Corporates who continuously utilize their cash balances carry an incisive tool for optimizing cash management costs & revenue. Creating a plan for managing those balances and the yield that is inherently created is a necessity in a market that is unlike ones in recent history. For treasury professionals, this means optimizing costs & interest earnings and strategically positioning this channel as a significant point of influence within banking relationships.

From January 2022 to August 2023, interest rates rose at an unprecedented pace, stabilizing only in the past year.

This rapid escalation required corporates to reassess their yield strategies to take advantage of the prospective beneficial circumstances. Initially, banks were slow to react to these hikes, often requiring their clients to initiate discussions to secure better rates. Whether implementing rate structures that indexed to the increases, or manually discussing new rates at every inflection, it was essential to capture the opportunity monthly. At Redbridge Debt & Treasury Advisory, we’ve assisted numerous businesses in implementing strategies to secure the best industry rates and yield structure during this critical period, understanding that these favorable conditions were temporary. For insights into how these strategies have been applied, consider reading about maximizing interest on cash deposits in our previous article.

Anticipating Changes: The Future of Bank Responses and Rate Declines

As 2024 ends and with it the long stable period of a maximized Fed target interest rate, the big question is: How will banks respond when interest rates begin to descend?
Unlike the gradual increase in Earnings Credit Rates (ECR) observed when rates were climbing, we anticipate that any decreases will be swiftly passed on to corporates. Unfortunately, banks may not inform clients of these rate changes unless asked. To mitigate the impact of these changes, it’s crucial for businesses to:

1. Ensure clear communication with banks to establish proportional responses to changes in ECR and interest rates, ideally documented in writing.
2. Negotiate terms that reflect a fair percentage of the rate decrease if applicable. ECR and/or interest rates should only be affected within fair judgement. If a client remains with a low Earnings Credit Rate compared to the FFR, it should not be expected that an initial decease of a quarter or half point will effect the ECR.
3. Agree on timing for these changes to aid in financial planning, potentially negotiating a grace period to adjust to new rates.
4. If a bank requires a predetermined target balance (PEG Balance), make sure that these are reviewed monthly as rates fluctuate. A decrease in ECR will require a higher PEG balance.

Exploring Alternatives and Strategic Adjustments

As the benefit of Earnings Credit Rate (ECR) diminishes with falling interest rates, corporations will need to adjust their strategy by reevaluating their current banking relationships and fee structures and service offerings. The attention shift will require banks to provide more attractive terms or additional or alternative services to help maintain profitability for their corporate clients. Furthermore, as diminishing ECR focuses more attention on treasury EBITDA, other financial aspects such as cash management services and associated fees will need reevaluation. Because of these changes, it becomes more important than ever to:

Maintain ECR in the spotlight, ensuring it remains a competitive factor across industries, pressuring banks to uphold strong rates. Rates are always negotiable. Even when FED targets are decreasing, it’s not too late to strengthen this corner of the Cash Management landscape. There are many situations where rates have not been negotiated and remain low. It is the responsibility of the organization and not the bank to keep this conversation in the forefront. The chart below shows Redbridge’s observation of rates left unnegotiated:

Review and negotiate fees for services like cash management, as these could become much more impactful in a lower interest environment, potentially impacting the EBITDA.

Moving Forward

As the interest rates evolve, so too should corporate strategies for managing yield and treasury operations. By anticipating rate changes, communicating effectively with financial institutions, and exploring alternative financial solutions, businesses can safeguard their financial health and continue to thrive.

For those looking to understand more about yield optimization and how it can be tailored to your corporate needs, reach out to our team at Redbridge Debt & Treasury Advisory. Let us help you navigate the complexities of cash management and ensure your strategies are aligned with the best industry practices.

Let’s start with the basics: What is a P-Card?

A Purchasing Card (P-Card) is a special type of company card that empowers employees to purchase goods and services on behalf of their employer, bypassing the traditional purchase request and approval process. These cards are tailor-made for business expenses and are equipped with stringent controls that restrict usage to approved locations and spending limits, effectively curbing potential fraud and misuse.

Unlike personal credit cards, P-Cards do not provide a line of credit; instead, businesses must settle the full balance monthly, often with significantly higher limits to accommodate substantial B2B transactions.

Why would your business need P-Cards?

P-Cards introduce a streamlined method for handling transactions of all sizes, replacing manual approvals with a quick, controlled, and transparent spending mechanism. This efficiency not only simplifies procurement but also enhances the ability to monitor and manage corporate spending effectively.

What are the benefits of implementing P-Cards?

1. Enhanced Cash Flow Management

   P-Cards optimize working capital by extending days payable outstanding (DPO), thanks to flexible billing cycles and payment terms that can stretch up to 55 days of interest-free credit. This extension allows businesses to manage liabilities more strategically, improving the overall cash position of the organization.

2. Cost Reduction and Rebate Incentives

   Transitioning to P-Cards eliminates the need to process supplier invoices and issue paper payments, thereby reducing transaction costs. Moreover, businesses can benefit from rebate programs that provide annual cash back based on the volume of transactions, which increases with higher spending. These tiered rebate structures are designed to reward companies for their loyalty and volume of expenditure, turning a simple payment method into a revenue-generating tool.

3. Security and Convenience

   The integration of P-Cards with mobile wallets and the use of tokenization ensure that physical cards can’t be lost or stolen, and sensitive card information is shielded from skimmers. Mobile payments not only secure transactions but also streamline them, saving valuable time for employees.

4. Detailed Reporting and Budget Control

   Unlike cash transactions, spending on P-Cards can be tracked and attributed to specific department budgets, allowing for real-time financial oversight and better adherence to budget constraints. Companies can set precise spending limits and monitor these in real-time, ensuring that departments stay within budget.

How Redbridge Debt & Treasury Advisory Can Enhance Your P-Card Program

At Redbridge, we understand the nuances of negotiating and managing P-Card programs. Our expertise lies in:

• Negotiating Better Terms: We leverage extensive data and benchmarking to help negotiate rebate tiers and terms, ensuring your business maximizes its return on spend.
• Promoting Vendor and Internal Adoption: We aid in expanding your P-Card program by engaging vendors who benefit from faster payments and by ensuring that cards are distributed to departments that frequently make significant purchases. Proper training and promotion within the company are also crucial for maximizing the benefits of P-Cards.
• Enhancing Program Benefits: We work with banking partners to secure signing or retention bonuses and to explore additional incentives such as performance bonuses based on spending achievements.
• Implementing Virtual Cards: For added control and efficiency, we recommend integrating virtual card solutions for one-time or recurring transactions, further securing your procurement processes and expanding your electronic payment capabilities.

Summary and Next Steps

Implementing a P-Card program can transform your business spending, streamline procurement processes, and improve financial management. With Redbridge Debt & Treasury Advisory by your side, you can not only implement a comprehensive P-Card system but also continually optimize it to reap maximum financial benefits.

To explore how P-Cards can positively change your business spending, contact us today. Let’s discuss how we can tailor a P-Card program that fits your unique business needs and enhances your financial operations.

Redbridge Opens New Office in Chicago

Chicago, IL – 8/12/2024 – Redbridge Debt & Treasury Advisory, a leading international advisory firm, is proud to announce the opening of its new office in Willis Tower, located in the heart of Chicago. This expansion marks the 25th anniversary of the firm and underscores its dedication to the U.S. market.

“As we celebrate twenty-five years of excellence and innovation in treasury advisory services, opening our new Chicago office is a natural step.” said Patrick Mina, CEO of Redbridge. “Chicago has already been an incredible hub for our team, and having a physical presence in the midwest will improve our capabilities to serve clients in this region and beyond.”

The new Chicago location adds to Redbridge’s existing operations in New York and Houston, strengthening its network across the United States. This expansion is a demonstration of the firm’s growth strategy and its dedication to providing clients with best-in-class advisory services in debt, payments, and cash management.

About Redbridge Debt & Treasury Advisory

Founded in 1999, Redbridge is an independent advisory firm providing comprehensive treasury operations and debt advice to corporations around the globe with teams in Geneva, Houston, London, New York and Paris. Redbridge assists companies in optimizing financing and treasury, from strategic design of treasury organizations to creation and implementation of operational solutions. This includes bank and merchant processing fees, treasury systems and execution of debt financing structures.

For more information about Redbridge and its services, please visit www.redbridgedta.com/us

Media Contacts

US

Michael Denison
Redbridge Debt & Treasury Advisory
mdenison@redbridgedta.com

EU

Emmanuel Léchère
Redbridge Debt & Treasury Advisory
elechere@redbridgedta.com

The Challenges of Lockbox Services

Organizations relying on traditional Lockbox payment systems often face a range of operational inefficiencies and security challenges. Lockbox services, which require the physical mailing and processing of checks, inherently slow down transaction speeds, creating a lag in cash flow management known as mail float. Mail float can vary based on many factors, including postal delays, the distance between the sender and receiver, and the method of mailing. This delay in the time it takes for a check to travel from the payor to the payee can significantly impede access to funds, affecting a business’s ability to manage its working capital efficiently and capitalize on timely investment opportunities.

As checks are physically mailed and handled, they become vulnerable to interception and fraudulent activities, posing significant security threats to the payor. In contrast, Automated Clearing House (ACH) payments, which are electronic, eliminate these risks by bypassing the need for physical checks. This not only enhances the security of transactions but also contributes to better environmental practices by reducing the use of paper and physical mail. As such, companies that continue to rely on traditional Lockbox methods may find themselves at a disadvantage, facing higher processing costs, security vulnerabilities, and challenges in meeting corporate social responsibility goals related to environmental sustainability.

ACH Payments as the Solution

Adopting ACH payments can transform and streamline an organization’s working capital. ACH enables swift, direct bank-to-bank transfers that can be automatically scheduled, decreasing the amount of time it takes to process a transaction compared to traditional Lockbox methods. This rapid processing allows businesses to gain faster access to their funds, which is crucial for maintaining liquidity and responding swiftly to investment opportunities or operational needs. The efficiency gained through ACH not only helps in managing cash flow more effectively but also reduces the high costs associated with maintaining a lockbox.

In addition to operational efficiency, ACH payments offer enhanced security benefits over a traditional Lockbox. The ACH network has several security measures to help prevent fraud and unauthorized transactions. This shift towards a more secure and environmentally friendly payment method aligns with broader corporate social responsibility objectives, reducing paper waste and the carbon footprint associated with mailing checks. Moreover, ACH payments provide a higher level of convenience for customers, particularly in settings that require regular, recurring payments, thereby improving customer satisfaction.

Key Benefits of ACH:

• Enhanced efficiency: Electronic transfers expedite the payment process, significantly reducing the transaction time compared to physical checks.
• Reduced costs: ACH payments lower overall transaction costs by eliminating many expenses associated with lockbox processing.
• Improved security: The electronic nature of ACH payments minimizes the risks of fraud and theft for the payor.
• Sustainability: Reducing reliance on paper checks decreases the environmental impact, aligning with broader corporate sustainability goals.

The Impact of Transitioning from Lockbox to ACH

The implementation of ACH payments improves cost, security, and operational efficiency. Businesses experience a noticeable reduction in processing fees and gain faster access to funds, which in turn enhances working capital. Additionally, the secure framework of ACH transactions decreases the likelihood of fraud, providing businesses with a safer, more reliable method of receiving payments.

How to Make a Smooth Transition to ACH Payments

When encouraging clients to transition from checks to Automated Clearing House (ACH) payments, a strategic and supportive approach is crucial for success. This transition not only optimizes their payment processes but also aligns with current cash management practices that can significantly enhance their operational efficiency and security. By outlining the benefits clearly, providing comprehensive information, and supporting clients every step of the way can help ease any hesitations and foster a smooth transition.

By taking these proactive steps, businesses can ensure that their clients understand the advantages of ACH payments, feel confident in the new process, and appreciate the ongoing support, making the switch beneficial for all parties involved.

1. Educate on Benefits: Highlight the speed, security, and cost-efficiency of ACH payments over traditional checks, using examples and statistics to demonstrate their effectiveness.
2. Provide Detailed Information: Explain how ACH payments are processed, the security measures in place, and direct benefits like faster access to funds and lower fees.
3. Guide the Transition: Offer clear instructions and necessary documents for completing authorization forms and providing banking information.
4. Address Concerns: Proactively tackle common concerns regarding security and reliability, and explain how ACH reduces risks.
5. Offer Support: Assist clients throughout the transition, from filling out forms to answering technical queries.
6. Incentivize the Switch: Encourage clients to switch by offering incentives like discounts on billing.
7. Follow Up: After the transition, check in to ensure client satisfaction and address any further questions or issues to reinforce a positive ongoing relationship.

Next Steps for your Organization

For companies looking to enhance their receivables process, the shift from Lockbox to ACH payments is a strategic, forward-thinking decision worth considering. It is imperative to begin this transition with a structured approach that includes educating stakeholders about the benefits and providing support throughout the change process.

Your organization should:

• Initiate detailed discussions with internal teams to highlight the advantages and operational changes associated with ACH.
• Adopt a gradual integration strategy to ensure a smooth transition and allow for adjustment.
• Extend incentives for early adoption to encourage client participation.
• Offer continuous support and address any challenges promptly to ensure a seamless migration.

By adopting ACH payments, companies not only streamline their payment processes but also position themselves as efficient, environmentally conscious, and secure enterprises in the competitive landscape of corporate finance.

At Redbridge DTA, we are dedicated to nurturing and enhancing your banking relationships through strategic guidance and expert advice. We understand the intricacies involved in transitioning from a traditional Lockbox to ACH payments. Our team is here to ensure that this transition is not only smooth but also advantageous for your operational efficiency and financial security.

If you have any questions about how to navigate the shift from Lockbox to ACH, or if you need assistance in managing your banking relationships more effectively, Redbridge DTA is here to help. We are committed to supporting you in strengthening your financial operations and enhancing your relationships with your banks.

Reach out to us anytime to explore how we can assist you in making the most of your banking solutions.

The broker-dealer is set to expand the range of solutions for corporations by sourcing private placements of debt and capital markets transactions, offering independent and unbiased strategic capital structure advice, and providing comprehensive financial guidance to treasurers, CFOs, and CEOs across diverse sectors including industrial, retail, energy, distribution, and services.

“We are thrilled to launch Redbridge Global Markets as a new broker-dealer subsidiary that will enhance our capabilities and reach in the United States,” said David Laugier, COO of Redbridge DTA. Didier Philouze, Global Head of Debt Advisory, added, “with Redbridge Global Markets, we will be able to offer our clients a comprehensive and customized suite of capital solutions and services that meet their specific needs and objectives. We believe that flexibility is key in today’s environment, and we are committed to providing advantageous solutions to our clients.”

How Redbridge Global Markets works:

Comprehensive Analysis: In-depth analysis of a company’s credit profile, strategic plan, and current financial partnerships.

Roadmap Development: Creation of a customized financing strategy, including timing, product selection, and desired terms.

Capital Provider Search: Potential capital providers are approached with targeted information and detailed desired terms, requiring investors to respond on the company’s terms, and potentially improving the outcome.

Provider Selection: Assistance in selecting providers and negotiating necessary documentation.

While operating as a separate legal entity from Redbridge DTA, Redbridge Global Markets will continue to provide the same experienced guidance, assisting clients in their financial decision-making process. For more information about Redbridge Global Markets, please contact Audrey Lokker, Executive Vice President, at alokker@redbridgegm.com, or Michael Elias, Director, at melias@redbridgegm.com.

About Redbridge DTA

Redbridge DTA is a leading financial management partner to corporations around the globe. The Redbridge team assists companies in their development through global advisory teams and industry leading software solutions to support financing and treasury projects.

Redbridge is committed to providing each customer with the information required to make the best decisions and optimize their financial performance. Redbridge’s experienced staff acts as an extension of a customer’s financial team, providing the necessary resources and expertise for a successful project. Redbridge’s teams are in Houston, New York, Paris, Geneva and London. For more information about Redbridge, visit our website: www.redbridgedta.com/us

What are the differences between real time payments vs ACH?

Distinguishing between Real Time Payments (RTP) and Automated Clearing House (ACH) transactions is crucial for treasury departments. These payment methods are pivotal in shaping a more agile, efficient, and secure approach to financial operations. Understanding their unique benefits and applications can significantly impact liquidity management, streamline operations, and enhance stakeholder satisfaction.

Your treasury department, like many others, must handle a constant stream of new options, solutions, and decisions about handling your transactions that directly influence financial outcomes. Global commerce demands fast, flexible, and secure payment solutions. For managing vendor payments, payroll or capitalizing on real time opportunities, the strategic application of RTP and ACH is critical for enhancing cash flow, operational efficiency, and minimizing fraud risks.

What you need to know about Real Time Payments (RTP) and Automated Clearing House (ACH):

• Speed and Efficiency: RTP transactions are completed instantaneously, offering a significant edge for time-sensitive operations. This immediacy can dramatically improve working capital optimization and market responsiveness. Although ACH is reliable, its processing time is slower, and transactions are typically settled within one business day. The advent of Same Day ACH has improved this, yet it still doesn’t match RTP’s speed. In 2021, the volume of Same Day ACH payments increased by 74%, indicating a growing demand for faster payment solutions, but RTP’s instant processing remains unparalleled.
• Recallability and Security: RTP payments, once made, are final and cannot be recalled, emphasizing the need for accuracy. In contrast, ACH payments allow for recall under specific conditions, offering a safety net but also potential complications. This finality in RTP necessitates robust security measures, given the irreversible nature of transactions.
• Availability and Flexibility: RTP’s 24/7 availability supports global and instantaneous transactions, a necessity in today’s economy. ACH, however, is limited to business hours, affecting cash flow timing. RTP also introduces dynamic features like “Request for Payment,” broadening its use beyond immediate transactions to include invoicing and payment requests, unlike ACH’s scheduled nature.
• Use Cases: RTP is more ideal in scenarios requiring immediate fund access, from emergency disbursements to real time investments. ACH, favored for routine payments, maintains relevance for its efficiency in handling recurring transactions. Businesses reported a 30% improvement in payment efficiency upon integrating RTP into their systems, underscoring its impact on operational fluidity.

The benefits of Real Time Payments vs ACH

Leveraging RTP can enhance financial agility, reduce reliance on credit, and enable swift market adaptation. It streamlines operations by facilitating immediate payment settlements. Optimizing ACH processes, in contrast, provides a robust framework for managing predictable cash flows and reducing transaction costs, which is crucial for sustained operational stability.

Next Steps for RTP & ACH with Redbridge:

Understanding RTP and ACH complexities necessitates a deep understanding of their implications on your financial strategy. Redbridge’s expertise in payment mechanisms and strategic financial planning ensures that your treasury operations are aligned with modern efficiencies and security standards. By analyzing payment flows and identifying optimization opportunities, we implement solutions that not only improve current operations but also ensures your company remains competitive and can leverage new payment options as they become available.

Our team aids in integrating a payment strategy for RTP and ACH, tailored to your company’s needs. With a focus on enhancing efficiency, security, and performance, Redbridge positions your cash management strategy for success.

Where efficiency and adaptability are paramount, the choice of payment method can significantly impact your company’s operations. With the strategic application of RTP and ACH, treasury departments can make informed decisions about their payment strategy, ensuring liquidity, operational efficiency, and adapting to emerging payment rails.

Redbridge is here to guide your company through these decisions, providing a strategic approach to cash management that meets and exceeds current demands.

Rates Fluctuate. Is your debt strategy flexible?

This reality emphasizes the critical need for businesses to adopt flexible, innovative debt solutions that can weather volatility and support informed financial decision-making.

The Challenge You Face:

Because of the fluctuation in rates and the constant unknown, your business faces two challenges: the need to adapt to rapidly changing interest rates while ensuring sustainable growth. This situation has made it imperative for companies to reevaluate their debt management practices and find strategies that not only mitigate risks but also capitalize on opportunities presented by market fluctuations.

With this in mind, here are six essential actions to guide your business in strengthening your financial strategies in the face of rate volatility:

Action #1 – Evaluate Capital Structure

The evaluation of debt capital structure involves a strategic analysis where businesses must consider the right mix of debt, equity, and cash flow to finance your strategic plan. This involves assessing the cost and constraints of your debt structure against key value-correlated performance indicators such as returns on invested capital (ROIC), earnings margins, and top-line growth.

The inherent risks for different financing alternatives must be considered such as the chance of default, refinancing risk, and interest rate volatility. If not evaluated properly, the consequence could be an inability to continue operating as a viable business.

Action #2 – Diversify Funding Sources

The principle of diversifying funding sources can be linked to the concept of balancing opportunity with capital. Companies are encouraged to continuously evaluate their entire portfolio, considering the mix of investments in new and existing opportunities that create the most value.

This includes recognizing that capital can be raised or returned to shareholders, suggesting that diversification is not just a tactic to mitigate risk but a strategic approach to optimize capital allocation across different opportunities​​.

Action #3 – Seize Refinancing Opportunities

Refinancing opportunities emerge as part of strategic financial planning as well as with the passage of time, where your company assesses your capital balance against the need for investment in growth opportunities or the optimization of existing debt.

This strategic perspective emphasizes the importance of agile financial planning, where your business adapts your strategies based on current and anticipated financial conditions, including the possibility of refinancing to unlock value​​.

Action #4 – Explore Innovative Debt Products

Exploring innovative debt products involves understanding the evolving landscape of financial instruments and how they can be leveraged to manage risk and capitalize on new opportunities.

This approach requires a deep understanding of the market and the ability to adapt to new financial products that offer strategic benefits under changing economic conditions.

Action #5 – Strategic Use of Fixed-Rate Options

The strategic use of fixed-rate options can be seen as part of a broader approach to managing financial risk across a portfolio. By balancing fixed and variable rate debt, you can protect your company against interest rate fluctuations, much like how portfolio-level risk management can optimize the allocation of capital and mitigate financial risks more effectively across a company’s project portfolio​​.

Action #6 – Implement a Flexible Financial Strategy

Flexible financial planning is crucial for adapting to the dynamic economic landscape. By recognizing all risks, ensuring adequate funding, and adopting a consistent approach across the portfolio, companies can make more informed decisions, enhancing financial stability and responsiveness to market changes​​.

Confidently Prepare for the Future

Adopting a strategic approach to debt management is crucial for thriving in a decade marked by interest rate changes, a global pandemic, and dynamic geopolitical situations. Redbridge’s debt advisory services provide businesses with the expertise needed to navigate these challenges effectively.

Our team of financial experts deliver tailored strategies to design financial structures that balance cost and flexibility as well as current and future needs. This helps our clients to gain insights into market dynamics and:

• Enhance Financial Flexibility
• Diversify Lenders
• Extend Loan Maturities
• Secure Liquidity

By incorporating these six essential tips into your financial strategy, you can enhance your business’s resilience against market volatility. Partnering with Redbridge’s debt solutions allows your business to be prepared for the uncertainties of today and positioned for prosperity in the future.

Contact Redbridge today to explore how our debt advisory services can guide your business through turbulent debt markets and beyond, laying the foundation for enduring financial health.

Introducing the Redbridge debt advisory team

Introducing the Redbridge Debt Advisory Team: your ally in navigating the financial landscape. Beyond our expertise in credit and debt management, we’re your partners committed to fostering growth and ensuring stability. With a rich background of global experience and a commitment to tailored solutions, our team not only helps your business prepare for the future — but stay ahead of it.

Each member of the team embodies the passion and precision that define our approach to debt advisory, bringing their unique insights into the heart of what we do and why it matters. With that in mind, meet the skilled professionals whose expertise powers the Redbridge Debt Advisory Team:

Dedicated to providing you with the strategic guidance

The landscape of debt markets is constantly evolving, presenting new challenges and opportunities. Redbridge’s debt advisory team is dedicated to providing you with the strategic guidance and support needed to navigate these changes effectively. Our tailored solutions: * Bullet points of features of our solutions * ensuring you remain competitive and financially healthy.

Explore how the Redbridge Debt Advisory Team can elevate your financial strategy and secure your business’s future.

Contact Us

Houston, Texas, March​ 12, 2024 — Redbridge, a leading provider of treasury and debt advisory solutions, today announced that its HawkeyeBSB solution has been certified for use in the Coupa App Marketplace. The Coupa App Marketplace connects businesses with certified pre-built solutions. HawkeyeBSB will be offered to Coupa Treasury customers worldwide, via the Coupa Business Spend Management (BSM) platform. Coupa helps teams collaborate to build more agile and sustainable operations, delivering intelligent and responsible spend strategies to meet their companies’ purpose.

HawkeyeBSB, Redbridge’s proprietary bank fee management software, transforms how enterprises manage and analyze bank fees, offering a unique solution that bridges the gap between procurement, accounts payable, and treasury departments. HawkeyeBSB leverages reliable data from bank branches to provide actionable insights and streamline financial operations.

“With the complexity of global banking relationships, the need for streamlined bank fee management is imperative,” said Nigel Pegg, VP & GM of Coupa Platform and App Marketplace at Coupa. “We are proud to have Redbridge and HawkeyeBSB on the Coupa App Marketplace to give our Treasury customers even greater visibility into their global bank relationships to improve efficiency and reduce costs.”

As a certified CoupaLink solution, HawkeyeBSB meets the requirements established by Coupa through its CoupaLink Partner Program and is available in the Coupa App Marketplace. Coupa’s treasury customers benefit by discovering and connecting solutions to optimize their business spend and mitigate business risk while reducing the cost of third-party software integration. Through HawkeyeBSB, Coupa Treasury users can take their cash forecasting, reporting, cost allocation and budgeting to the next level. Bank fee data strategically bridges the gap between accounts payable, procurement, and treasury.

“Connecting HawkeyeBSB into the Coupa Business Spend Management platform gives our customers a streamlined bank fee management experience and significant cost savings,” said Bridget Meyer, Head of Strategic Partnerships at Redbridge. “We are proud to be part of the Coupa App Marketplace and a trusted CoupaLink technology partner. We look forward to our relationship with Coupa to further help customers transform their spend management processes.”

For more information on HawkeyeBSB and how it can revolutionize your bank fee management process, visit the Coupa App Marketplace at marketplace.coupa.com.

Coupa, Coupa Business Spend Management (BSM), CoupaLink, and all Coupa logos are trademarks or registered trademarks of Coupa Software, Inc. All rights reserved.

About Redbridge

Redbridge Debt & Treasury Advisory is a global advisory firm dedicated to helping corporations optimize their financial operations through innovative solutions. With expertise in treasury management, debt advisory, and financial technology, Redbridge empowers clients to achieve greater efficiency, control, and savings in their financial processes.

Redbridge Media Contact

For further details, please contact:

Bridget Meyer, Head of Strategic Partnerships

Email: Bmeyer@redbridgedta.com

The Case for Bank Fee Analysis Software

At last year’s New York Cash Exchange Conference, Frank D’Amadeo, Con Edison’s Director of Treasury Operations, shared his proactive approach using software. For D’Amadeo, bank fee analysis is not a tedious task, but a treasure hunt, where building a relationship of transparency and trust with banks is as much a priority as finding errors. Emphasizing bank fee analysis software as a strategic asset, D’Amadeo shared, “it is not merely an expense, but an investment that multiplies its value within the first year.”

Still, many organizations remain skeptical, viewing bank fee analysis software as another added cost in a time when most are focused on cost cutting. What they do not realize is that the neglect of thorough bank fee analysis can lead to significant cost increases, including redundant charges.

Exploring Uncertainties in Treasury Management

As limited resources leave treasury teams stretched thin, pressing questions are left unanswered—how much does the global banking operation truly cost? What is the effective yield on balances held in our accounts? And, as Timothy T. Hesler, Assistant Treasurer at NYU, asked during the discussion, “Are we ensuring our bank fee costs are minimized,” by verifying them against agreed pricing and rates?

These questions merely begin to uncover the complex risks underlying bank fee analysis oversight. Imagine discovering fraud in a bank account you did not know existed or finding charges that span months, or even years, for a supposedly closed lockbox. Consider a scenario where an Accounts Payable team member, aiming to streamline processes, inadvertently racks up substantial fees by uploading vendor payment instructions online. What happens to those who are responsible for these expensive financial oversights?

Treasurers like Marguerite Versacci understand the complexities of data management all too well, as treasury operations at Tronox span 6 banks and 120 accounts across 17 countries. Speaking at the conference, Versacci shared that bank fee analysis software was crucial for gaining visibility, control, and the ability to make informed decisions at her organization. “I would not pay a personal bill without a statement or invoice,” she explained, highlighting the software’s role in enhancing transparency. “Having that clear oversight has empowered me with better decision making and action planning,” she added.

Winning With Bank Fee Analysis Software

The journey of treasurers like Hesler and Versacci underscores the transformative potential of bank fee analysis software. It’s clear why solutions like HawkeyeBSB are so vital. By addressing the nuanced challenges inherent in bank fee analysis, HawkeyeBSB transforms bank fee analysis from a routine task into a strategic asset that:

• Enhances Transparency and Control
• Guides Strategic Decision-Making in Finance
• Turns Treasurers into the Leaders that Know the Answers Hidden with the Data

Redbridge remains committed to developing tailored solutions that solve bank fee analysis problems. With HawkeyeBSB, your financial management is simplified, and you are empowered with actionable insights to promote operational efficiency. Discover why leading organizations choose HawkeyeBSB for a transformative approach to their treasury needs.

In recent years, you’ve likely received several communications related to the Visa and Mastercard Payment Card Settlement. These may have been emails or calls from entities offering assistance in reclaiming funds lost to merchant processing costs. While initial developments may have been slow and complex, significant progress is now being made in this case.​

Key Developments in the Settlement Process​

As of December 1, 2023, claim forms started being dispatched to merchants, a process expected to extend into January 2024.​

Eligibility and Participation​

You might wonder, “What does this mean for me?” If you didn’t opt out of the Settlement by July 23, 2019, and accepted Visa and MasterCard payments between January 1, 2004, and January 25, 2019, you’re eligible to participate. Additionally, participation is optional, even after receiving your claimant number. Learn how you can begin the claimant process below: ​

Option 1: You choose to participate and file a claim​

If you have received a claim form with a claimant ID and control number, you can log in at the official Payment Card Settlement website, here: Payment Card Settlement | Official Court-Authorized Website – Login. If you haven’t received a claim form, providing your Tax-Payer Identification Number (TIN), along with additional business information will allow a Class Administration to determine your eligibility. We recommend that you utilize the official website to avoid fraudulent links.​

Upon receiving your claim form, you will find that it includes estimated totals from Visa and MasterCard, detailing transaction, volumes and interchange fees. These estimates offer a foundation for your claim, allowing you the option to proceed with these figures or provide your own data for a more customized assessment. Additionally, for those managing multiple TINs, the system facilitates an efficient linking of these identifiers within your established profile. This feature is designed to streamline the claim filing process for businesses with complex structures. ​

Ultimately, the settlement payment will be based on your actual or estimated interchange fees associated with Visa and MasterCard transactions from the timeframe of January 1, 2004, through January 25, 2019.

The deadline to file is May 31, 2024!​

Can I utilize a third-party service to file the claim?​

Yes, merchants have the option to enlist third-party services to file their claims, though they are free to file claims independently without incurring third-party costs. Additionally, merchants are entitled to contact the Claims Administrator, or Rule 23(b)(3) Class Counsel, at no cost, to request assistance with understanding and filing the claim form. Keep in mind, there is still much uncertainty about the timing for funding and the settlement amounts that will be paid out. ​

How will I know how much I will receive?​

Visa, MasterCard, and the Bank Defendants have agreed to pay a minimum settlement of $5.54 billion to merchants who have not excluded themselves. In addition to exclusion status, your individual payout is dependent on a variety of factors such as the number of participating merchants and the actual or estimated interchange fees associated with your Visa and Mastercard transactions from January 1, 2004, through January 25, 2019. ​

Additionally, the settlement funds will be reduced by an amount not to exceed $700 million, for those merchants who have excluded themselves. These funds will also cover the cost of the settlement administration, tax expenses that are approved by the court, as well as any approved legal expenses.​

When will I receive my claim funds?​

The timeline for disbursing funds has not yet been determined. Payments are expected to begin after the May 31st, 2024, claim submission deadline, and subsequent court approvals.​

Option 2: You choose not to participate​

It is completely at the merchant’s discretion to not participate in the settlement. However, it should be noted that if you did not opt out of the settlement by July 23, 2019, you will be bound by the terms of the agreement which includes the release of certain claims against the Defendants and other parties identified in the Agreement.

These claims are released if they already have accrued or will accrue in the future, for up to five years following the court’s approval of the settlement and the resolution of all appeals. Essentially, we believe the courts took this approach to prevent numerous additional lawsuits within the window of five years that could be similar in nature. If you don’t file a claim by May 31, 2024, you will not be eligible for a portion of the settlement. For detailed information of the release and claims please see the court document here: Microsoft Word – Interchange Long Form Notice 4.11.19 – clean (paymentcardsettlement.com) ​

Settlement Background and Final Thoughts​

This lawsuit, initiated in 2005, accused card brands and banks of colluding to fix merchant processing fees. This settlement involves both Visa and MasterCard as well as major US banks which issue their cards, including JPMorgan Chase, Bank of America and Citibank. The lawsuit culminates based on the interchange fees merchants paid during the time frame from January 1, 2004, to January 25, 2019.​

During this time, it was stated that the associated card brands and banks violated the law by imposing and enforcing rules that limited you, the merchant, from steering your customers to other payment methods. These rules did not allow surcharging or cash discounting, and required all cards be honored, which ensured the card brands and banks controlled the market. The court did not state which side was right or wrong or which laws were violated. Instead, an agreed upon settlement by both sides has been reached, averting the possibility of further trials and appeals. ​

The settlement is an ongoing process, and the outcome for non-opt-out merchants is still being determined. It is unknown how many merchants will be participating to share in the funds, and it is at your discretion if you would like to participate. ​

While we don’t provide claim filing assistance or legal advice, we’re here to offer informational support should you need it. For inquiries or further clarification regarding the claim submission process, please reach out to Chelsey Kukuk, Director of Payments at Redbridge, at Ckukuk@redbridgedta.com. Otherwise, please consult your legal counsel for personalized guidance.

The Evolving Role of Treasurers in the High Interest Rate Landscape

Treasurers have a wide range of daily responsibilities that include updating cash flow forecast, monitoring cash pooling, setting cash positioning, bank account management, and much more. As a result, the task of regularly evaluating the company’s cash investment policy can be overlooked and become a missed opportunity for companies to capitalize on the current high interest rate environment.

The traditional investments utilized by treasurers include money market accounts, short-term bonds, cash pooling, interest bearing accounts, and leveraging excess operating cash balances for Earnings Credit Rates. That said, treasury departments have a chance to be viewed as profit centers within their organizations.

With the recent Fed Fund Rate increases, meant to reduce inflation, companies can invest their cash balances to offset bank fees, generate interest revenue, and increase cashflow. Banks are motivated to attract and retain cash balances from companies to offset their internal liquidity ratios; therefore, their interest rate offerings are increasingly aggressive.

The first step in this process is to evaluate the cash on hand that is available to be tagged as excess operating cash flow or investable balances. Additionally, researching any restrictions placed on excess cash on hand is required.

Optimizing Excess Cash Flow

Excess operating cash flow is the cash on hand in the operating DDA that is leftover after a company’s outgoing liabilities and payments are met. Treasurers should pay close attention to this amount to ensure that there is no missed opportunity for long-term investment with a higher yield. In addition, these balances can be utilized with the bank’s offered earnings credit allowance, which offsets monthly cash management fees by assigning an earnings credit rate (ECR), which typically follows the fed funds rate or low risk government bonds.

Contingent on the balances kept in the operating DDA, the awarded earnings credit allowance is applied against monthly cash management bank fees and works to reduce your overall annual bank fees. Earnings credits are tax exempt and not considered income. Additionally, they are applied monthly based on the available balance, and expire at the end of month, if any excess credits remain. This option requires a delicate balancing act of maintaining a threshold, or peg balance, to fully take advantage of the earnings credit rate offered and maximize your offset of cash management bank fees.

Strategic Allocation of Investable Funds

Investable balances are balances that do not need to remain in the operating DDA and can instead be placed in an investment opportunity for short-term gains. These balances may include capital contributions, managed account balances, or surplus operating cash. Identifying the investment opportunity for investable balances should be revisited quarterly, if not monthly, in the current interest rate environment.

Investable balances are usually placed in an interest-bearing account that generates taxable interest revenues. This investment strategy presents a lucrative opportunity for organizations that hold high investable balances, as the amount of revenue generated from these accounts can cover the tax implication and cash management fees assessed by banks, while also further enhancing the company’s on-hand liquidity.

During the 2018 and 2020 recessions, the most common investment vehicle banks offered to treasurers for investable balances was a money market account or short-term bond (with one or three-month terms). Of course, the low interest rate options at that time required minimal maintenance and intervention by corporate treasurers and their departments. Specifically, the climate ensured that a small amount of interest revenue could be obtained to offset bank fees, as the earnings credit rates were under 15bps.

Rethinking Investment Strategies in the Current Economic Climate

Today, considering the current high-interest rate environment, does it make sense for treasurers to select money market accounts over other interest-bearing solutions offered by banks? It is important that companies consider whether the investment strategies of the past are currently the best investment strategies for the success of the company today.

With the help of their cash management partners, companies may find opportunities to capitalize on amending their treasury investment policy by researching other investment vehicles that yield higher returns than money market accounts.

Traditional interest-bearing accounts, for example, offer highly competitive hard interest rates. Interest bearing account rates tend to have a direct relationship to the current fed funds rate and are parallel with the changes made. Another beneficial option, especially in international regions, could be a cash pooling setup. In this case, interest revenues are generated daily either by a traditional sweep each night or a notional pooling setup.

The Redbridge Solution: Tailoring Investment Strategies for Optimal Treasury Performance

Considering today’s high interest rate environment, treasury teams may be pondering the following questions:

• Which type of investment vehicle is best for my organization?
• How do we select and re-write our investment policy to produce cash flow for the company with confidence?

Redbridge has a wealth of solutions that can aid you in this decision-making process. As leaders in banking and cash management negotiations, we have solid partnerships with banks that give us insights into how to prescribe the best investment solutions to corporations.

Our experienced team of global advisors work to analyze your current investment strategy and cash balances, and recommend several different scenarios to reduce your cash management costs and generate interest revenues.

The volatility of the world economy over the last 5 years has shown that we must remain vigilant with identifying new means of cash flow forecasting, protection, and planning. Treasurers must stay abreast of all investment opportunities available and being offered by their banking partners.

It is prime time for treasury departments to generate revenue and be seen as a profit center. Learn more about how you can partner with Redbridge today and capitalize on the current interest rate environment:

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Within the realm of cash management, major corporations are always seeking innovative ways to optimize their financial strategies. One tool often used as a means of cost-savings is the Earnings Credit Rate (ECR). For businesses, ECR plays a pivotal role in offsetting bank fees and providing a financial cushion that eases the weight of service charges.

While utilizing ECR is undoubtedly a valuable tool, it is essential that treasury departments understand the potential challenges of over-relying on credit rates, while also being made aware of other tools that can maximize their cash management strategies beyond ECR.

Understanding Earnings Credit Rates (ECR)

Earnings Credit Rate, or ECR, is a financial tool used by businesses to offset bank fees associated with treasury services. At its core, ECR represents the interest rate that a bank applies to the average daily balance held in a company’s operating account.

This accrued interest can then be used to cover various fees, including service charges, transaction costs, and other banking expenses. In essence, ECR is a financial safety net–a means for businesses to protect their bottom line from being chipped away by bank charges.

The Current ECR Landscape

In recent times, as the Federal Funds Rate has continued to hike, ECR rates have also seen a significant uptick. Unsurprisingly, many companies have become reliant on ECR to effectively offset their banking fees. Though viable today, in the long term, this strategy tends to be highly unreliable.

ECR rates are influenced by many factors, such as the Federal Reserve’s monetary policies, but they do not always mirror every shift in interest rates. Additionally, ECR rates are not entirely within an organization’s control, and they exhibit a level of transience. As the economic landscape fluctuates, so do ECR rates—the expression, “what goes up, must come down,” rings true in this case.

Companies that find themselves dependent on ECR rate increases to manage their bank fees may inadvertently become complacent and leave themselves vulnerable to sudden economic and financial shifts. A more integrated approach can be found in implementing a comprehensive cash management strategy that not only addresses bank fees, but also optimizes yield structure, hones cost-efficiency, brings clarity to fees and service costs, and prepares financial departments for a future where ECR rates might fluctuate.

The Need for a Comprehensive Approach: Redbridge Cash Management Advisory

The two key first steps in effectively managing your bank fees and mitigating unexpected offset changes are ensuring you have visibility into what you are currently being charged across your banks, and determining how precisely these charges are being offset.

Today, this transparency is crucial in wider financing discussions with banks, as they are increasingly moving toward a holistic pricing model across all their services.

Redbridge has unrivalled expertise, proprietary tools, and market benchmarks to ensure your success in this area. With our Cash Management Advisory service, we empower businesses to:

• Gain a comprehensive understanding of their banking fees.
• Anticipate potential market fluctuations.
• Strategically negotiate better terms with financial institutions.
• Optimize yield structures and ensure long-term financial resilience.
• Remove the “heavy lifting” data collection and analysis, which Redbridge manages on your behalf.

While utilizing ECR to offset bank fees can be a short-term relief, maintaining a clear view on the long-term health of your financial strategy remains critical.

Contact us, to learn more about how your business can partner with Redbridge to optimize its cash management strategy, today.

The Association for Finance Professionals (AFP) conference is more than just a gathering of financial experts; it’s a convergence of minds navigating the complex currents of finance, treasury, and banking. Over three days of sessions and exhibits, last week’s attendees gained valuable insights into how to strategically approach their payments, banking, and treasury operations, amid today’s fast-evolving economic and technological landscape.

With finance leaders from industry giants like Under Armour, U-Haul, Microsoft, American Airlines, and AT&T at the helm of several key discussions, here are three major takeaways from this year’s AFP conference:

1. The Power to Transform the Financial Landscape Lies Within the Data

Under the guidance of Redbridge’s Head of Strategic Partnerships, Bridget Meyer, treasury leaders from American Airlines, Under Armour, and AT&T underscored the role of data in transforming treasury operations. The resounding lesson learned is that data accessibility and analytics lie at the heart of optimizing bank fee analysis and achieving cost efficiencies. Digitizing bank statements and using data analysis software are just two ways that organizations can begin to foster accessibility within their databases.

The most crucial element in making data transformative though, is turning the insights into action. “It’s not just about securing electronic fee statements; it’s about having dedicated systems that can dissect that complicated data and spit out a clean analysis for the Treasury team, thus turning it into actionable intelligence,” said Ryan Millard, Senior Manager of Treasury at American Airlines. “I agree,” said Stacey Roth, AVP Global Cash Management at AT&T. “Having that robust system makes all of the varied data a little more apples to apples, so that ultimately, there’s greater clarity across the treasury organization,” she added.

2. As Payments Costs Continue to Increase, Remaining Vigilant Is Key

Payment costs are primarily composed of interchange fees, making it critical for businesses to closely monitor and assess their payment processing strategies. From interchange rate increases to shifting consumer card preferences, businesses today are faced with a complex landscape of cost drivers. Dealing with these cost dynamics demands vigilance, continuous monitoring, and proactive adjustments, according to Andrew Cain, U-Haul International’s Director of Payment Operations.

Implementing and leveraging data-driven insights is one way that payments teams can enhance their vigilance in the cost management process. Additionally, using available resources to understand the why behind cost increases is equally as important in the quest for effective cost management. “Most people are afraid when they’re tasked with having to search for errors, and request any changes associated with these types of costs,” said Joey Dembek, Head of Solution Delivery, Optimized Payments. “Everyone generally accepts that credit card costs are up, but no one really asks why, and if they do, there’s typically no response… If you don’t have someone in the organization that can tell you “why,” it’s wise to start looking for someone that can; your solutions start there,” he added.

3. Automation Technology Is a Key Driver of B2B Payments and Process Improvement

As we enter an era of rapid technological advancement, many businesses are finding themselves at a critical crossroads where reevaluating B2B operational strategies is key. From identifying pain points in manual processes and payments, to efficiently managing insurance and tax complexities, organizations must forge ahead with comprehensive process optimizations.

One optimization path focuses on implementing automation software to reduce the costs of manual processes. “We’ve found that paper invoices were typically processed in 10 days at a cost of $10.90,” said John Paris, Sr. Treasury Manager at Gilbane Building Company. “In manual scenarios, processing time and costs were found to be 3 times higher when compared to an automated invoice, which was typically processed in 3.1 days at a cost of $2.60,” he added.

Many organizations face difficulty in changing current internal processes, still, “payment teams should be proactive in urging their companies to adapt these new technologies,” said Greg Toussaint, Director at Edgar, Dunn & Company. Otherwise, the added risks of slowed growth and lack of organizational visibility grow.

Connect with Redbridge Debt & Treasury Advisory

AFP’s 2023 Conference unveiled a wealth of insights and strategies for finance, treasury, and banking professionals. From tackling inflation and cutting bank fees to harnessing AI and automation, attendees gained actionable wisdom to elevate their financial operations.

Redbridge Debt & Treasury Advisory is a leading financial management partner to global corporations seeking cash management, payments, and financing solutions. Through the expertise of our global advisory teams, and the reliability of our industry-leading software, we are committed to providing every client with proper strategic guidance to optimize cash flow and reduce transaction costs.

For more information about our bespoke solutions, Contact us today.

Organizations are constantly in search of new ways to optimize their banking relationships and reduce costs. Still, many companies face a significant hurdle: the lack of time, resources, and expertise needed to understand the intricacies of data elements like AFP Service Codes™, ensure their correct mapping and harness the valuable data within their bank fee statements. This oversight can lead to inaccurate benchmarking, improper cost calculations, and missed opportunities for cost savings.

The AFP Service Code™ Conundrum

AFP (Association for Financial Professionals) Service Codes are a critical component of any bank fee benchmark, reporting, analysis, or project. Additionally, they are also the key that unlocks the mystery of the service charges themselves, as they provide a standardized way to categorize transactions and banking activities. The challenge arises when organizations, especially the financial institutions who report them, fail to allocate the necessary resources to properly manage these codes.

The improper mapping of AFP codes can result in flawed benchmarking, making it difficult to accurately compare financial performance with industry peers. Banks are one of the largest consumers of benchmarking data and they perform more cross-bank pricing exercises than their corporate clients so the lack of attention to these codes creates more work on all sides.

In addition, within the loads of data contained in bank fee statements lies a wealth of cost-saving opportunities that often go unnoticed. The complexity of these statements and the sheer volume of transactions can overwhelm finance teams, leaving them without the time or know-how to extract meaningful insights that can positively impact an organization’s bottom line.

The Solution For Data Complexities

While extracting meaningful insights from banking data presents universal challenges, there are a few solutions organizations can consider:

1. Transition to Electronic Bank Fee Data – Traditionally, treasury departments spend exorbitant amounts of time sifting through PDF statements. Making the switch to electronic data not only saves time, but also makes the AFP code mapping process much easier to complete with potentially fewer inaccuracies.
2. Work with AFP Accredited Service Code Providers – These banks have their AFP Service Codes certified annually to ensure accuracy and consistency.
3. Leverage Bank Fee Software – Bank fee analysis software is a helpful tool that can identify the hidden potential within your bank fee statements. A solution that manages the data classification is key to being able to gain visibility into the nature of your charges to reduce costs and detect internal processing issues that should be resolved.
4. Outsource Your Benchmarking – Utilizing data service providers to offload the benchmarking process allows organizations to access comprehensive data sets, tap into external expertise, unlock accurate industry comparisons, identify areas for improvement, and make data-driven decisions with confidence.

Why Redbridge

With our comprehensive bank fee analysis software and team of experts, we offer clients:

• Strengthened Bank Relationships: Proper AFP code analysis and mapping, as well as data optimization, lead to more transparent and efficient communication with your banking partners. This strengthens your relationships and fosters collaboration for mutual benefit.
• Time, Money, and Resource Savings: Redbridge’s finance expertise and proprietary technology streamline the entire data process, saving your organization precious time and money so that you no longer need to allocate excessive resources to manual data analysis.
• Better Benchmarking: Our global database includes billions of fees in more than 105 countries and 550 bank branches.
• Enhanced Finance Team Efficiency: With Redbridge as your partner, your finance team becomes more effective and efficient. Freed from the burden of manual data analysis, they can focus on strategic initiatives that drive growth and profitability.

If your treasury department’s current process for streamlining the analysis of its bank fee data is unoptimized, it’s crucial that an efficient strategy is devised and implemented. Working with a data optimization partner like Redbridge allows organizations to free their internal resources by outsourcing the heavy lifting of data analysis and benchmarking to finance experts.

Connect with us today to learn more about how you can optimize your bank fee analysis process and enhance your cost-savings capabilities.