Treasury teams don't just make payments, they add tangible value to business
Meet David, Treasurer @ Global Manufacturing Inc.,
A large multinational corporation, Global Manufacturing generates significant cash flow, but faces the constant challenge of optimizing its liquidity management. David needs to balance the need for safe and liquid cash holdings with the desire to maximize returns in a low-yield environment. He's exploring innovative solutions like ring-fenced collateral structures to enhance his treasury operations.
The Challenge:
Global Manufacturing needs to maintain substantial cash reserves for various purposes, including:
Working Capital: Funding day-to-day operations, payroll, and supplier payments.
Capital Expenditures: Investing in new equipment, facilities and research & development.
Mergers & Acquisitions: Having readily available funds for strategic acquisitions.
Contingency Planning: Maintaining a financial buffer for unexpected events or economic downturns.
David's mandate is to ensure the safety and liquidity of these funds while generating a reasonable return. He's looking for a solution that:
Minimizes Counterparty Risk: Protects the company's cash from bank failures or other financial institution risks.
Enhances Yields: Generates a better return than traditional money market accounts or short-term deposits.
Liquidity: Ensures access to funds for operational needs and unforeseen circumstances.
Transparency and Control: Offers clear visibility into the investment strategy and the underlying assets.
Streamlines Treasury Operations: Simplifies cash management processes and reporting.
Working Capital: Funding day-to-day operations, payroll, and supplier payments.
Capital Expenditures: Investing in new equipment, facilities and research & development.
Mergers & Acquisitions: Having readily available funds for strategic acquisitions.
Contingency Planning: Maintaining a financial buffer for unexpected events or economic downturns.
David's mandate is to ensure the safety and liquidity of these funds while generating a reasonable return. He's looking for a solution that:
Minimizes Counterparty Risk: Protects the company's cash from bank failures or other financial institution risks.
Enhances Yields: Generates a better return than traditional money market accounts or short-term deposits.
Liquidity: Ensures access to funds for operational needs and unforeseen circumstances.
Transparency and Control: Offers clear visibility into the investment strategy and the underlying assets.
Streamlines Treasury Operations: Simplifies cash management processes and reporting.
The Outcome
By using secured deposit service, David has achieved his objectives:
Principal Protection: Global Manufacturing's cash is safe and protected by the ring-fenced collateral structure.
Competitive Returns: The company earns a significantly better return on their cash than they would with traditional deposit accounts.
Liquidity: They maintain access to their funds when needed for business operations.
Transparency and Control: David has full visibility into the investment strategy and the underlying assets.
By securing the deposit and lowering the overall risk, David was able to increase his counterparty and duration exposure limits to place a greater balance with more choices of tenor than was possible with unsecured cash deposits placed with the same institution.
Principal Protection: Global Manufacturing's cash is safe and protected by the ring-fenced collateral structure.
Competitive Returns: The company earns a significantly better return on their cash than they would with traditional deposit accounts.
Liquidity: They maintain access to their funds when needed for business operations.
Transparency and Control: David has full visibility into the investment strategy and the underlying assets.
By securing the deposit and lowering the overall risk, David was able to increase his counterparty and duration exposure limits to place a greater balance with more choices of tenor than was possible with unsecured cash deposits placed with the same institution.
How it works
1. Dedicated account
2. Ring-fenced collateral
3. Wholesale repo market participation
4. Enhanced yields
5. Uninterrupted liquidity
6. Enhanced transparency and reporting
2. Ring-fenced collateral
3. Wholesale repo market participation
4. Enhanced yields
5. Uninterrupted liquidity
6. Enhanced transparency and reporting
In Summary
For Global Manufacturing, secured deposit service with ring-fenced collateral provides a robust and efficient solution for managing its liquidity, optimizing returns, and minimizing risk. This allows the company to focus on its core business operations and strategic objectives, knowing that its cash reserves are safe, liquid, and working efficiently.
A large multinational corporation, Global Manufacturing generates significant cash flow, but faces the constant challenge of optimizing its liquidity management.
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