10 Ways Asset Management Firms can Optimise Cash Control in 2021
Our latest industry paper details 10 ways that asset and wealth management companies can significantly improve their operational efficiency and enhance the service offered to clients, while also improving client money compliance, risk monitoring and accounting.
Since the beginning of the COVID-19 pandemic, asset and wealth management firms who have invested in the “cloud” are able to allow their staff to work remotely, securely, and effectively. However, the sector continues to be challenged by changing consumer preferences, technology advancements, increasing service delivery expectations and strict regulatory requirements – with the UK’s client money regulations (CASS) in particular being arguably the most stringent in the world.
These regulatory and compliance challenges in many cases act as a significant distraction from commercial challenges to drive performance improvement and compete in the global marketplace. Many asset / fund managers remain on the hook with the regulators for service and regulatory failures of third parties, staying reliant on third parties to deliver the innovation needed to meet their compliance obligations effectively and efficiently.
While firms are currently able to achieve minimum levels of compliance, they may need to consider upgrading their client money protection processes. With regulatory changes having a significant impact on the industry, firms need to start thinking about the future, now. They need to look to appropriate cash and banking platform solutions that can be their firm’s cash control hub at the centre of their back-office systems stack.
10 Ways to Upgrade cash management operations in 2021
With this in mind, our latest industry paper details 10 ways that asset and wealth management companies can significantly improve their operational efficiency and enhance the service offered to clients, while also improving client money compliance, risk monitoring and accounting:
- Enable intra-day reconciliation: Enable near real-time clearance and settlement of transactions as well as delivering the highest levels of compliance. Get bank statements throughout the day using a solution that delivers automatic reconciliation, allocation, settlement, and clearance of cash transactions on a near real-time basis.
- Use bank-active virtual accounts: Use fully functioning, bank-active virtual accounts. A virtual account can be configured to pay interest at a pre-defined rate or allocate the client’s fair share of the interest earned on the real pooled account.
- Create dual-ledger client accounts: Create dual-ledger general ledger accounts for client, counterparty, and agent accounts, with an accruals/future-dated ledger and a cash ledger which represents the client’s share of the actual cash position in the pooled bank account and the cash transactions initiated but not yet cleared or settled, respectively.
- Make client ledger accounts externally addressable: Make client, counterparty and agent accounts externally addressable through the banking clearance system. Here at Cashfac for example, we use virtual accounts to reflect this as they act as hybrid accounts – half bank account and half general ledger account. The accounts are made externally addressable by giving them their own virtual IBAN, account number or other unique reference allowing cash received in the pooled bank account to be automatically and instantly credited to a platform’s client ledger.
- Implement full “thick” general ledger accounting: Implementing a fully functional accounting engine can deliver double entry accounting for cash operations for both client and related firm money activities such as the collection of fees, settlement of trades or client money top-ups.
- Gain full credit control from dual-ledger accounts: Use dual-ledger accounts to offer full credit control, preventing overdrafts by stopping payments that would otherwise let your client’s account become overdrawn.
- Use pooled accounts and liquidity management to deliver treasury: This allows for the pooling of bank accounts of the same ownership, giving the firm’s treasury function the ability to consolidate its cash positions in one easy-to-understand record.
- Enable multi-bank account management: Many solutions on the market are multi-bank enabled and can operate pooled bank accounts from different deposit takers simultaneously. This gives diversification of funds with automatic intraday rebalancing, redundancy in the event of one of the banks having an outage, and easier access to multi-currency services.
- …and multi-currency: Many platforms can also be multi-currency and can set up virtual accounts connected to bank accounts in different currencies. They can group these multi-currency virtual accounts for any client or product, for reporting, control and trading purposes.
- Achieve client money compliance: Coupled with the previous nine points, implement the right technology platform to get the tools needed to actively control firm and client cash to industry best practice standard. Vastly increase the efficiency of your operations and customer service. Doing so can give your firm a complete solution to meet the requirements of CASS 7 and CASS 9.
Want more info?
These 10 solutions are detailed more thoroughly in our latest cash platform brochure. Download your copy free using the button below, or contact us if interested in an in-depth discussion with one of our experts on how Cashfac can help – without requiring a wholesale replacement of your legacy systems!