Investing Corporate Cash

Principle and practices of effective investment management

What is it about?

This course presents an overview of the key elements of effective investment management, and focuses on the diversity of factors that need to be taken into account when investing cash. The course is aligned with the principles set out in the book, The Treasurer’s Guide to Investing Cash, a copy of which will be given to each participant.

Day one reviews the various investment challenges facing corporate treasurers and considers the basic factors of yield, counterparty risk and choice of instrument. Day two considers the factors that should be included in a comprehensive investment policy, together with the operational requirements that need to be met when developing a properly controlled investment process.

Programme

Day 1 Introduction and Basics of Investment

Background: Corporate Treasury role and structure

• Structure; centralised and decentralised models and impacts on liquidity
• Role of policy and drivers
• Definition of Corporate Liquidity (as “Access to Cash”)
• Current trends

Cash and liquidity management

• The Corporate Cash Cycle and Transaction flows
• Liquidity structures and techniques
• Resultant liquidity buckets; long, medium, short term operational cash; investment and pension cash

Understanding yield and yield parameters

• Interest rates
• Discount rates
• Day count conventions

Risk Management

• Counterparty risk
• Role of rating agencies
• Alternative approaches and special cases

Exercise on yield

Asset classes and instruments

• Bank investments (Accounts, Depos, CD)
• Non-bank investments (CP, Bonds, MMF)

i. Government and quasi-government
ii. Corporate
iii Hybrids (incl MMF, repo)

• Alternative investments” Derivatives, Equities etc)

Exercise on Asset Classes

Day 2 Establishing the policy; evaluating the position; and executing the deals

Developing policy

• General considerations (all policies)
• Investment considerations
• Interaction with other policies

Developing process: Establishing the future liquidity position

• Role of cash flow forecasting
• Segmentation and cash buckets

Exercise on Cash Flow Forecasting

Managing the interest rate

• Fixed v. floating
• Use of derivatives – FRA’s, swaps and futures

Administration of investments

• Dealing
• Settlement
• Reporting and accounting
• Custody requirements
• Taxation issues

Control and audit

• Risk identification
• Onion theory
• Key controls and reports

IT and data management

• Rate feeds
• Execution and portals
• TMS support
• Reporting

Exercise: managing operational risk

How do you benefit?

Participants will gain an insight into, and understanding of, the significant factors to be taken into account when investing corporate cash, including policy, financial and operational risks and the linkage between policy, process and controls. All participants will be provided with a current edition of “the Treasurer’s Global Guide to Investing Cash”

Who is it for?

• New entrants to Treasury
• Experienced treasury staff wishing to review and update their investment skills and knowledge
• Treasury staff reviewing, or planning to review, their policies and processes
• Bankers and asset managers wishing to understand the key parameters and thought processes behind corporate investment decisions

Trainer

• Adrian Rodgers FCT FCA BSc(Econ) CCM