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Cash Management Trends


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Cash Management Trends

Cash Management Trends

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  • 1. By – Ashish Sharma
  • 2.
    • The quality of cash management services being provided.
    • Current cash management product usage and Trends
    • Quantify buyer attitudes towards pricing of cash management services.
    • Determine company plans and intentions for current banking relationships, product purchases, and
    • Cash management projects over the next year.
  • 3.
    • The Drive Towards Efficiency, Transparency, Standardization and Integration
    • Increasing Payment Alternatives for Consumers
    • Accelerating Momentum for Corporate Payments
    • Digitizing What Remains — Check Electronification
    • Towards Strategic Receivables Management
    • Managing Risk, Ensuring Adequate Controls
  • 4.
    • Traditionally having a paper-based clearing system involving not only high processing cost but security risk, cash management process has certainly undergone a paradigm change.
    • From a product-centric approach, the focus for almost all banks today has shifted emphatically to the customer. And success is all about bringing the maximum possible delivery channels to the prospect's doorstep .
    • The objective of a cash management system is to improve revenue, maximise profits, minimise costs and establish efficient management systems to assist and accelerate growth.
    • Today a corporate treasurer's dilemma is multifaceted. With more movement towards the regional/central liquidity management in the complex structure of rules and regulations, further complication is caused by taxation issues.
    • A corporate treasurer needs as VOC - Visibility of funds, Optimised returns on funds, and Control over receivables and payables.
    • Treasury can face a number of issues related to the slow movement of funds, locked working capital, loss of float income, high cost of funds, time consuming reconciliation and manual processes.
    • In India the cash management business primarily involves collections and payments services.
  • 5.
    • Local cheque collections.
    • High value (0 Day clearing).
    • Agnetic ink character recognition (MICR) (three day clearing of cheques).
    • Outstation cheque collections.
    • Cheques drawn on branch locations.
    • Cheques drawn on correspondent bank locations.
    • Cheques drawn on coordinator locations.
    • House cheque collections.
    • Outside network cheque collections.
    • Cash collections.
    • ECS-Debit.
    • Post dated cheque collections.
    • Invoice collections.
    • Capital market collections.
    • Demand drafts/bankers cheques.
    • Customer cheques.
    • Locally payable.
    • Payable at par.
    • Cash disbursement.
    • Payments within bank.
    • Capital market payments.
  • 6.
    • STATE BANK OF INDIA provides cash management services to Corporate Clients under the brand name SBI-FAST (Funds Available in Shortest Time).
    • SBI FAST ensures optimization of collections and payouts while ensuring predictability in the cash flows.
    • SBI FAST ensures getting Funds in time, quick transfers, account reconciliation, easy disbursements, controlled processes and customized MIS.
    • SBIFAST eliminates the inherent delays of the traditional funds transfer mechanism and enhances liquidity to ensure optimum planning and utilization of funds.
    • File upload facility over web based portal and which can provide complete Host to Host facility for Payments and e- collections.
  • 7.
    • Centralized Control of cash
    • Interest Cost reduction on borrowings
    • Enhanced Liquidity
    • Interchange of Information between Treasury & Operating units
    • Cash forecasting & scheduling
    • Effective control over disbursements
    • Efficient Financial Management
  • 8.
    • There are a number of regulatory and policy changes that have facilitated an efficient cash management system ( CMS ).
    • Fox example, the Enactment of Information Technology Act gives legal recognition to electronic records and digital signatures.
    • The establishment of the Clearing Corporation of India in order to establish a safe institutional structure for the clearing and settlement of trades in foreign exchange (FX), money and debt markets has indeed helped the development of financial infrastructure in terms of clearing and settlement.
    • Other innovations that have supported in streamlining the process are:
    • Introduction of the Centralised Funds Management Service to facilitate better management of fund flows.
    • Structured Financial Messaging Solution, a communication protocol for intra-bank and interbank messages.
  • 9.
    • Account reconciliation services
    • Balancing a chequebook for a very large business can be quite a difficult process. Banks have developed a system to overcome this issue. They allow companies to upload a list of all the cheques whereby at the end of the month, the bank statement will show not only the cleared cheques but also uncleared ones.
    • Positive pay
    • An effective anti-fraud measure for cheque disbursements. Using the cheque issuance data, updated regularly with cheque issuance and payment, the bank balances all cheques offered for payment. In the case of any discrepancies, the cheque is reported as an exception and is returne
    • Balance reporting services
    • Balance reporting provides help in procuring a company's current banking information from its accounts. With this service the banks can offer almost all types of transaction-specific details on activities related to payment like deposits, cheques, wire transfers etc. It also helps in an effective and efficient management of regular cash flow.
    • Lockbox
    • Facilitates the cash improvement where, instead of being delivered to business address, customer payments are delivered to a special post office (PO) box. It is only the customers' payments that are delivered in the PO box and the company's own bank collects the amount and delivers them to the banks of the customers. The bank of the customers opens and processes the payments for direct deposit to the bank account. Lockbox contents regularly removed and processe
  • 10.
    • Current Cash Management Issues and Trends
    • An important outcome of the 2008 survey was the ranking of top issues affecting the cash management – Via 2008 Visa Global cash mgt survey
    • Changes in technology were identified as having the greatest positive impact on cash flow management, while global economic and geopolitical issues were seen as having the greatest negative impact.
    • Issues Affecting Cash Flow Management
    • Changes in Technology 70%
    • Changes in Corporate Governance/Regulatory Concerns 63%
    • Changes in Tax Laws 62%
    • Changes in Organization’s Policies 62%
    • Global Economic and Geopolitical Issues 57%
  • 11.
    • Lack of Streamlined
    • Operational Processes
    • Labor-Intensive
    • Administrative Work
    • Inadequate Information and
    • Reporting Capabilities
    • Sluggish Cash Flow Movement
    • Poor Cash Position Visibility
  • 12.
    • Reduction of Administrative and Process Costs
    • Elimination of Paper-Based
    • Invoicing and Payments
    • Facilitates Payables and Receivables
    • Use of Transaction Data for Better Vendor Pricing/Negotiation
  • 13.  
  • 14.
    • Process Streamlining Leading to Cost Reduction
    • Enhanced Compliance with Corporate Policies and Procedures
    • Automating Expense
    • Reconciliation Processes
    • Use of Card Transaction Data for Better Pricing Negotiation
    • Availability of Transaction Data for Spend Analysis
  • 15.
    • Four variables that are strongly related to a corporation giving more business to a bank.
    • Company’s perception of a positive change in the bank’s quality,
    • The number of relationship
    • Whether the company believes that the bank represents a “prime relationship”, and
    • Whether the company added a new E-Commerce/ Internet-based product
    • Statistical relationship between more business and the number of years that a company has done business with the bank,
    • The size of the current relationship as measured by fees paid,
    • The size of the relationship as measured by the credit outstanding
  • 16.
    • Banks have invested quite heavily in new, technology-based products in the last few years.
    • In the Cash Management Monitor, Banks analyses on Five of these new product areas.
    • Quality
    • Product
    • Consolidations
    • Pricing
    • Plans
    • Business-To-Business Electronic Commerce (B2B e-commerce)
    • Business-To-Consumer Electronic Commerce (B2C e-commerce)
  • 17.
    • ABN-AMRO / La Salle
    • Allfirst KeyCorp
    • AmSouth
    • Bank of America
    • Bank of New York
    • Bank One
    • Bankers Trust Company
    • Chase
    • Citibank
    • Comerica Bank
    • Commerce Bancshares
    • First Tennessee
    • First Union
    • Firstar
    • Fleet Boston
    • Wells Fargo
    • Huntington National Bank
    • Marshall & Ilsley
    • Mellon Bank
    • Mercantile Bank
    • Michigan National Bank
    • Morgan Guaranty
    • National City Bank
    • Northern Trust Company
    • PNC Bank
    • State Street Bank
    • SunTrust
    • Union Bank of California
    • US Bank
    • Wachovia
    • Harris Trust and Savings
  • 18.  
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  • 23.
    • HSBC voted 'Best Cash Management Bank in Middle East and Africa' by TMI
  • 24. [email_address] THANK YOU