QUESTION: WHAT IS CASH MANAGEMENT IN BANKS?

ANS: Money is an account balance. Banks do not maintain cash on hand equal to t
he amount of money deposited. Rather, they keep about 10% of deposited funds in
cash. The amount required varies from day to day and week to week. Cash manageme
nt is keeping enough cash on hand to handle the bank's cash business plus the ca
sh reserve dictated by the bank's policy. Cash on hand plus cash deposited minus
cash paid out equals net cash on hand. To ensure that the net cash on hand meet
s the bank's needs, the cash manager must estimate with fair accuracy the amount
of cash to be deposited as well as the future cash demand. Cash is ordered from
the federal reserve and excess cash is returned there.
STANDARD CHARTED BANK: Cash Management, “
Our cash management services include local and cross border payments, collection
s, information management, account services, liquidity management and investment
services for both corporate and institutional clients”
1.Payment Services
We can help you save time and money by reducing processing costs while providing
a value-added service to your suppliers.
Comprehensive payments solution
Standard Chartered’s payment solutions can help to reduce your overall processin
g costs – for domestic and global payments – saving you time and money while pro
viding a value-added service to your suppliers. Our comprehensive payment servi
ces will be tailored to enhance your accounts payable process. This will elimin
ate many manual tasks involved in making payments, allowing you and your staff t
o spend more time focusing on your core business needs.
We understand that most of your effort in the payment cycle is directed towards
initiation; difficulties in the subsequent reconciliation process can jeopardise
the whole process. With Straight2Bank Channels you can now track the exact stat
us of each payment through timely reports that can be uploaded seamlessly into y
our company’s system.
We offer a full range of payment capabilities including:
• Cross-border payments
o Telegraphic transfers
o International bank cheques / drafts
• Domestic payments
o Local bank cheques / drafts / Cashiers order
o Corporate cheque
o Direct credits – ACH / GIRO / credit vouchers
o Local bank transfers (RTGS)
o Book transfers (account transfer between Standard Chartered branches)
• Payroll
Payments system integration
Straight2Bank channels caters to different levels of customer payment sophistica
tion, including simple online transaction via Internet, bulk file payment via in
ternet or lease line, and the ability to send industry standard messages directl
y to the bank. Our in-country specialists are available to help customise a sol
ution that enables you to manage your working capital in a more efficient manner
2. Collection Services
Comprehensive receivables management solution
Standard Chartered understands that operating and sustaining a profitable busine
ss these days is extremely tough. Your key business concerns could be:
• Receivables Management - ensuring receivables are collected in an effici
ent and timely manner to optimise utilisation of funds
• Risk Management - ensuring effective management of debtors to eliminate
risk of returns and losses caused by defaulters and delayed payments
• Inventory Management - ensuring efficient and quick turnaround of invent
ory to maximise returns
• Cost Management - reducing interest costs through optimal utilisation of
funds.
Our solution
The Standard Chartered Collections Solution leverages the Bank s extensive regio
nal knowledge and widespread branch network across our key markets to specially
tailor solutions for your regional and local collection needs.
This Collections Solution, delivered through a standardized international platfo
rm, has the flexibility to cater to your local needs, thus enabling you to meet
your objectives of reducing costs and increasing efficiency and profitability th
rough better receivables and risk management. The key components of our solution
include the following:
A) Extensive clearing network
Our extensive branch network, complemented by our correspondent banks network,
provides you with a wide coverage of clearing locations to ensure you get the be
nefit of early availability of funds. This is further enhanced by our cheque pur
chase and guaranteed credit services.
B) Guaranteed credit:
To help you manage your cash inflow from your accounts receivable more efficient
ly, Standard Chartered can arrange for guaranteed (subject to prior agreement) c
redit to your account for cheque collections. Your local and foreign currency ch
eques will be credited to your account on a fixed date even if the Bank is not i
n receipt of the funds from the clearing house or correspondent bank. The faster
availability of funds helps reduce overdraft balances and consequently lowers i
nterest costs.
C) Comprehensive MIS
We understand the importance of timely and accurate information regarding accoun
ts receivable to help you effectively manage your receivables and debtors, and m
inimise losses caused by delayed receipts and defaults. You can also better mana
ge your buyers requirements and improve your inventory management.
Based on your choice of Straight2Bank channels, multiple, detailed reports are d
elivered to you via email, fax, Straight2Bannk Access (Host-To-Host channel) or
Straight2Bank Web(Internet Banking Channel).
These reports are tailored to your needs and provide details such as invoice num
ber, drawer name, customer reference number, debtor code, special narration, rem
arks and any other information you have requested for. Here are some of the comp
rehensive reports the Standard Chartered solution provides you with:
• Activity Reports e.g. information on collections activity for the period
• Deposit Reconciliation Reports e.g. deposit confirmation
• Return and Reversals Report e.g. information on cheques returned
• Drawer Summary Report e.g. information on drawers
D) System integration
The Standard Chartered collections platform can be integrated with your account
receivables system to enable auto reconciliation for your account receivables. Y
ou get fully reconciled receivables files with invoice details and amounts match
ed against receipts.
In addition, Straight2Bank Web (Internet Banking Channel) can also be used as an
electronic channel to transmit collection information such as DDI (direct debit
initiation) files or invoice number (account receivables) details to the Bank.
We also provide the option of transmission of files and MIS through Straight2Ban
nk Access (Host-To-Host channel)
E) Outsourcing of collections
Standard Chartered supports your complete collection cycle. These services cover
:
• Courier pick-up service, which is available for cheques from your office, deal
ers and distributors offices, from PO boxes etc.
• Clearing of instruments whether local or foreign currency through the clearing
houses, directly by Standard Chartered or through our correspondent bank networ
k.
• Electronic collection services through the ACH.
• Data capture of information.
• Reconciliation activities.
Types of collections
We provide collection services for:
• Local currency cheques
• Foreign currency cheques
• Lock box services – retail and wholesale
• Direct Debits
• Credit card collections
• Inward telegraphic transfers
Please refer to your Standard Chartered relationship manager to confirm the avai
lability of specific collections products and services
3. Liquidity Management
Solutions for efficient management of your funds
A corporate treasurer s main challenge often revolves around ensuring that the c
ompany s cash resources are utilised to their maximum advantage. You need a part
ner bank that can help you:
• Maximise interest income on surplus balances; minimise interest expense
on deficit balances for domestic, regional and global accounts
• Minimise FX conversion for cross-currency cash concentration
• Customise liquidity management solutions for different entities in diffe
rent countries
• Centralise information management of consolidated account balances
Our Solution
With our global experience and on-the-ground market knowledge, Standard Chartere
d will help you define an overall cash management strategy which incorporates a
liquidity management solution that best meets your needs.
Standard Chartered s liquidity management propositions
Issues: Customer benefits:
• Regulatory considerations
• Tax implications
• Single vs multiple entities
• Single currency vs multiple currencies • Maximise float managemen
t
• Minimise funding cost
• Account balance information
• MIS reports on inter-company settlements
• Outsourcing
A) Physical sweeping
Subject to regulatory considerations, Standard Chartered offers both domestic an
d cross-border physical sweeps. To maximise yield on your daily cash, these solu
tions help you concentrate all surplus balances and deficit balances at a pre-de
fined period into one concentration account. Under a physical sweep structure, b
alances in multiple accounts are physically transferred from participating accou
nts to a designated concentration account.
Main features:
• Multiple-layer sweep;
• Standing instruction;
• 1-way sweep; 2-way sweep;
• Zero-balancing sweep; target balancing sweep;
• Debit sweep; credit sweep;
• Sweep with back value transactions;
• Comprehensive MIS reporting.
B) Notional pooling
If regulatory considerations permit, you can utilise Standard Chartered s Notion
al Pooling to help you maximise yield on your daily cash by offsetting accounts
with deficit balances against accounts with surplus balances in different entiti
es. You enjoy all the benefits and features of Physical Sweep, except that under
Notional Pooling, there is no daily physical movement of balances from the part
icipating entities to the designated cash concentration account.
C) Interest reallocation
Standard Chartered provides you with a flexible Interest Reallocation Programme
whereby the interest component can be reallocated back to the participating enti
ties from the designated cash concentration account based on your instruction. Y
ou get a detailed report, tracking the daily cash balance from each entity and t
he interest computation based on the interest reallocation formula that you have
defined.
D) Investment
To help you maximise your surplus balances, make use of Standard Chartered s ove
rnight investment instruments. With this, you can instruct excess balances to be
invested to yield a return that is based on the overnight market driven rate. A
lternatively, for longer term core balances, you have a choice of investing in s
hort term AAA credit rated Money Market funds.
4. Clearing Services
Making the right connections for financial institutions
With increasing business globalisation, your banking network may not have suffic
ient reach. You may not want to put in the extra infrastructure or resources to
expand your network but still want to ensure your clients transactions are serv
iced efficiently. Clearing is one of the important services in which your bank w
ould need support to facilitate your clients smooth international trade and cro
ss-border transactions.
Contact us
Stephen Street
Stephen.street@sc.com
Our solution
Standard Chartered s international network and multi-currency capabilities are w
ell placed to provide you with a seamless service for all your clearing requirem
ents worldwide. Our network extends across Africa, the Middle East, South Asia,
Latin America, the USA and the UK. You can count on our over 150 years of on-the
-ground experience to tailor a clearing solution that meets your needs. Standard
Chartered is a correspondent banking partner you can trust to make this potenti
ally complicated process much easier for you. Click here to view our internation
al network.
We tailor clearing solutions to address your specific needs whether in one or mu
ltiple countries, or to complement our other services.
Standard Chartered offers "Best in Class" technology and processes in our cleari
ng services wherever you are, in whichever country you do business and in whatev
er currency:
A) Emerging markets
If you are looking for a correspondent banking partner you can trust, Standard C
hartered can help you. We are in an excellent position to design the clearing se
rvice that meets your needs. We have offices in every Asian country, with the ex
ception of North Korea – and with almost 150 years of on-the-ground experience,
we make this potentially complicated process much easier for you.
Asia Pacific
Standard Chartered s well established local franchise delivered throughout Asia
is well placed to meet your needs. We have offices in every Asian country with t
he exception of North Korea.
We provide a full range of services, which includes execution of payments, repor
ting, liquidity management, billing and account services. This includes US dolla
r and euro clearing (which commenced in April 2003 and for which Standard Charte
red is the settlement agent) in Hong Kong.
Your benefits from Standard Chartered:
• Dedicated customer service and extensive local knowledge
• Value-added reporting capabilities (including via the internet)
• Consistent service levels – all our offices offering clearing services are ISO
accredited
• Automated service delivery – inquiries / matching / cancellations; auto repair
and detailed STP reporting
• Customised billing
Middle East and Southern Asia
If you are looking for a correspondent banking partner you can trust, Standard C
hartered can help you. We are in an excellent position to design the clearing se
rvice that meets your needs. We have offices throughout the Middle-East and Sout
h Asia and with almost 150 years of on-the-ground experience, we make this poten
tially complicated process much easier for you.
We provide a full range of services, which include execution of payments, report
ing, liquidity management, billing and account services. This includes US dollar
and euro clearing (which commenced in April 2003 and for which Standard Charter
ed is the settlement agent) in Hong Kong.
Your benefits from Standard Chartered:
• Dedicated customer service and extensive local knowledge
• Value-added reporting capabilities (including via the internet)
• Consistent service levels – all our offices offering clearing services are ISO
accredited
• Automated service delivery – inquiries / matching / cancellations; auto repair
and detailed STP reporting
• Customised billing
Africa
Standard Chartered is the experienced partner you can rely on to take care of yo
ur African clearing requirements. You can entrust us with your clients needs th
roughout the region, offering them the same high level of service that they expe
ct from you. Africa is the latest region where Standard Chartered offers its cle
aring services, complementing the coverage already provided in Asia, the Arabian
Gulf, the eurozone and the United States.
Our wide clearing network in Africa is managed as one business with a consistent
approach to transactional services and service quality that is unique in Africa
. With over a hundred years presence in many of our African territories, our fi
rst-hand market knowledge of local business practices enables us to handle your
transactions with confidence and expertise, in some of the most challenging bank
ing environments.
Services include payments and collections, account services, trade services, inv
estment options and reporting services via a variety of channels.
Your benefits from Standard Chartered:
• Network approach across our 138 offices in twelve African countries
• Consistency of services
• Market knowledge
• Customer service
• Local reputation
B) USD clearing
The U.S. Dollar is the primary currency for the settlement of foreign exchange a
nd international trade transactions. With evolving changes in the marketplace, y
ou need partners who are responsive to your growing needs and who can execute yo
ur transactions quickly and effectively. Standard Chartered can help give you th
e support you need to grow your business successfully.
Providing quick and reliable clearing is one of our core competencies. We can he
lp improve your international transactions, allowing you to free up your time to
focus on your clients needs. We understand the clearing process clearly and ha
ve the infrastructure and expertise to help you with your U.S. dollar clearing r
equirements around the world. Our operations are highly automated to ensure that
your transactions are completed reliably, efficiently and securely.
With a comprehensive range of U.S. dollar clearing services and corresponding re
ports available, we can tailor products to suit your specific needs so that you
can operate more efficiently and effectively. Automated payments using SWIFT, de
tailed reporting and simplified billing are all designed to streamline your Clea
ring process and improve liquidity. These are some of the key features and benef
its of our USD clearing services.
At Standard Chartered, we have the resources, skills and expertise to take care
of your Clearing concerns, while you focus on looking after your clients.
Key features
Standard Chartered understands how to meet your needs for a smooth and efficient
U.S. dollar clearing service. One of the first foreign banks to be invited to j
oin the Clearing House Interbank Payments System (CHIPS), Standard Chartered is
a major U.S. dollar clearing provider. Standard Chartered understands the market
s where we do business, our clients needs and the rapid changes affecting the U
.S. dollar clearing business.
Our network, expertise and technology enable you to resolve your clients cleari
ng requirements promptly and efficiently.
Automated payments
Our payment process is highly automated, making use of electronic transfer techn
ology which reduces errors, enhances processing times and minimises costs -compl
eting the clearing process with maximum speed and efficiency.
FedBen®
For most U.S. banks, Fedwire®* is the primary channel for making international p
ayments. Standard Chartered Bank’s FedBen® service gives your bank the ability t
o leverage our unmatched international payment capability by simply sending a Fe
dwire® to Standard Chartered Bank. FedBen® is the quick and cost-effective way t
o easily effect payments directly to beneficiary banks’ correspondents overseas.
Through the FedBen® service, the U.S. bank can send international payments only
through Standard Chartered Bank via Fedwire®, thereby gaining better control ove
r payment delivery, improving customer service, and generating new income. This
innovative solution pioneered by Standard Chartered Bank seamlessly integrates
into your standard payment processing environment. One of the key features of o
ur FedBen® service is that it will unlock the full revenue potential of internat
ional wires for your organization while creating operational efficiencies by rem
oving the burden of routing international wire transfers.
FedBen® gives you a “business as usual” solution to international U.S. Dollar tr
ansfers. You simply open a FedBen® account with Standard Chartered Bank. Every
time you send us a FedBen® eligible payment you account will be credited. In r
eal-time our FedBen® service will apply a beneficiary deduction and complete the
international transfer by debiting your account.
*Fedwire® is a registered service mark of the Federal Reserve Banks.
Value-added reporting
We offer comprehensive reporting on balances and transaction activities. With th
is information, you will be better able to track transactions, oversee the recon
ciliation process and analyse usage patterns. Full reporting is also available t
hrough our electronic delivery channels including the internet. Our extensive ma
nagement information systems provide you with clear and timely information to he
lp you facilitate your management decisions and simplify reconciliation. At Stan
dard Chartered, our vast range of tailor-made reporting capabilities satisfies a
ll your record-keeping needs.
Billing
We understand your need for a simple and transparent billing system. We offer in
novative pricing structures that enable you to remain competitive. As such, you
will find that our billing covers tiered pricing, volume rates as well as standa
rd fees and services.
Customer service
No matter which part of the world you are conducting business from, we have dedi
cated multilingual customer service staff to attend to your enquiries. Our numer
ous ISO 9002 certificates earned around the world demonstrate our commitment to
excellence in service delivery. For your added convenience, we have an 18-hour p
ayment and inquiry processing service, which enables us to respond quickly to yo
ur needs. The information you need is always at your fingertips.
Technology
At Standard Chartered, we consistently invest in innovation, upgrading our techn
ology to guarantee that our services meet your needs. Our state-of-the-art techn
ology and interfaces make the clearing process quick, secure and efficient. We a
lso supply a PC-based automated search system for locating CHIPS and SWIFT codes
to assist you in creating straight-through payments for your added efficiency.
Liquidity management
We offer an array of products and investment sweeping vehicles to allow for maxi
misation of your USD account balances that can be tailored to your specific requ
irements.
Key benefits
Standard Chartered has been operating in the US for over 100 years. Our in-depth
experience and thorough understanding of clearing services enable us to offer y
ou a consistently high level of quality service. While there are a number of ban
ks offering U.S. dollar clearing facilities, you will find that Standard Charter
ed s tailored approach and expertise can give you and your clients a value added
clearing service.
Fundamental to our business approach is a commitment to ongoing improvement, adv
anced technology and a system of rigorous controls. This gives us an competitive
edge and enables us to offer you complete consistency and reliability.
We have the skills, expertise and experience to deliver value-added solutions to
help you achieve better business results.
C) Euro / sterling clearing
Standard Chartered Bank, London is able to provide euro products and clearing se
rvices, including inter-bank and commercial payments, as well as trade reimburse
ments. We work particularly closely with financial institutions in the emerging
markets paying into Europe, financial institutions in Europe paying across Asia,
and financial institutions in the Americas paying into Europe. Whatever your pr
ofile, you can be rest assured our Euro services, with its comprehensive feature
s, will provide you with quality and consistency.
In Hong Kong, Standard Chartered is the sole settlement institution of the local
Euro clearing system. Standard Chartered Bank (Hong Kong) Ltd provides intra-da
y Euro liquidity for participating banks by means of intra-day overdraft facilit
ies and intra-day sale and repurchase agreements (“repos”). Intra-day repos are
supported by eligible papers (Hong Kong dollar exchange fund bills/notes and cer
tificates of deposit issued by Standard Chartered). Click here for more details.

TARGET Access
Standard Chartered Bank participates in TARGET2 via direct clearing connection.
TARGET2 has common operating times throughout the European Union for customer an
d inter-bank payments.
EBA Membership
The Euro Banking Association operates the Euro1 Clearing System, which works on
an end-of-day net settlement basis. Standard Chartered has been a clearing membe
r of the EBA since its launch, and is able to make Euro payments via the Euro1 C
learing System for transactions of any value.
Continuous Linked Settlement
Continuous Linked Settlement (CLS) is the new private sector response to increas
ing regulatory pressure to reduce foreign exchange settlement risk exposures. Th
e initiative has been live since the end of 2002 and is endorsed by the G10 cent
ral banks and lead regulators. The primary objectives of CLS are to eliminate th
e inherent settlement risk from the current foreign currency settlement processe
s and to provide a mechanism for containing any systemic risk arising from the f
ailure of a major market participant.
Standard Chartered at the forefront
Standard Chartered Bank has been deeply committed to this industry initiative si
nce its inception in 1997 and holds full shareholder status in the new bank. Sta
ndard Chartered operates as a full settlement member within CLSB and extends com
prehensive third party services to our clients, enabling them to take full advan
tage of the settlement risk benefits associated with FX settlement through CLS.
How it operates
CLS has already changed the way banks conduct and settle their FX settlement bus
iness. For the first time, it introduces, payment-versus-payment (PvP) into th
e foreign exchange settlement process.
The CLS Bank (CLSB) provides the necessary account structure and mechanism throu
gh which the separate payment legs of an eligible foreign exchange trade are sim
ultaneously exchanged (using a payment-versus-payment process), thus eliminating
the associated settlement risk. Similarly, all funding obligations are discharg
ed by the use of an overlapping window for the RTGS systems in the CLS countries
.
CLS started with seven currencies – AUD, CAD, CHF, EUR, GBP, JPY and USD, but du
ring this year the three non-Euro Scandinavian currencies will be added, as well
as the Singapore Dollar.
CLS is expected to extend its reach thereafter, adding new currencies, and an in
creasing number of participants through an expansion of third party services, wh
ereby non-settlement members of CLS may access the benefits of the system, witho
ut incurring the start-up costs.
Contact us
Stephen Street
Stephen.street@sc.com