What is Cash Management

Cash management is the corporate process of collecting and managing cash, as

well as using it for short-term investing. It is a key component of a company's
financial stability and solvency. Corporate treasurers or business managers are
frequently responsible for overall cash management and related
responsibilities to remain solvent.

Receivables Cash Management 

Cash management is the treasury function of a business, responsible for

achieving optimal efficiency in two key areas: receivables, which is cash coming
in, and payables, which is cash going out.

When a business issues an invoice it is reported as a receivable, which is cash

earned, but not yet to be received. Depending on the terms of the invoice, the
business may have to wait 30, 60 or 90 days for the cash to be received. It is
common for a business to report increasing sales, yet still run into a cash
crunch because of slow or poorly managed receivables. There are a number of
things a business can do to accelerate its receivables and reduce payment
float, including clarifying billing terms with customers, using an automated
billing service to bill customers immediately, using electronic payment
processing through a bank to collect payments, and staying on top of
collections with a receivables aging report.

Payables Cash Management

When a business controls its payables, it can better control its cash flow. By
improving the overall efficiency of the payables process, a business can reduce
costs and keep more cash working in the business. Payables management
solutions, such as electronic payment processing, direct payroll deposit and
controlled disbursement, can streamline and automate the payable functions.

Most of the receivables and payables management functions can be

automated using business banking solutions. The digital age has opened up
opportunities for smaller businesses to access the same large-scale cash
management technologies used by bigger companies. The cost savings
generated from more efficient cash management techniques easily offsets the
costs. More important, management will be able to reallocate precious
resources to growing the business.

Debtor management
Debtor management is central to the effective cash flow of your business.
Without an effective debtor control system, you leave your finances
vulnerable.

The following guidelines will also help to establish an effective debt

management system:

 Ensure all payment arrangements with debtors are always confirmed in

writing
 For overdue payments, contact the debtor promptly to confirm they
received their invoice
 Create a monthly debtors aged analysis
 Make sure your invoices meet your customers' format requirements
 Create a debtors day outstanding chart to identify potential cash flow
improvements if your business could minimise overdue payments

Offshore Banking

Offshore banking involves the securing of assets in financial institutions in

foreign countries, which may be limited by the laws of the customer’s home
nation, can be used to avoid certain unfavorable circumstances should the
funds be kept in a financial institution in the home nation. This can include the
avoidance of tax obligations as well as making it more difficult for these assets
to be seized by a person or entity in the home nation. For those who work
internationally, the ability to save and use funds in a foreign currency for
international dealings can be a benefit, which can provide a simpler way to
access funds in the needed currency without the need to account for rapidly
changing exchange rates. Because banking regulations vary from nation to
nation, it is possible the country in which offshore banking is conducted does
not offer the same protections as other nations.

What is Forex (FX)?

Forex (FX) is the market in which currencies are traded. The forex market is the
largest, most liquid market in the world, with trillions of dollars changing hands
every day. There is no centralized location, rather the forex market is an
electronic network of banks, brokers, institutions, and individual traders
(mostly trading through brokers or banks). All these entities have currency
needs, and may also speculate on the direction of currencies. They post their
orders to buy and sell currencies on the network so they can interact with
other currency orders from other parties. The forex market is open 24 hours a
day, five days a week, except for holidays. Currencies may still trade on a
holiday if at least country/global market is open for business.

Travel card, Currency Notes

 Currency notes in various denominations can be carried by customers

travelling overseas to meet small expenses

 Transfer money across the world through Wire Transfer or Foreign

Currency Demand Draft

What is the difference between: term loan and working capital loan?

A Term Loan is for acquiring CAPITAL ASSETS and is long term in nature i.e., the
repayment period exceeds 36 months and up to say 10 years with or without
initial repayment holiday. Term loans are granted for income generating
capital assets and the repayment is determined based on estimate of earnings
and cost of production both of which should be realistic. Banks insist on
technical feasibility and economic viability report besides other statutory
requirements.  Promoters are expected to have sufficient managerial and
technical competence. Generally banks would look for at least 25%margin
contribution from the reporters. 

Working capital loan is granted for meeting the day to day requirements of the
unit and represents the short requirement of the unit and is generally granted
either by way of runnig a/c or loan repayable in instalments with the collateral
of the securities created out of the working capital loan. The repayment of
working capital comes from the profit of the unit. 

For example for starting a Hotel, the promoted would be granted a Term loan
for acquiring Furniture& Fixtures, Kitchen equipments, electrical fittings, AC
etc.,  While working capital would be for purchase of provisions,
vegetables,payment of wages etc., (a simplistic example)

Basis for
Merchant Bank
Comparison
Meaning Merchant Bank implies a
banking institution, that fulfills
capital requirements of the
companies in the form of share
ownership, rather than granting
Investment Bank
Investment Banks are the
middleman between the issuer
of securities and the investing
public, and also provides
various financial services to the
 Basis for
Merchant Bank Investment Bank
Comparison
loans. clients.
Underwriting and issuance of
Deals with International financing activities
securities
Based on Fee based Fee based and fund based
Trade
Offered to the clients Rarely provided
financing
Deals with Small companies Large companies

Scope of investment banking in india

I am presuming that you are talking about “scope” as in the career

opportunities. The scope of investment banking globally is reducing as a large
part of this pipeline is being automated and being replaced by technology.
Investment banking traditionally has 2 parts to it - the private side which does
deal making and the public side which does trading, structuring, and product
sales. The public side is now highly automated and several jobs are being cut
globally in that arena. The private side continues to be required but as the
public side is shrinking some of the headcount from that side is being shifted to
the private side as well.

That said in India like almost all other industries as the growth of the overall
economy is high the investment banking space is also increasing headcount but
at a far smaller pace than several other industries. If you are starting out in
your career better to focus on a specific industry and get hands on experience
or even consulting experience before considering private equity or investment
banking. Once you are a domain expert the investment banks will want you
rather you finding opportunities there.

The venture capital focused investment banking space has also seen a massive
increase in headcount - but then again I would say that before entering this
space it would better for you to get startup experience as an early team
member or founder, then do venture capital and then move to the investment
banking space from a position of strength. You could also get some experience
with the angel funds as an analyst which might get you good experience to get
into the large VC deals.

What is Project Finance

Project finance is the financing of long-term infrastructure, industrial projects
and public services using a non-recourse or limited recourse financial structure.
The debt and equity used to finance the project are paid back from the cash
flow generated by the project. Project financing is a loan structure that relies
primarily on the project's cash flow for repayment, with the project's assets,
rights and interests held as secondary collateral. Project finance is especially
attractive to the private sector because companies can fund major projects off-
balance sheet.

Key Elements of BOT Project Finance

Project finance for BOT projects generally include a special purpose vehicle
(SPV). The company’s sole activity is carrying out the project by subcontracting
most aspects through construction and operations contracts. Because there is
no revenue stream during the construction phase of new-build projects, debt
service only occurs during the operations phase.

For this reason, parties take significant risks during the construction phase. The
sole revenue stream during this phase is generally under an off-take or power
purchase agreement. Because there is limited or no recourse to the project’s
sponsors, company shareholders are typically liable up to the extent of their
shareholdings. The project remains off-balance-sheet for the sponsors and for
the government.

What is a Chinese Wall?

In finance, a Chinese Wall (or a Wall of China) is a virtual information barrier

erected between those who have material, non-public information and those
who don’t, to prevent conflicts of interest.

Below is an example of how a bank uses a Chinese Wall policy to comply with
securities regulation.