Cash management
Foreign exchange

Process objective
Ensure cash balances are applied promptly to reinvestment, idle balances attract appropriate value and overdrafts are avoided where practicable

Process requirements
Service providers must report cash movements and balances with clarity and timeliness, preferably in real time.  Cash forecasting tools should be provided (see below) and credit facilities must be offered to ensure that trade settlement and cash transactions do not fail because of insufficient funds on the client's cash account.

For idle cash balances, service providers should pay credit interest at a good rate, linked to a relevant market rate - at a minimum, in most major currencies; ideally, across all currencies.  There should not be an unduly high balance requirement for a reasonable rate to apply.  A cash sweep service, offering automatic transfer of balances to higher-yielding instruments, is an attractive offering for many clients.  And short term investment funds (STIFs) should be made available - at a minimum, the service provider's in-house STIFs in most major currencies; ideally, in-house and third-party STIFs across all currencies.

The effective management of cash balances by clients is greatly eased by service providers' "contractual" programs.  These provide clients with certainty as to the date on which the associated cash movements are applied to the cash account.  All reversals, interest charges, fees and other items should be incorporated into the cash forecasting tool to help clients avoid unnecessary overdrafts.

Cash forecasting tools
Many service providers provide a cash projection to aid in avoiding overdrafts and in putting balances to good use.
Cash sweep service
A service provider may offer automatic investment of uncommitted balances in overnight deposit instruments to attract higher yields.
Off-balance-sheet products
Many service providers offer products such as short term investment funds (STIFs).  These allow clients to move large cash balances off the service provider's balance sheet while retaining immediate access to funds and gaining a competitive interest rate.


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Service Matrix