Special Report: Cash is King - an overview of corporate liquidity management
In this report, we survey the broad options and products available, and highlight new possibilities including the arrival of liquidity funds and Certificates of Deposit. We discuss the changing role of cash management in a corporate treasurer’s overall strategy, and we assess the role of risk, and what some of the hidden costs might be behind a decision to go for lower rates.
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‘Cash is King’ - a Report on corporate liquidity management
With interest rates at historic lows, corporate treasurers are looking to yield-enhancing products such as range accruals to increase their cash management returns. |
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A question of cash
The cash decision is a richly layered one for investors, both money managers and corporate treasurers alike. Where interest rates are headed not only determines where you want to be along the curve, but is also perhaps the key driver of where you want to be as regards the wider range of other asset classes, equities, bonds, property, alternatives etc. for those who have that flexibility of mandate. In this sense, cash is something of a ‘gateway’ asset, writes Eugene Kiernan. |
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The risk/reward paradigm - lower ratings or greater risk?
Every corporate treasurer, investment manager and many private individuals have significant cash surpluses to invest. Thanks to the myriad of information services available, people are keenly aware of the comparative returns available to them. Many investors spend significant time in the ‘everlasting search for higher yield’. However, not all investors are aware that each additional basis point of yield brings with it additional risk – namely default risk. John Coffey and Niall Cuddihy examine the different alternatives available to a cash investor, identifying, for each case, the risk/return issues involved. |
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Decisions need to be based on whether after tax returns from cash management are trading or non-trading?
Most corporates will be involved in cash management activities to some extent. Given the differential between the corporation tax rate applicable to trading and non-trading income, it is important that treasury managers are aware that the returns from their cash management and treasury activities may not necessarily be taxable as trading income, writes Jean O’Sullivan. |
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Training for corporate treasurers
The Certificate in International Cash Management (Cert ICM) run by the Institute of Bankers is an international qualification which has been specifically developed by the Association of Corporate Treasurers (ACT) for those working in within banks and corporates in Europe, Asia and the United States. Although the deadline for Institute courses is September 9th, the Cert ICM has a deadline of September 30th. |
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Funds rise in prominence in Europe as treasurers benefit from earning an enhanced yield on surplus cash
Liquidity funds have been a popular investment tool in the US for over 30 years, and the market for this niche treasury product has grown to over $2 trillion. Now, such products are becoming available in Europe, writes John O’Farrell, and are an attractive tool for treasurers looking to earn an enhanced yield on their surplus cash, whilst enjoying same day access to those funds. |
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The changing face of cash management – from cash investment to portfolio management
The concept of cash management for corporate treasurers has changed significantly in recent years, writes Pat Leavy. Traditionally, corporates saw cash management in terms of surplus cash investment and its main components such as security and liquidity, and the concept of 'portfolio' management related to the construction of investment portfolios. Now however, corporates consider the total cash value chain as the new 'portfolio' and are challenged to maximise value for the company from each element of this chain. In addition, there has also been a strategic shift in the status of cash management within companies, driven by legislation such as Sarbanes Oxley, and it is now high up on the corporate management agenda securing senior management and board attention. |
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CDs as a tool for cash management and funding
Since a rule change in the Finance Act 2003, which made it possible for Irish resident financial institutions to issue certificates of deposit (CD) to Irish investors, a number of Irish based financial institutions have availed of the opportunity to issue including EBS, Depfa Bank and UniCredito Italiano Bank (Ireland) plc. In this, our annual update on CDs, we present a Questions & Answers session, where key industry players – Mark Whelan, Caroline O’Connor and John Whelan of EBS; John O’Farrell of UniCredito Italiano Bank (Ireland) plc; Hugh Beattie of McCann Fitzgerald; Christopher Amott of JP Morgan and Damien O’Donoghue of Bank of New York, discuss the main issues in the market, including CDs as a cash management tool, and new types of product emerging. |
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