In a credit-squeezed market, cash and liquidity rule - find out how to drive the effectiveness and efficiency of your company's and your own cash
Banks are running a zero tolerance policy towards your bank account. Go overdrawn, for whatever reason, and you’ll be punished financially. The banks are rebuilding their capital position, trying to cover years of questionable loan practices and to meet new global banking regulations. A source of cheap deposits and fee income is the SME (Small and Medium Enterprise) and the individual. In the past you may not have concerned yourself unduly with managing your cash, but today if you do not pay (pun intended) attention then the banker may take it all.
Be Your Own CFO: The Art of Cash Management for SMEs is a best-practice guide that makes liquidity understandable and demonstrates how better cash management can help you and your company weather the current financial storm.
With greater insight into banking, payment and trade infrastructures, better decisions can be made to drive the efficiency and effectiveness of cash.
The book asks you to look at:
• You direct debits – 1 in 10 are usually for something you don’t now need;
• Earning money on money while staying liquid – take a look at currencies and gold;
• Payments - get paid faster, ask for electronic transfer instead of paper;
• Accounts receivable – figure out how much working capital you are lending out;
• Accounts payable – how it is affecting your credit rating.
Written by John Bertrand, a veteran banker with 30 years' experience in banking, cash management, payments and technology at Citibank, IBOS, ALLTEL, Misys and Admertec/Ceptum in the US and the UK.
Review
“Be Your Own CFO is superb. For the first time there is a book that explains banking and finance in every day language. Easy and simple to read and understand. It is ideal for people needing a practical understanding of finance and how it affects them and their companies." Thomas E Jones, former Vice Chairman of the IASB
"Actually, it is very good, concise, and I wonder who you got to write it." Gerry English, past President of the Irish Association of Corporate Treasurers
Publication date: October 2012
ISBN 978-1-907720-49-9
For full list of Contents, click here
To see sample pages, click here
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Each chapter starts with Key Questions for SME directors and a Key Points Summary
Chapter 1 Stages of Cash Management
Domestic Cash Management
International Cash Management
Chapter 2 Bank Accounts - New Rules and Regulations
Mandate
Know Your Customer (KYC)
Anti Money Laundering
Deposit Insurance
Value Dating
3rd Party Management
Chapter 3 Liquidity/Cash Cushion
Chapter 4 Savings
Bank Accounts
Interest Rates
Chapter 5 The Investment Pyramid
Base
Appreciating cash investments
Bonds, equities and property
Speculation
Chapter 6 The Credit Pyramid
Overdrafts
Unsecured Credit
Secured credit
Credit Agencies
Credit Default Swaps
Chapter 7 Investment versus Credit
Net Interest Income
Chapter 8 Payments
Cheque
ACH
Direct Debit
SEPA Direct Debit (SDD)
Epayments
Mpayments
Warehouse Accounts
Correspondent Banking Payments
Real Time Gross Settlement (RTGS)
Chapter 9 Foreign Exchange
Chapter 10 Supply Chain
Invoice Financing
eInvoicing
Asset Based Finance
Personnel Guarantees
Chapter 11 Illiquid Management
Bankruptcy
Pre-pack Administration
Chapter 12 Case Studies
Nordea
Citi
HSBC
Wells Fargo/Wachovia
John's expertise in banking, cash management, payments and technology was gained over 30 years at Citibank, IBOS, ALLTEL, Misys and Admertec/Ceptum in the USA and UK.
In this time he created and implemented technology in front, middle and back offices of banks, in addition to developing electronic access options for the needs of corporations and retail customers. This included redefining core banking for Misys (300 banks), ensuring long-term revenue. He has provided and developed cash management consulting, netting schemes, third party cash management, pooling and foreign exchange.
John has been involved in mergers and acquisitions in more than 10 banking/software transactions that included cloud-based solutions. One transaction in the cloud now represents 9% of Misys profits.
John raised capital, added mezzanine financing, leasing and invoice factoring together to create Ceptum Limited, a potential bank, now with $10 million in profitable assets and with no debt.
He has worked with the UK (FSA) and Swedish (FI) banking and finance authorities to create a de nova bank.
The focus on cash has intensified since the financial crisis and company cash balances have reached record levels.
In crisis-riddled markets, Financial Institutions and Corporates need to ensure cash is available to deal with whatever happens in the market.
Five key events have pushed cash management to the forefront of attention:
1. Liquidity concerns and cash cushions;
2. No growth economies (especially in Europe);
3. Tight credit markets;
4. The recapitalisation of banks in order to meet new global standards (Basel III);
5. New legal regulations and compliance.
Liquidity Strategies for Financial Institutions and Corporates: The Art of Cash Management is a best-practice guide through the financial storm for Chief Financial Officers, Treasuries and Cash Managers.
With greater insight into banking, payment and trade infrastructures, better decisions can be made to drive the efficiency and effectiveness of cash.
Written by John Bertrand, a veteran banker with 30 years' experience in banking, cash management, payments and technology at Citibank, IBOS, ALLTEL, Misys and Admertec/Ceptum in the US and the UK.
Review
“Liquidity Strategies for Financial Institutions and Corporates is superb. For the first time there is a book that explains banking and finance in everyday language. Easy and simple to read and understand. It is ideal for CFOs and others needing a practical understanding of finance and how it affects their companies." Thomas E Jones, former Vice Chairman of the IASB
Publication date: April 2012
ISBN 978-1-907720-47-5
Download full Contents here
Download sample pages here
Print:£79.00//€96.00/$125.20 plus p&p; PDF: £59.00+ VAT/€71.70+ VAT/$93.50
1-5 user company licence: £200.00 + VAT/€245.00 + VAT/$320.00
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Each chapter starts with Key Questions for the CFO, Treasurer or Cash Manager and a Key Points Summary
Preface
Introduction
Managing cash flow
Banks create their own cash cushions
The move towards non-banks
1 The three levels of cash management
Introduction
Domestic cash management
Bank charges on the rise
Domestic cash management stages
Stage 1: Simple bank account
Stage 2: Bank account with technology
E-banking now the preferred approach
Smartphones
Stage 3:Bank account with investment rules
Stage 4: Bank account with overdraft facilities
Stage 5: Multiple banks with more than one bank account in the same currency
Complexity increases as company grows
Technology and processes
Competitive bidding for banking business
International cash management
Stage 6: International cash management services with more than one currency account
Cash pooling to notional pooling
Cash pooling considerations
Notional pooling
Notional accounting
Payment infrastructure
Global cash management
Stage 7: Global cash management
Reducing transaction volumes
CLS
Geographic approach
Nordic region vs. eurozone
Rules on inter-company lending
The technology that makes cash management work at banks
The future
2 Compliance: new rules and regulations for bank accounts
Compliance started in earnest in 2001
Ongoing AML
Politically Exposed Persons
Due diligence by the corporate
Due diligence by the bank
High risk criteria
Documentation
Customer Due Diligence/Know Your Customer
Anti Money Laundering
The money laundering schematic
Risk-based assessment
Customer screening
Single view of the customer business within the bank (CRM)
Account monitoring
Bank applies compliance testing to bank accounts
Bank applies compliance to payment messages
Additional regulation
The future
3 Bank account structures
How safe is your bank balance?
Stability ratings and stress tests
Bank account fees
Electronic Bank Account Management (eBAM)
Extensible Markup Language (XML)
Banking mandates
Value dating
Credit attached to the bank account
Branch foreign exchange rates
Bank accounts for third party cash administrators
Client cash structure: today and tomorrow
Benefits of client cash
Bank – today (with little automation)
Bank with third party accounts (full automation, complete STP)
Intermediary – today
Intermediary with virtual accounts
Corporate employing third party accounts
The future
4 Liquidity management and cash cushions
Liquidity management
Intraday liquidity in clearing and settlement
Pricing intraday liquidity
Reduction in bank lending capacity
Credit scoring
Degrees of liquidity
Cash and the flight to safety
Cash cushions
Stress testing
The future
5 Putting cash to work
Earning interest
Islamic banking
Linking the savings module to the bank account
Outside investments
Forecasting cash flows
Predicting revenue and expenses
Making money on the money
The future
6 Risk and interest structures
The investment risk pyramid
Base level investments – no risk to principal and highly liquid
Appreciating cash investments – up to 15% market risk and highly liquid
A strong currency
Gold
Speculation – up to 50% market risk
Gold – the universal currency
The future
7 The credit ladder
Charges for credit facilities
Credit rating agencies
Banks and financial institutions’ scoring techniques
Intraday overdrafts
Large value payments
Other credit techniques
Asset based financing
Sale and leaseback
Leasing other assets
Loans against equity
Inventory financing
Government return financing
Financing via other collateral
Credit default swaps
The future
8 The investment pyramid versus the credit ladder
Net Interest Income (NII)
Comparing the pyramid with the ladder
The future
9 Payments
Creating harmonised payments
Float and timeframes
Same/next day funds transfers – urgent payments
Other payment methods
Cheques
Automated Clearing House (ACH) payments
ACH for non-urgent payments
Direct debit
SEPA Direct Debit (SDD)
Local direct debit schemes vs. SEPA
Payment solutions for corporates
E-payments
M-payments
Warehouse accounts
International payments for corporates
Correspondent banking payments
Other international payment options
The banking infrastructure for cross-border payments
Third party account managers
Payment fees
Real Time Gross Settlement (RTGS)
The credit card process cycle – key players
Sample transaction and stakeholders
Prepaid cards
Near Field Communication (NFC) payments
Reconciliation
The future
10 Foreign exchange
International cash management and FX
Managing foreign exchange options
Derivatives
e-options
Regulatory changes
Other options
Forwards
Interest rate swaps
Currency exposure
Buying and selling FX
Credit line from the bank
Spread and commission-based pricing
Continuous Linked Settlement (CLS)
Automated FX (e-trading)
FX roles
The administrator
The dealer
The trader
The customer
The compliance officer
The support team
Currency movements
Margin, or increased leverage
Comparing euro performance
Asian currencies and the RMB
The future
11 Supply chain management
The supply chain and liquidity
DPO
DSO
DIO
Supply chain management developments
SWIFT’s TSU
Forfaiting
Size of the supply chain
Top 20% of companies achieve efficiencies
The physical supply chain
The electronic financial supply chain
Technology creates efficiency
Logistics and the supply chain
Supply chains and the role of the financial services industry
Automation and standards
Invoice financing
E-invoicing
Global adoption of e-invoicing
Changing supplier and buyer processes
Rosettanet
Bill payment in the US
The future
12 Illiquid management
Bankruptcy
Liquidation in the UK
The winding-up process
Liquidation
Pre-pack administration
13 Case study: Nordea
Profile
Client base
Cash management products
Group accounts
Sweeping and topping
Zero balancing
SWIFT statements
Value dating and currencies
Direct debit
Same-day cross-border money
Inter-company payment
In-house bank for a Corporate Treasury
Netting
Mobile banking
e-invoices
Factoring
Re-invoicing
Working capital
Achievements and initiatives
Client case study – Tele2
Tele2’s treasury centre
14 Case study: Citibank
Profile
Cash management products
CitiDirect (e-banking)
CitiDirect BE Mobile
WorldLink
WorldLink Payment Services reporting and tracking online
Group accounts
Citibank Electronic Cheque Deposit (ECD) in the US
Payment
Notional pooling
Data aggregation
Analytics
Target balancing
Netting
Electronic supply chain
The Citibank Electronic Account
Citibank e-Billing
CityFXPro
Pricing on 130+ currency pairs
Outsourcing treasury functions
Online investment
Liquidity desks
Achievements and initiatives
15 Case study: HSBC
Profile
Cash management products
Exposure management
Receivables solutions
Currency dealings as and when
Actively managing the exposure
Interest rate offerings in other countries
Cash concentration and multi-currency receivables
Online banking – Direct Connect
HSBCnet
HSBCnet Mobile
Achievements and initiatives
Client case study – Korean Air
16 Case study: Wells Fargo/Wachovia
Profile
Cash management products
Inefficient manual processing
No real-time visibility
Inaccurate cash forecasting
Increased exposure to fraud
Services for multinational corporates (MNCs)
Cash management consulting for multinational corporations
ACH
Cash collection (USA)
Remote Deposit Capture (RDC) for cheques
Direct deposits
Pre-authorised payments (direct debit)
Sweep investments for corporates
Global cheque clearing
Lockbox – the collection of cheques
Client case study – Bumble Bee Foods
Tables and figures
Table 1.1: Features of UK bank accounts 2009, 2010
Table 1.2: EIU 2010 digital economy rankings and scores
Table 3.1: Deposit protection schemes
Table 5.1: Wells Fargo economic forecast 2011
Table 7.1: Charges for credit facilities
Table 7.2: The credit ladder
Table 7.3: Credit rating agencies ratings guide
Table 9.1: Payment systems comparison
Table 9.2: Multipurpose Pan-European Direct Debit
Table 9.3 Prepaid card fees
Table 9.4: The reconciliations process
Table 10.1: Example of currency option pricing based on basis point spread.
Table 10.2: Euro changes as reported by the European Central Bank
Table 13.1: Report for external sales less exchange rate fluctuations
Figure 1.1: Simple domestic cash management
Figure 1.2: Account opening process
Figure 1.3: Simple bank account – domestic
Figure 1.4: Simple bank account – international
Figure 1.5: More than one company bank account (single currency) – simple
Figure 1.6: More than one company bank account (single currency) – alternative
Figure 1.7: International cash management
Figure 1.8: Cash pool with notional pooling
Figure 1.9: Bi-lateral netting
Figure 1.10: Multi-lateral netting
Figure 1.11: Bi-lateral and multi-lateral netting
Figure 1.12: Payment and core banking landscape
Figure 1.13: Core banking systems and payments landscape
Figure 2.1: Ongoing due diligence
Figure 3.1: eBAM - opening a bank account
Figure 3.2: eBAM – account maintenance
Figure 3.3: eBAM – account closure
Figure 3.4: Value dating
Figure 3.5: Value dated transactions
Figure 3.6: Branch foreign exchange rates
Figure 3.7: Virtual account model
Figure 3.8: Deposits to MFI by non-financial and other financial sectors
Figure 4.1: Liquidity management for a bank
Figure 4.2: Intraday money flows
Figure 4.3: 30-day cash outflows
Figure 5.1: Bank account with savings account
Figure 5.2: Outside investments
Figure 5.3: Company balance over time
Figure 5.4: Forecasting company balances going forward (1)
Figure 5.5: Forecasting company balances going forward (2)
Figure 5.6: Interest rates vs. time (UK, December 2011)
Figure 6.1: The investment pyramid
Figure 6.2: Gold – London PM fix 2000-2011
Figure 7.1: Sovereign credit default swaps January 2010– November 2011
Figure 8.1: The investment pyramid vs the credit ladder (1)
Figure 8.2: The investment pyramid vs the credit ladder (2)
Figure 8.3: The investment pyramid vs the credit ladder (3)
Figure 9.1: Cheque (paper) payment flow
Figure 9.2: ACH payment
Figure 9.3: Direct debit payment
Figure 9.4: SEPA Direct Debit
Figure 9.5: Banks’ payment solutions for corporates
Figure 9.6: Warehouse account process (1)
Figure 9.7: Warehouse account process (2)
Figure 9.8: Foreign exchange payments
Figure 9.9: Options for international payments – independent domestic banks
Figure 9.10: Options for international payments – domestic banks in an Association
Figure 9.11: Options for international payments – international bank
Figure 9.12: Traditional cross-border payments
Figure 9.13: Direct debit to a virtual account
Figure 9.14: Direct debit from a virtual account
Figure 9.15: Real Time Gross Settlement process
Figure 9.16: The credit card process cycle
Figure 9.17: Integrated and hosted virtual account solutions
Figure 9.18: Corporates – the paper trail
Figure 9.19: Corporates automated using virtual accounts
Figure 11.1: Supply chain growth
Figure 11.2: Supply chain management
Figure 11.3: Sales days outstanding
Figure 11.4: Supply chain financing for large companies
Figure 11.5: Accounts receivable financing
Figure 11.6: Invoice factoring
Figure 11.7: Invoice discounting
Figure 11.8: Paper vs e-invoicing
Figure 15.1: Korean Air’s FX outsourcing solution
John's expertise in banking, cash management, payments and technology was gained over 30 years at Citibank, IBOS, ALLTEL, Misys and Admertec/Ceptum in the USA and UK.
In this time he created and implemented technology in front, middle and back offices of banks, in addition to developing electronic access options for the needs of corporations and retail customers. This included redefining core banking for Misys (300 banks), ensuring long-term revenue. He has provided and developed cash management consulting, netting schemes, third party cash management, pooling and foreign exchange.
John has been involved in mergers and acquisitions in more than 10 banking/software transactions that included cloud-based solutions. One transaction in the cloud now represents 9% of Misys profits.
John raised capital, added mezzanine financing, leasing and invoice factoring together to create Ceptum Limited, a potential bank, now with $10 million in profitable assets and with no debt.
He has worked with the UK (FSA) and Swedish (FI) banking and finance authorities to create a de nova bank.
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