Question 1

How do we maximize returns on cash?

Accepted Answer

Likwidity provides a platform that fully automates price discovery on cash with your banks. This means that by simply clicking a button, you can get interest rate quotes from up to 20 banks (your own existing banks) in a fraction of the time. You get to decide. To ensure good bank relationships, all banks are notified on your selection, and the notifications are fully automated and workflow driven.
On average, our clients benefit by 0.52% improved rates

Question 2

We already use a platform

Accepted Answer

That means you can see the benefit of using a platform. Likwidity can take the advantages of using a Deposit Platform further. Unlike our competitors, we do not get paid any commissions by any of the Banks we deal with. We have no conflicts of interest when it comes to which Bank you choose to place your funds with. We endeavour to get you the best rates available. Every time. Even after accounting for our nominal fee, you could see a benefit of up to 50% Unlike commission taking competitors, you are not limited to just dealing with the Banks on “our panel”. Being a technology platform, we enable you to transact with any Bank that you have a relationship with. Unlike some of our competitors, we do not get involved in moving any of your funds thus removing any settlement risks or potentials for delay

Question 3

Does it mean we have to setup new bank accounts ?

Accepted Answer

Only your existing banks are setup and you retain full control over which banks you choose to invite or not. So this is entirely in each clients control. Some banks will quote on new client opportunities but these can only be acted upon once bank relationships are put in place.

Question 4

Why should we pay for a deposit service ?

Accepted Answer

In addition to ensuring you get the best rates available as we mentioned, you also get improved business process automation, a full audit trail of all dealings, improved compliance and reporting. According to our data, our Clients have seen an average benefit of 43 basis points when transacting deposits over $2,000,000

Question 5

It's too much effort, is it worth the time and attention ?

Accepted Answer

If you have average balances of less than $1m, then it may not be worthwhile. But above that amount, it's worthwhile. The higher the balances, the more you stand to gain. Our data shows spreads between the Big-4 of 43 basis points. The spreads are even higher when you take international, mid-tier and smaller Banks into the mix. See our benefit calculator

Question 6

Why should we pay for the service when others don't charge ?

Accepted Answer

Commission based platforms typically charge anywhere between 5-20 basis points per transaction in commissions. Additionally, different Banks pay different commissions making it hard to decipher what the true rate you could have received. This is never disclosed to you - the end Client. Finally, commission-based platforms will only allow you to deal with Banks that are on their “panel”. Likwidity, being a technology provider rather than a Broker allows you to deal with any Bank you want.

Question 7

Can you provide indicative quotes ?

Accepted Answer

This is hard to do due to the bespoke nature of the quoting process where Banks might price differently depending on your Industry, Credit Rating, Balance Sheet etc

Question 8

What about Commissions ?

Accepted Answer

Very simply. We have no intermediary or fee arrangement in place with any banks and we do not earn any commissions or rebates from any banks

Question 9

What is cash optimization?

Accepted Answer

Cash optimization is the process of ensuring available cash is earning the best risk adjusted return. The key is a) best return or yield and b) risk adjusted, so that the safety versus risk is taken into account

Question 10

What should firms do with idle cash?

Accepted Answer

Many firms do not have a guide on what to do with idle or surplus cash funds. Firms should have a policy or guideline on what to with surplus cash, taking various aspect into account. We have a suggested guideline and checklist available here https://www.likwidity.com/post/master-guide-on-what-firms-should-do-with-idle-or-surplus-cash-funds

Question 11

What questions should CFO’s ask about liquidity?

Accepted Answer

Cash management is a priority for all CFO’s, and their are various individual priorities. We have expanded some of these issues for CFO’s with out considerations/ https://www.likwidity.com/post/cfo-planning-for-cash-and-liquidity

Question 12

What are risks of being single banked?

Accepted Answer

All risk guidelines always caution about being dependent on a single counterparty, whether its a supplier, customer or bank. The easiest way to think about is “how would we be affected if that counterparty” went out of business tomorrow. We have illustrated this with our Likwidex tool https://www.likwidity.com/post/cash-to-asset-ratios-and-bank-failure-data https://www.likwidity.com/post/cash-to-asset-ratios-and-bank-failure-data

Question 13

What does a credit rating mean?

Accepted Answer

A credit rating is a standardized assessment of the creditworthiness of a borrower, such as an individual, corporation, or government, evaluating their ability to repay debt and the likelihood of default.  Independent credit rating agencies (like Standard & Poor's, Moody's, and Fitch) assign these ratings on an alphanumeric scale to help investors, lenders, and borrowers quickly compare financial risk. To compare them, see this article https://www.likwidity.com/post/how-to-read-credit-agencies-ratings

Question 14

Does existing cash management include cash optimization?

Accepted Answer

Almost never. Traditional cash management activities include consolidating the information from various systems to identify cash flows from Account Receivable, Accounts Payable, Capex, Opex and measured against current liquidity with cash at bank or available facilities.But too often, the process ends with cash in bank. And this is where the magic should happen. https://www.likwidity.com/post/master-guide-on-what-firms-should-do-with-idle-or-surplus-cash-funds

Question 15

How do we measure concentration risk?

Accepted Answer

Each organization may have a policy or guideline around counterparty risk (see definition of counterparty) The concentration risk refers to the potential for significant financial loss due to overexposure to a single counterparty, sector, geographic region, or correlated risk factor. In our example it means having ALL firm cash with a single bank. If that bank experiences a problem, whether solvency or technical, your firm has NO alternatives. https://www.likwidity.com/post/lessons-from-svb-and-the-importance-of-diversification-and-price-discovery

Question 16

How can we ensure bank diversification?

Accepted Answer

Adopt a policy or guideline that meets your firms specific profile, and then have tools in place to measure and report on bank diversification. It should be incorporated into monthly reporting packs

Question 17

How can we measure cross border cash performance ?

Accepted Answer

When firms operate cross border operations, it has multiple challenges including local banking laws and regulatory constraints. Many companies end up using a single international bank to conduct operations, and excess cash is then parked in a low interest account. Firms need a tool to be able to measure and compare how competitive your banks are? https://www.likwidity.com/post/cross-border-price-discovery

Question 18

Can Likwidity be used as a shared service?

Accepted Answer

Absolutely. Likwidity was designed to be multi-portfolio (entity), multi-currency and multi-bank. This could be deployed within a group structure to act as a centralised “bank” and price discovery for the group. Ensuring standardisation of processes and visibility. https://www.likwidity.com/post/automated-white-labeled-cash-management-optimization-shared-service-platform

Question 19

Should cash allocation be subject to same procurement rules?

Accepted Answer

Absolutely. In most organisations, cash makes up between 10-20% of assets. By not using comparative cash allocation procedures, organzations are flouting policies on procurements, losing money and increasing risk https://www.likwidity.com/post/procurement-policies-should-apply-to-cash

Question 20

How can we ensure all cash investments get multiple quotes?

Accepted Answer

Using the traditional manual way of calling different banks at the same time and recording all the information OR use Likwidity to automate the entire process with full audit trails and reporting

Question 21

What questions should a Non-Executive director ask about cash

Accepted Answer

Non-Executive Directors (NEDs) play a crucial role in overseeing a company's financial health and risk management. Very often, NED's will operate under the assumption that their role is not executive and hence they don't ask or are curious about operations. This is not true. In most jurisdictions, NED's are equally responsible as executive directors and should be asking all the hard questions. That is after all why they are appointed! https://www.likwidity.com/post/what-questions-should-ned-ask-about-cash-optimization-and-risk

Question 22

What is “price-discovery”?

Accepted Answer

In simple terms, “price-discovery” means comparing different offers. Everytime you go shopping, whether for groceries, buying a car or insurance, you are doing some form of price discovery, mostly called comparing prices. Yet, most people do NOT compare rates on their cash. https://www.likwidity.com/post/what-is-price-discovery

Question 23

Should cash optimization be incorporated into the Cash Conversion Cycle?

Accepted Answer

Absolutely. The typical cash cycle process and ratios in accounting is about measuring sales conversion etc to compute how fast and efficient goods and services are converted into cash. But what happens when all that hard work results in the cash surplus left in a 0% account. That would be a substantial loss and defeat the efficiency of the cash cycle calculation. Cash optimization must be included to round off the calculation and illustrate the amplified returns. https://www.likwidity.com/post/simplify-cash-cycle-and-optimization-reimagined

Question 24

Do banks hide their best cash rates?

Accepted Answer

In most cases, yes. Bank will showcase their cash rates to retail customers, but hardly ever show what rates are available to business customers. https://www.likwidity.com/post/why-banks-hide-rates-from-business-customers-on-cash-investments

Question 25

What is automated cash optimization

Accepted Answer

This means converting the manual process of -price discovery -limit management -bank confirmations -reporting -spreadsheet and calendards -Into an automated and integrated process that delivers : -Better interest rate outcomes through a structured, automated price discovery process using a Request for Quote process with up to 20 banks at a time. -Complete automation of processes and significant time saver -Enhances bank relationships, and opportunity for new bank relationships -Visibility over counterparty risk and limits -Full auditability, governance, risk and compliance over organization cash funds -Automated reporting, including for board reporting -Cross-border price discovery in country currency and product https://www.likwidity.com/post/what-does-likwidity-do-automated-cash-optimization

Question 26

Is there a suggested checklist before investing surplus cash?

Accepted Answer

Yes, we have a suggested checklist available here: https://www.likwidity.com/post/checklist-for-investing-surplus-or-idle-funds-better-cash-management-and-the-effects-of-tariffs-an

Question 27

How does Governance Risk and Compliance impact cash management?

Accepted Answer

An organization is typically comprised of multiple stakeholders, such as investors, employees, customers etc. In the case for example of investors, they need to be reassured that the company is acting in their best interest. So for example, when an organization leaves funds in a nil interest account, that is losing money for investors, and that's why organizations have forms of governance, risk and compliance measures to monitor and measure such scenarios. https://www.likwidity.com/post/how-does-grc-governance-risk-and-compliance-impact-on-cash-management

Question 28

What does the term “best-interest” mean?

Accepted Answer

The concept of "best interest" has deep history across jurisdictions with and is considered a pillar of jurisprudence. At its most basic, it means making decisions that are in the "best interest" of the individual or entity. This has applicability across most categories whether in family law, healthcare and most definitely in financial services. https://www.likwidity.com/post/how-does-best-interest-apply-to-treasury-and-finance-teams

Question 29

How should the modern CFO approach cash management and optimization?

Accepted Answer

Many CFOs and controllers have historically viewed cash management as a minefield of compliance issues and interest rate risks, preferring to keep things simple with basic checking accounts and minimal yields.But the landscape has shifted dramatically. According to PwC's latest survey of leading companies, cash and liquidity management now ranks as the #2 priority for CFOs and the #1 priority for treasurers. The message is clear: cash optimization is no longer optional—it's essential.The modern CFO who ignores treasury management isn't being prudent; they're being negligent. https://www.likwidity.com/post/bridging-the-treasury-gap-what-the-modern-cfo-controller-fpa-and-treasury-teams-need-to-know

Question 30

What is meant by fiduciary responsibilities around cash investments?

Accepted Answer

Non-Executive Directors (NEDs) play a crucial role in overseeing a company's financial health and risk management. Very often, NED's will operate under the assumption that their role is not executive and hence they don't ask or are curious about operations. This is not true. In most jurisdictions, NED's are equally responsible as executive directors and should be asking all the hard questions. That is after all why they are appointed! https://www.likwidity.com/post/what-questions-should-ned-ask-about-cash-optimization-and-risk

Question 31

How does automating liquidity management with a platform mean?

Accepted Answer

Liquidity management is a critical challenge for businesses and financial institutions. Efficiently managing cash flow, assets, and liabilities ensures operational stability and maximizes returns. Traditional methods often rely on manual interventions, leading to inefficiencies and delays. However, automation—powered by digital marketplaces—is transforming liquidity management by enabling real-time optimization. https://www.likwidity.com/post/automating-liquidity-management-using-platforms-and-marketplaces

Question 32

How many banks do most companies use?

Accepted Answer

According to research by a leading finance organization for firms above $1bn, the majority of firms had between 4-6 banks. https://www.likwidity.com/post/its-time-for-banks-and-multi-banked-corporates-to-connect-seamlessly-exploring-the-next-gen-deposit Additional research also shows the implied resilience risk based on number of banks https://www.likwidity.com/likwidex

Question 33

What is meant by the lessons of SVB?

Accepted Answer

SVB is a prominent bank that experienced a bank failure in 2023, causing the 2nd largest bank failure in US history and caused great difficulty for many business in California. The main lesson was about diversfication. https://www.likwidity.com/post/lessons-from-svb-and-the-importance-of-diversification-and-price-discovery

Question 34

What is meant by counterparty?

Question 35

What is Likwidex?

Accepted Answer

Likwidex is a risk fragility index developed by Likwidity using publicly available data to measure and illustrate organization risk fragility based on cash as % of assets and the number of banks, compared to industry data. https://www.likwidity.com/likwidex

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