Recap and Recording | 2025 Outlook, Maximising cash value in a new interest rate environment

The Importance of Cash Management

Sugandha emphasized the fundamental role of cash in business operations, stating, “Cash is the lifeblood of any business. It directly impacts your operational flexibility, profitability, and long-term sustainability.” She highlighted the need for treasurers to prioritize financial resilience, growth, and optimizing returns on cash.

Strategies for Financial Resilience

Sugandha outlined her approach to ensuring financial resilience, focusing on liquidity planning. “As a treasurer, I ensure that we have enough liquidity to handle short-term shocks. This means planning for operational expenses and having a robust investment portfolio,” she explained. She introduced the concept of cash laddering and risk diversification as essential strategies for managing cash effectively.

The Role of In-House Banking

Paul discussed the significance of maintaining arm’s length interest rates within in-house banking structures. “If you have an in-house bank, you must ensure that the internal interest rates applied to cash pools are aligned with the investment returns,”he cautioned. He stressed that failing to do so could lead to financial losses and damage the reputation of the treasury function.

Optimizing Cash Allocation

Alistair, representing Aviva, provided insights into the importance of optimizing cash allocation. “Predicting the future is hard, but the key objective for any treasurer is to ensure that cash is optimally allocated to meet business needs,” he stated. He praised the practices shared by his fellow panelists, calling them “world-class” and essential for effective treasury management.

Embracing a Cash Culture

A recurring theme throughout the discussion was the importance of fostering a cash culture within organizations. Sugandha noted, “When everyone is aware of the importance of cash management, it leads to better decision-making and operational efficiency.” This cultural shift can help organizations identify inefficiencies and improve cash flow.

The Investment Toolkit: Money Market Funds

Alistair highlighted the role of money market funds as a vital tool for corporate treasurers. “Money market funds provide liquidity, diversification, and a way to optimize cash management,” he explained. He emphasized that these funds are particularly beneficial in a falling interest rate environment, allowing treasurers to maintain access to cash while seeking better returns.

The Path Forward

The session concluded with a call to action for treasurers to actively engage in their cash management strategies. Sugandha advised, “Understand everything you are investing in. Think like an owner and make prudent decisions.” Paul echoed this sentiment, urging treasurers to pay attention to internal interest rate policies to avoid financial pitfalls. Alistair reinforced the need for treasurers to explore all available options to optimize their cash management practices.

In summary, the session provided valuable insights into the complexities of cash management and investment strategies. The expert panel underscored the importance of financial resilience, the role of in-house banking, and the benefits of money market funds. As organizations navigate the evolving financial landscape, embracing a proactive approach to cash management will be essential for long-term success.