By – Ashish Sharma

The quality of cash management services being provided.

Current cash management product usage and Trends

Quantify buyer attitudes towards pricing of cash management services.

Determine company plans and intentions for current banking relationships, product purchases, and

Cash management projects over the next year.

The Drive Towards Efficiency, Transparency, Standardization and Integration

PAYMENTS CONVERGENCE: TRENDING TOWARDS ELECTRONIC Increasing Payment Alternatives for Consumers Accelerating Momentum for Corporate Payments Digitizing What Remains — Check Electronification Towards Strategic Receivables Management THE CONVERGENCE OF CASH, TRADE, LIQUIDITY AND RISK Managing Risk, Ensuring Adequate Controls THE BEST IS YET TO COME

Traditionally having a paper-based clearing system involving not only high processing cost but security risk, cash management process has certainly undergone a paradigm change.

From a product-centric approach, the focus for almost all banks today has shifted emphatically to the customer. And success is all about bringing the maximum possible delivery channels to the prospect's doorstep.

The objective of a cash management system is to improve revenue, maximise profits, minimise costs and establish efficient management systems to assist and accelerate growth.

Today a corporate treasurer's dilemma is multifaceted. With more movement towards the regional/central liquidity management in the complex structure of rules and regulations, further complication is caused by taxation issues.

A corporate treasurer needs as VOC - Visibility of funds, Optimised returns on funds, and Control over receivables and payables.

Treasury can face a number of issues related to the slow movement of funds, locked working capital, loss of float income, high cost of funds, time consuming reconciliation and manual processes.

In India the cash management business primarily involves collections and payments services.

COLLECTIONS

Local cheque collections. High value (0 Day clearing). Agnetic ink character

recognition (MICR) (three day clearing of cheques).

Outstation cheque collections. Cheques drawn on branch

locations. Cheques drawn on

correspondent bank locations. Cheques drawn on

coordinator locations. House cheque collections. Outside network cheque

collections. Cash collections. ECS-Debit. Post dated cheque collections. Invoice collections. Capital market collections.

PAYMENTS

Demand drafts/bankers cheques.

Customer cheques.

Locally payable.

Payable at par.

RTGS/NEFT/ECS.

Cash disbursement.

Payments within bank.

Capital market payments.

A BRIEF INTRODUCTION:        STATE BANK OF INDIA provides cash management services to

Corporate Clients under the brand name SBI-FAST (Funds Available in Shortest Time).

      SBI FAST ensures optimization of collections and payouts while

ensuring predictability in the cash flows.        SBI FAST ensures getting Funds in time, quick transfers,

account reconciliation, easy disbursements, controlled processes and customized MIS.

       SBIFAST eliminates the inherent delays of the traditional funds

transfer mechanism and enhances liquidity to ensure optimum planning and utilization of funds.

       File upload facility over web based portal and which can

provide complete Host to Host facility for Payments and e- collections.

Centralized Control of cash

Interest Cost reduction on borrowings

Enhanced Liquidity

Interchange of Information between Treasury & Operating units

Cash forecasting & scheduling

Effective control over disbursements

Efficient Financial Management

There are a number of regulatory and policy changes that have facilitated an efficient cash management system (CMS).

Fox example, the Enactment of Information Technology Act gives legal recognition to electronic records and digital signatures.

The establishment of the Clearing Corporation of India in order to establish a safe institutional structure for the clearing and settlement of trades in foreign exchange (FX), money and debt markets has indeed helped the development of financial infrastructure in terms of clearing and settlement.

Other innovations that have supported in streamlining the process are:

Introduction of the Centralised Funds Management Service to facilitate better management of fund flows.

Structured Financial Messaging Solution, a communication protocol for intra-bank and interbank messages.

Account reconciliation services Balancing a chequebook for a very large business can be quite a difficult process. Banks

have developed a system to overcome this issue. They allow companies to upload a list of all the cheques whereby at the end of the month, the bank statement will show not only the cleared cheques but also uncleared ones.

Positive pay An effective anti-fraud measure for cheque disbursements. Using the cheque issuance data,

updated regularly with cheque issuance and payment, the bank balances all cheques offered for payment. In the case of any discrepancies, the cheque is reported as an exception and is returne

Balance reporting services Balance reporting provides help in procuring a company's current banking information from

its accounts. With this service the banks can offer almost all types of transaction-specific details on activities related to payment like deposits, cheques, wire transfers etc. It also helps in an effective and efficient management of regular cash flow.

Lockbox Facilitates the cash improvement where, instead of being delivered to business address,

customer payments are delivered to a special post office (PO) box. It is only the customers' payments that are delivered in the PO box and the company's own bank collects the amount and delivers them to the banks of the customers. The bank of the customers opens and processes the payments for direct deposit to the bank account. Lockbox contents regularly removed and processe

Current Cash Management Issues and Trends

An important outcome of the 2008 survey was the ranking of top issues affecting the cash management – Via 2008 Visa Global cash mgt survey

Changes in technology were identified as having the greatest positive impact on cash flow management, while global economic and geopolitical issues were seen as having the greatest negative impact.

Issues Affecting Cash Flow Management

Changes in Technology 70%

Changes in Corporate Governance/Regulatory Concerns 63%

Changes in Tax Laws 62%

Changes in Organization’s Policies 62%

Global Economic and Geopolitical Issues 57%

Lack of Streamlined

Operational Processes

Labor-Intensive

Administrative Work

Inadequate Information and

Reporting Capabilities

Sluggish Cash Flow Movement

Poor Cash Position Visibility

Reduction of Administrative and Process Costs

Elimination of Paper-Based

Invoicing and Payments

Facilitates Payables and Receivables

Use of Transaction Data for Better Vendor Pricing/Negotiation

Process Streamlining Leading to Cost Reduction

Enhanced Compliance with Corporate Policies and Procedures

Automating Expense

Reconciliation Processes

Use of Card Transaction Data for Better Pricing Negotiation

Availability of Transaction Data for Spend Analysis

Four variables that are strongly related to a corporation giving more business to a bank.

Company’s perception of a positive change in the bank’s quality,

The number of relationship

Whether the company believes that the bank represents a “prime relationship”, and

Whether the company added a new E-Commerce/ Internet-based product

Statistical relationship between more business and the number of years that a company has done business with the bank,

The size of the current relationship as measured by fees paid,

The size of the relationship as measured by the credit outstanding

Banks have invested quite heavily in new, technology-based products in the last few years.

In the Cash Management Monitor, Banks analyses on

Five of these new product areas. Quality Product Consolidations Pricing Plans

Business-To-Business Electronic Commerce (B2B e-commerce)

Business-To-Consumer Electronic Commerce (B2C e-commerce)

ABN-AMRO / La Salle Allfirst KeyCorp AmSouth Bank of America Bank of New York Bank One Bankers Trust

Company Chase Citibank Comerica Bank Commerce

Bancshares First Tennessee First Union

Firstar Fleet Boston Wells Fargo Huntington National

Bank Marshall & Ilsley Mellon Bank Mercantile Bank Michigan National Bank Morgan Guaranty National City Bank Northern Trust Company PNC Bank State Street Bank SunTrust Union Bank of California US Bank Wachovia Harris Trust and Savings

HSBC voted 'Best Cash Management Bank in Middle East and Africa' by TMI

ashishsharma128@gmail.com

THANK YOU