkshire. After getting offers from other banks I took them back to RBS and asked them whether they wanted to keep the account. They did and offered very similar terms. I replied that if they would increase the rate on Client by a further 0.25% we would accept (with plenty of probate and conveyancing work this firm ran high client balances for its size). I was greeted with a bit of a shocked silence but an hour later the manager came back and agreed. They could not afford to lose the account. This small firm saw an overall annual gain of over £30,000!

Some firms place client funds on deposit with building societies. This can work but again your rate needs to be really attractive to make the transfers and the extra time spent managing them worthwhile. I have also seen firms use the banks' own treasury departments, making overnight deposits. This can be something of a lottery. If you strike lucky and your bank is short on overnight cover you may get a good rate but if they are awash with funds you will be offered very little. When you consider that you also need to leave some funds in Client to take care of anything in the course of clearance that might arrive overnight, because of course overdrawing Client is strictly forbidden, I have found that it is usually better to leave all your funds in Client. You have then made it the most attractive for your bank, and you can beat them over the head for a better rate. I have done analyses for a number of firms on this and it has always produced the best result. And as a bonus, your accounts staff spend less time on this and can spend more chasing debtors............

With Office Account you are looking for modest overdraft rates and low or no transaction charges. Banks will argue that transactions cost them money but will quietly forget to mention that the actual costs have fallen enormously as more and more is done electronically and online rather than with people handling paper. Sometimes banks will set charges at zero but will then set aside a part of your client account interest, in effect arriving at a charge. Others will charge a monthly fee in place of any transaction charges.

So, How much should you be paying?
Your aim is transaction fee-free banking and a good rate on Client. I would suggest that your benchmark for medium and smaller high street firms should be along these lines:Client Account - 0.75% below base rateOffice Account borrowing - Maximum 2% over base, 1.5% for credit-worthy partnershipsNo transacation charges if at all possible and certainly not more than around £1,000 per month in total

And don't let them go on charging you for same-day CHAPS transfers. These cost them very little these days and their standard fees of £20 or £25 each are hugely profitable for them. In any case, banks have been under enormous pressure to cut the three or four days they currently take to clear payments. I understand that by the end of 2007 we will see same-day electronic transfers available to all and becoming the norm.

Credit cards
You will pay a percentage of about 1.5% to accept Visa, Mastercard and so on but the charge for debit cards is usually a flat fee of around 45 pence per transaction. It may be possible to get this reduced or even waived as part of your overall negotiations on charges. I find that firms do not usually accept American Express as you hear stories of much higher commissions and three weeks to get cleared funds.

And look out for the cost of taking credit cards. For fees it may be worthwhile, as you get quick payment and certainty - as soon as your terminal has accepted the transaction you are bound to get paid. But with disbursements you will lose the 1.5% or so commission charged and end up out of pocket. You may well want to consider a small credit card processing fee to cover this, just like the budget airlines and many other businesses.