In the asset management industry, maintaining sufficient cash reserves is crucial for liquidity and smooth daily operations. Asset managers need to be prepared to fulfill margin calls, post collateral, and redeploy cash once market conditions improve. The ongoing pandemic has heightened the importance of effective cash management, prompting asset managers to seek tools that provide accurate tracking and cash forecasting capabilities. In this blog, we will explore the significance of cash management for asset managers and how the IVP Treasury Management platform’s cash management module can empower them with the necessary tools to optimize their cash positions and cash forecasting.

Efficient cash management is a fundamental aspect of treasury management and fund operations. Asset managers must have a clear understanding of their cash position, both current and future, to make informed decisions about their investment strategies. With proper cash management practices, managers can mitigate risks, seize investment opportunities, and meet financial obligations promptly. By having a holistic view of their cash reserves, managers can align their investment decisions with anticipated activities, ensuring that they have enough liquidity to navigate changing market conditions.

Significance of Cash Forecasting in Treasury Management

Accurate and timely cash forecasting is imperative for effective cash management. By anticipating future cash inflows and outflows, managers gain insights into their liquidity needs and can adjust their investment strategies accordingly. For example, if a significant redemption is expected in the next 30 days, it would be wise to invest in short-term securities rather than long-term assets. On the other hand, if there’s an upcoming subscription, managers can utilize existing cash to increase holdings and rely on their investments to meet future requirements. Cash forecasting empowers asset managers to make proactive decisions that optimize their cash positions and enhance overall portfolio performance.

Additionally, cash forecasting plays a vital role in assessing working capital requirements and optimizing its utilization. By accurately predicting cash flows, businesses can make informed decisions regarding inventory management, accounts receivable, and accounts payable. This ensures that working capital is efficiently deployed, reducing the need for short-term borrowings or costly emergency funding.

Need for a Treasury Management Solution

When evaluating a treasury management solution for efficient cash management, asset managers should make sure that it can be customized to their requirements and objectives. It should provide real-time visibility into cash positions to optimize liquidity risk management. Seamless integration with existing systems, such as portfolio management and accounting platforms, is essential for efficient data flow and process automation. Asset managers should assess factors such as scalability, user-friendliness, vendor reputation, implementation support, and overall cost-effectiveness.

How IVP Can Help

Recognizing the need for robust cash forecasting and reporting tools, IVP has developed a powerful solution in the form of cash management module of IVP Treasury Management.

This module helps asset managers to:

  • Precisely track the current cash positions and project future cash flows
  • Achieve a summary-level view of the cash balances by leveraging analytical dashboards
  • Drill down into specific accounts and positions contributing to cash balances
  • Gain valuable insights into the movement of cash reserves with real-time balance monitoring
  • Customize the date range to analyze historical data and gain a deeper understanding of cash flow patterns
  • Identify discrepancies or issues with the information provided by custodians or the fund accounting system

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