Cash Positioning

Configuring Centralized & Decentralized Cash Management in TS CMO - Part 2

Sujith Nair — Wed, 27 Jul 2011 21:40:44 GMT

Todays post continues that series of posts that describes the ability of TS CMO to support multiple centralized and decentralized cash management and positioning needs of enterprise organizations. Today we will look at a case of decentralized cash management. (Please read the first post the describes a centralized scenario as well)

Decentralized Cash Management - Consider an organization head quartered in the US with operations in US and Canada, the US organization managing the treasury (cash and investments) for the US and the Canadian subsidiary managing their cash.

A decentralized cash management scenario is described below - the organization receives BAI files from banks and proprietary investment updates in the US and Bank proprietary files for cash and investments in canada. Cash management and Investments are decentralized and taken care of by treasury users in respective locations. Also note that two backend GL systems that TS CMO synchronizes with are part of this setup as well. You can read more about the GL integration capabilities of TS CMO here and here.

To accommodate this need 2 Treasury Operations Entities are configured - Canada and US and respective users or roles and accounts or account groups are assigned. Now users in the respective organizations can perform their day to day forecasting, reconciliation, positioning, reporting and other functions w.r.t the specific set of accounts. As noted previously, not all accounts need to be used position and they can be classified as such.

A third Treasury Operational Entity called North America is created with access to all accounts and is assigned to a specific set of senior management users who would need access to data across the enterprise- Note that users using this entity will use it for view only access as the cash management functions are performed within the US or Canada entities created earlier. This configuration is described below.

It is important to note here that we went from centralized positioning (described in the previous post) to decentralized positioning purely via end user configuration. It is also important to note that in the event that a new user or set of users need to perform a cash management function, all an administrator has to do is to assign that user or the role of the user to the appropriate tag using a web browser.
We will look at the same feature set in even more complex scenarios in the next couple posts. Thank you for reading.

Configuring Centralized & Decentralized Cash Management in TS CMO - Part I

Sujith Nair — Mon, 18 Jul 2011 19:47:56 GMT

Over the next 4 posts, I will describe the ability of TS CMO to support multiple centralized and decentralized cash management and positioning needs of enterprise organizations. To start, we will look at less complex scenarios and move towards the more complex models.

Centralized Cash Management - Consider an organization head quartered in the US with operations in US and Canada, the US organization managing the treasury (cash and investments) for the entire enterprise.

The centralized cash management scenario is described below - the organization receives BAI files from banks in US and Bank proprietary files for cash and investments in canada and investments in the US, it has one backend GL system that TS CMO synchronizes with. You can read more about the GL integration capabilities of TS CMO here and here.

TS CMO allows for the configuration of this model via the creation of cash operations entities or tags. In this case, since all cash management is done by the central US organization one cash operations entity (tag) called North America is created by the end user. All bank and investment accounts across the enterprise (US and Canada) that are used for cash management purposes (note that accounts can be marked as not used for cash management as well, useful when concentration accounts are used for positioning) assigned this tag. Appropriate users or roles (groups of users) from US treasury organization are assigned this tag as well ensuring that they can position for US and Canada.

Once a US treasury user logs, he or she will be able to position both in USD and CAD for the enterprise without any custom development effort. Exports to the backend GL system can be automated . In the above example the only transformations needed are to transform the proprietary bank and investment formats into TS XML format and transformation of the TS XML GL export to Oracle GL Specific format. Note that these transformations are fairly quick and either the TS managed services team or your internal IT team could do that.

In the next post, we will look at a decentralized cash management scenario.

Treasury Workstation Features - Cash Management Dashboard

Sujith Nair — Tue, 26 Oct 2010 22:49:19 GMT

As part of our look at product features, todays post focusses on the cash management dashboard that is part of our cash management operations module.

The dashboard provides a consolidated, real time look all transactions across banks and provides you with your cash position at this point in time. Please see below a screenshot of our cash management dashboard that reports on transactions across 3 banks with totals per flow code, grand totals per bank and your consolidated cash position (bottom right).

Flow codes are nothing but groupings of transactions. Banks send transactions with transactions codes that identify the transaction types - for example the BAI transaction codes that are part of a BAI file. Flow codes allow end users to group multiple transaction codes into a readable format.

For example the ACHC flow code above stands for ACH Credit and is mapped to following BAI Codes - 142 (ACH Credit Received), 143 (Item in ACH Deposit), 165 (Pre-authorized ACH Credit), 166 (Pre-authorized ACH Credit), 169 (ACH Credit) and 201(Automatic Transfer Credit). As you can see, all of these BAI transaction codes pretty much mean that these are ACH credits into your bank accounts. You can of course change the flow code to transaction code mapping using the application itself.

Now, the numbers in dashboard are auto-updated on receipt of transactions or forecasts (Note that forecasted transactions are highlighted in bold). Each number listed above is clickable and you can drill down to the transactions screen to view what transactions make up these numbers.

Down below are a series of buttons, ones that let you drill down to view and reconcile transactions with forecasts, view and manage forecasts, ability to access a few reports quickly, originate concentration and net funding wires and of course the ability to Submit - ie. to create a snapshot of the data or create a cash position at this point in time.

In the next few posts, we will look at the transaction reconciliation and forecast management features that a cash analyst would perform before submitting a position.

Thank you for reading.

Payments and Cash Management solutions for Hedge Funds

Sujith Nair — Wed, 13 Oct 2010 20:43:03 GMT

I have been writing our hedge fund solutions overview and case study this last week and thanks to our creative team's efforts with the pictures and formatting, it is ready for release now. Look for it on our website later this week. Here is a quick excerpt that provides an overview of treasury sciences solution for hedge funds.

Treasury Sciences offers a configurable solution that is tailored to hedge fund specific needs. Key features include:

Centralized configurable payment controls and templates across financial institutions provides one system for all users across operations and management

Multi-currency support for wires, transfers, credit notices, ACHs and forecasts with the ability to systematically capture accounting treatment and supporting documents. Near-real time reporting, automated alerts and notifications

Multi-bank connectivity for payments based on SWIFT and ISO 20022 and automated integration for statement reporting, automatic reconciliation of transactions with payment forecasts and automated application of accounting treatment

STP - End user configurable, scheduled automated updates in transformable XML format that can be applied to backend Portfolio Management System for Straight Through Processing

Best in class reporting capabilities; end users can create rule based reports, share, export into MS-Excel and PDF and schedule automated delivery of reports via email

Cash Position, GL Integration, Hedge Fund Treasury Worstation, Netted Payments, Reporting, Straight Through Processing, Treasury Management , Treasury Management System , Treasury Workstation

Payments, Positioning & Integration for Hedge Funds - Overview

Sujith Nair — Thu, 07 Oct 2010 06:07:41 GMT

The last 2 posts detailed out various aspects of our implementation for a large hedge fund. Todays post or picture provides an overview of the complete implementation - this picture is an early version of the picture that will appear in a case study of our payments and cash management system implementation for hedge funds. Will post a link to it when available. Meanwhile, here is the overview.

Automated Accounting Treatment, Cash Position, GL Integration, Hedge Fund Treasury, Hedge Fund Treasury Worstation, Multi bank payments, Netted Payments, Payment workflow implementation, Reporting, Straight Through Processing, Treasury Management , Treasury Reporting, Treasury Workstation, Treasury Workstation Reporting

Netted Payments from Sungard VPM - Credit Notices, Transfers and Wires - Hedge Fund Implementation

Sujith Nair — Tue, 05 Oct 2010 06:59:49 GMT

In a previous post, I had described some of the challenges and implementation details of a recent payments system implementation for a hedge fund customer. You can read that post here.

This post further details the integration of our payments module (TS EFT) with Sungard's Virtual Portfolio Manager (VPM), subsequent details of netting and eventual transmission of payments, credit notices and transfers to the banks. The picture below provides an overview of the integrated system, details follow.

Sungard VPM Integration: Scheduled exports from Sungard VPM are created and uploaded to folder from which the TS scheduler pulls the data into the TS EFT module. The file imported has a list of transactions and each transaction has a unique transaction identifier and a field that indicates whether the transaction is a new one, an update or a delete request from VPM. Note that transactions from VPM can only be updated or deleted ONLY if the VPM transaction is not part of a netted EFT transaction already. If not, the EFT has to be rejected and only then will the transaction be updated or deleted.

Transaction Manager & Netting Capabilities: The EFT transaction manager lists all imported transactions and allows users to select transactions to net based on rules that can be defined per combination of fields - for example, only certain transactions maybe netted together based on multiple configurable fields (say the clearing broker and currency) from the VPM import file. As the transaction manager is completely XML driven; the product can easily be configured to support other portfolio management systems such as Advent Geneva. It can even be configured to integrate with in-house portfolio solutions.

Template Mapping: TS EFT supports creation and use of templates for all payment transaction types - note that these are templates that are independent of the banks themselves. The transaction manager also allows to map templates to end user selected mapping criteria based on data in the VPM input file. Here again, you could create and map templates - one per clearing broker and currency thereby requiring the user who nets the transactions to create the EFT to enter minimal information on EFT origination.

Payment Types: For this customer deployment, their custodial accounts are at BONY and CSFB has their prime broker accounts. Cash positioning for the custodial accounts held at BONY is done via TS CMO module and hence the need for forecasting for BONY accounts. Based, on the mapped templates or banks and accounts selected on free form transactions, the system presents the appropriate forms. The payment type selection criteria and associated transaction types for payments, notices and forecasts is described in the picture below.

A note about SWIFT for transmission: Our customer choose to utilize SWIFT for transmission to the banks (CSFB only, we communicate directly with BONY). It should be noted that if the payment bank supports secure transmission via FTP and since Treasury Sciences EFT supports standard formats such as ISO 20022 and SWIFT MT files, you do not need to use SWIFT only for transmission- it may not be cost effective.

I will describe some of these features using screenshots from the application in a later post. Thank you for reading.

Hedge Fund Treasury, Multi bank payments, Netted Payments

Treasury Workstation Features - Preliminary & Final Cash Positions

Sujith Nair — Thu, 30 Sep 2010 05:44:41 GMT

Daily cash positioning capability is probably the most basic, yet key function offered by treasury management systems. Today, we will look at cash positions at a high level- the types of cash positions that can be created using our Cash Management Operations module.

CMO supports two types of cash positions, a preliminary cash position (PCP) and a final cash position (FCP). The key distinction between the two being that preliminary cash positions are created for a future date and hence created based on forecasted data while final cash positions are created for the current day and would include any unsuppressed forecasts, reconciled current day transactions (reconciled with matching forecasts either automatically or manually by the cash analyst) and any current day transactions that were not forecasted.

Screenshot below shows positions for 9/29- both the PCP that was created yesterday and the multiple final positions created today utilizing the current day data in USD for the enterprise (enterprise is a tag and is a topic for another day). The multiple final positions shown above are based on changes in available cash based on intra-day updates from banks.

Note that since we support near-real time positioning of cash, positions are created using current day data. Eventually, when we do receive the prior day files the next day, the system reconciles these with matching current day transactions as well. However, for daily cash positioning purposes we utilize current day data. Having said that, we do offer the ability to position on prior day data only- the catch being that your positions will be a day late.

In short, CMO allows for multiple users within the treasury to collaborate and create forecasted positions (PCP) as well as near-real time final positions (FCP) based on current day data that is automatically imported from the banks.

Cash Position, Treasury Management , Treasury Workstation

Treasury Workstation Features - Your Enterprise's Global Cash Position

Sujith Nair — Wed, 29 Sep 2010 05:19:29 GMT

Today's post addresses what your enterprises global position would look like within our cash management operations module. Assuming that you have multiple banks that you work with (I have created four here) and say you position in multiple currencies, central cash management organization users will of course be able to see individual positions submitted for each currency.

The global position report enhances the enterprise wide view by providing a consolidated position across subsidiaries, currencies, banks and accounts.

Say we run the report for today. The system shows you the high level information upfront - i.e your total position across subsidiaries, currencies and all accounts at this point in time in your base currency - here USD is set as the base currency.

Below, the rolled up top level position, you would see the details- first data from day to day operations accounts grouped by currencies. Within each currency, you will be able to drill down to see the banks, the major transaction group (flow codes with CMO) totals and you will be able to view these in either the base currency or the transaction currency.

The third part of the global position report would show you your investment activity for the day. Data from operations plus data from investments would provide you with your consolidated top-level cash position.

So there you have it. Your top level enterprise wide position and drill downs by currency and banks to view details across operations and investments. Thank you for reading.

Cash Position, Hedge Fund Treasury Worstation, Reporting, Treasury Management , Treasury Reporting, Treasury Workstation, Treasury Workstation Reporting

Flexible Cash Positions - by Currency, by Country, by Subsidiary, by ......

Sujith Nair — Thu, 12 Aug 2010 00:30:09 GMT

A cash position is the cash you have/don't have or expect to have/not have across your banks at a given moment in time. You create one or multiple positions during a day, multiple if you have considerable current day fluctuation in cash and make short term investment decisions based on it. All treasury management systems or workstations should let you do that - i.e create multiple positions during the day.

During our early days at Treasury Sciences (some 3 years ago now) while responding to one of those lengthy RFP's ; we responded to a series of questions on cash positioning. The reason I recall this particular RFP is because the questions were vague. They asked if the vendor's system could create cash positions, if the system could position by currency, by country, by subsidiaries and finally by departments within subsidiaries. These were followed by a series of questions on how much effort was needed for each and so on. Well, they may not have known what they wanted when they wrote the RFP.

Since this RFP, we have met with multiple organizations who needed some combination of the above mentioned cash positioning groups (It be noted that we are yet to meet anyone who has all of the above needs). For example, some organizations would want their subsidiaries to position for themselves across currencies with the ability for central treasury/management to view the global enterprise position.

Our product team went to work and came up with a solution - TAGS.

Tags are generic, yet a very effective solution that has been used by web based applications for a while now. So, we let end users (mostly administrators) create TAG's within TS CMO. Customers can call the tag what they want (typically named a Subsidiary or a Region or a Department or something that is meaningful to the organization) and create as many tags as needed. Then administrators assign accounts and users to these tags. The system ensures that users assigned to a certain tag work within the confines of the tag- i.e they can work with only those accounts that are associated with the tag.

Within tags, users have the ability to create positions in multiple currencies- the only restriction being the accounts that they have access to based on the tags they are associated to. Finally, there is the global enterprise position - the ability for central treasury or management to view the enterprise position across currencies and tags.

From a security perspective, roles still exist and overlap with tags. For example, a user with view only access based on her role would be able view data in the accounts that she has access to based on the tag she is associated with.

We think that use of TAGS is the most effective way of providing a large organization with flexible cash positioning capabilities - end user driven, flexible, easy to manage and secure. And it just takes several minutes for an administrator to setup or change using a web browser.

Do let me know if you have questions, especially if you have similar needs and have alternate solutions to this problem.

Treasury Managemen , Treasury Workstation, Cash Position