Liquidity optimization is increasingly important as corporate treasurers strive to manage and optimise working capital in a dynamic, global environment. As the speed of transaction accelerates, so does the need for accurate and timely information. Liquidity management has increasingly become vital to corporate treasury departments, who need to manage working capital and to optimise surplus funds in a rapidly-changing regulatory environment.
Treasuries of Big corporates are finding it difficult to handle cash management related information since they have accounts with multiple Banks and do not have a bird’s eye view on how to consolidate their funds and manage the liquidity within the organization effectively. Banks are also in constant need of tools that can help them to take informed decisions, While at one side wherein most of the data comes from rating agencies, Banks are in better position to trust their own data in form of Past history records and transaction of Corporate Customers.
We at IDBI Intech have built a solution that will help Corporate customers address their liquidity issues and at the same time open up a revenue stream for Banks for the value add services they can provide to their customers.
Following are the key features of this solution:
- Exceptionally broad range of short-term investing options
- A wide range of liquidity management tools to manage cash flow, credit, and working capital across many accounts
- Liquidity management module enables optimization of liquidity available across multiple bank accounts and currencies
- Allows for the set up and execution of automated sweeping and notional pooling instructions
- Enables set up and execution of third-party bank sweeping
- Supports local currency and cross currency instructions
- Simplifies the definition of passive pool structures
- Manage inter-company loans
- Calculates interest and allocates benefits
- Fund disbursement to multiple accounts
- Four-eye and six-eye authentication
- Attractive dashboards as per user profile
This solution aims to automate the movement and pooling of money across different banks improving the overall efficiency via straight-through-processing (STP). This in turn will give corporates a more transparent view of their available liquidity at any point of time.
Frequently Asked Questions (FAQs)
Corporate liquidity management is a vital activity for corporates. Without sufficient liquidity, there is a risk that a company could be unable to meet its obligations and could even go out of business.
Liquidity optimization is increasingly important as working capital needs to be optimized. Liquidity management has increasingly become vital to companies, who need to manage working capital and to optimise surplus funds in a rapidly-changing regulatory environment.
Companies can manage their liquidity by paying off liabilities, using long-term financing, optimally managing receivables and payables, and cutting back on certain costs.
The goal of liquidity management is to ensure the business has cash available when needed. This is achieved by managing the company's liquidity as effectively and efficiently as possible.
Cash Management and Liquidity Management both are sub-components of Financial Supply Chain Management (FSCM). Cash Management is used to verify the cash position of all the bank accounts and liquidity Management is used to verify the liquidity position of the sub-ledgers.
Liquidity optimization is increasingly important as corporates strive to manage and optimise working capital in a dynamic, global environment. As the speed of transaction accelerates, so does the need for accurate and timely information.
Pooling is a liquidity management technique which:
- Enables corporations to virtually offset long and short positions across their multiple currency accounts, potentially reducing operating costs.
- Centralizes liquidity across multiple currencies.
- Reduces the need for effecting physical currency conversions to cover funding shortfalls.
- Diminishes the need to execute frequent FX swaps.
- May be used to notionally extract the net cash position across multiple currencies in a single currency.
