Optimising cash management in investments

Cash management is a critical function for any investment manager or asset owner. Maintaining an accurate picture of upcoming cash flows and planning for large redemptions or applications is essential – helping avoid penalties, ensure client and regulatory obligations are met, and maintain sufficient liquidity.

However, many investment management organisations still rely on error-prone spreadsheet models for cash flow forecasting, an approach that offers limited visibility into future cash needs, increasing the risk of not having the right amount of cash on hand when large client transactions occur. 

Traditional cash forecasting, dominated by manual spreadsheet processes, presents several challenges. Gathering, validating, and consolidating data from various sources is time-consuming and prone to human error, leading to inaccuracies, financial penalties, and reputational damage.

Clear visibility into future cash movements is key for accurate liquidity planning. Many investment managers struggle to forecast cash positions accurately, resulting in inefficiencies and financial risks. The level of manual effort needed to maintain and update spreadsheets consumes significant time, reducing the ability to respond quickly to market changes or client demands.

Outdated spreadsheet models also impact the ability to audit and validate cash management processes effectively. When regulators or internal stakeholders require a clear audit trail, tracing the source and validity of data becomes difficult. This lack of transparency and control can lead to costly penalties if discrepancies or errors are found.

To overcome these challenges, investment managers can adopt modern, automated cash management solutions that connect directly with data sources. Beyond saving specialist time, this enables the automatic calculation of detailed cash flow forecasts, providing early visibility into upcoming cash movements across portfolios and currencies. 

Being able to automate and maintain an accurate picture of upcoming cash flows reduces the manual input required – increasing operational agility while ensuring adherence to regulatory cash management requirements, reducing the risk of non-compliance and associated penalties.

AlphaCert's Cash Management solution enables unitised funds to effectively monitor and report on applications and redemptions, ensuring optimal cash levels within funds and compliance with mandated tolerance levels.

By integrating directly with data extracts, it eliminates the reliance on error-prone spreadsheets and provides early visibility into upcoming cash movements. This ensures that investment managers have the right amount of cash available when needed, enhancing control and confidence in cash management processes.

Understand how AlphaCert’s advanced Cash Management solution helps fund managers optimise cash levels, enhance forecast accuracy, and ensure compliance.