Treasury Resources

Global Investment, cash and risk management best practices, innovations and strategies

The Global Guide to Investing Cash

This guide intends to help corporate treasurers to navigate the complexities of developing and implementing an investment policy, the factors that impact investment decision-making, and explains the different investment instruments available in various countries around the world.

An introduction to money market funds

A money market fund (MMF) can be broadly defined as an investment fund whose objective is to provide investors with security of capital and daily liquidity. It seeks to achieve that objective by investing in a diversified portfolio of high-quality, low-duration money market instruments. The return on a MMF tends to follow short-term interest rates with a low level of volatility.

Fundamentals investment management: Design of the investment policy

The investment policy provides the strategic guidance for treasurers to navigate the dynamics of cash and the investment ecosystem. Only by ensuring that all the stakeholders are working to the same objectives and guidelines can the company successfully manage its cash investments.

Getting ahead of the curve: Cash management

Cash management processes have seen rapid changes and innovations to improve accuracy and satisfy the growing requirements of stakeholders Only by means of effective cash optimisation and subsequent visibility into short-, medium- and long-term cash requirements can treasurers identify and effectively manage their investments.

Effective cash positioning: Cash management tools and techniques

Cash management requirements have heightened to enable continuous and accurate cash position reporting, responsive forecasting and efficient handling of payments, as well as managing and evaluating financial risks with greater precision. This section reviews the efficient cash management structure, centralise payments and concentrate cash to generate additional liquidity and optimise interest.

Bedrock of treasury: Cash-flow forecasting

A good forecast is an essential tool in managing a company’s liquidity, not just for short-term, day-to-day cash management, but also for medium-term investment and borrowing. Forecasting is instrumental in managing risks, enhancing returns and maintaining financial controls, as it allows treasurers to anticipate cash movements and levels, enabling them to take any necessary action.

Cash Optimisation: Cash segmentation

Only by acting as cash-flow stewards for their organisations and thus, looking strategically at their cash, can treasurers gain the ability to increase incremental returns, without materially increasing the risk profile. Key to that process is the careful segmentation of operational, reserve and strategic cash and their respective investment horizons.

Treading the fine line between risk and return: Investment strategy

Treasurers need to find the right balance between the company’s requirements, liquidity and yield. Historic low prospective returns, coupled with elevated risk and the pandemic, has led to the reassessment of objectives and revisions of investment portfolios. Is the governance framework still fit for purpose? What is the cost of cash? What is the financial market’s view of the economy? Are the counterparty selection criteria still current?