Finance teams must stay alert to shifting trade policies, tariff uncertainties, and supply chain disruptions, as these changes can impact corporate debt strategy. A new administration often brings challenges and opportunities, such as rising costs, operational risks, and increased M&A activity. Treasurers and CFO’s need to stay ahead of the curve.

Finance teams must stay alert to shifting trade policies, tariff uncertainties, and supply chain disruptions, as these changes can impact corporate debt strategy. A new administration often brings challenges and opportunities, such as rising costs, operational risks, and increased M&A activity. Treasurers and CFO’s need to stay ahead of the curve.

Global trade dynamics are evolving quickly, with tariffs being considered for the U.S.’s top trading partners: Mexico, Canada, and China. This could significantly impact trade data and corporate strategies.

US trade deficits graph

U.S. imports consistently outpace exports with key trading partners. Tariffs or border closures could reduce trade volumes, disrupt supply chains, and challenge corporate finance teams. Auto manufacturing and states like Texas are especially vulnerable to tariffs on Canada and Mexico. Despite a large trade deficit with the EU, there’s less talk about European tariffs.

What’s at Stake?

Everything from cash flow to your ability to fund growth initiatives is at stake. Waiting to act until the impact hits your business could limit your options, leaving you scrambling for solutions when time, flexibility and market conditions are no longer on your side. Instead, now is the time to take a proactive approach to financing.

Treasury teams that prepare now will be ready to manage rising costs, capitalize on growth opportunities, and build resilience against future disruptions.

Time to Reassess Your Financing Strategy?

Rather than waiting for disruptions to impact your business, corporate treasurers can take proactive steps to strengthen their financial position. While it’s impossible to predict every scenario, there are clear reasons why securing financing today can put your company in a stronger position tomorrow. Corporate treasurers should evaluate these four questions:

1. Are You Ready for Sudden Changes to Trade Costs?
If your company imports parts or exports finished goods, now is the time to review your trade exposures. Tariffs can quickly change the cost and availability of goods, particularly for businesses relying on imports from Mexico, Canada, or China. Financial results such as revenue levels, input pricing, and margins could be negatively or positively impacted, and should be modeled, as this could affect your credit standing with banks and institutional investors. Understanding your exposure will help you anticipate potential challenges and plan ahead.

2. Do You Have the Liquidity to Handle Disruption?
In times of market volatility, liquidity is essential. Disruptions—whether from tariffs, global events, or supply chain issues—can strain working capital and reduce free cash flow. Evaluate your cash reserves and explore financing options to ensure your company can maintain operations and seize opportunities when they arise. Ensure you have the right debt mix and the right lenders to navigate through storms and sunny weather.

3. Could Consolidation Impact Your Financial Structure?
A less restrictive regulatory environment may lead to increased mergers and acquisitions. If you’re exploring opportunities to expand, streamline, or consolidate, ensure your financing strategy supports those goals. Reexamining your capital structure while the US economy is strong, rather than during a downturn, can improve long-term stability and flexibility.

4. Is Your Company Ready for a Sale?
If selling your business is on the horizon, preparing your financials is critical to securing the best outcome. Focus on improving cash flow, optimizing operational efficiency, and addressing any weaknesses in your financial performance to make your company more attractive to potential buyers.

Next Steps to Take

A key challenge companies face in acting promptly is the lack of resources, time, data and expertise and competing other priorities.

We understand that and at Redbridge Debt & Treasury Advisory, we have the dedicated resources, market leading software, proprietary benchmarks and expertise to optimize your yield rates in a falling rate environment – as you focus on other priority areas.

What Treasurers Should Do Today

If the answer to these questions is unclear or your business relies on global trade, you should urgently gather senior financial leadership to identify key areas where changes policy or regulations could impact your operations. From there, focus on:

  •  Liquidity Planning: Assess your working capital needs and consider how disruptions could affect cash flow and increase the need for diversified financing sources across products and geographies.
  • Strategic Growth: Revisit your M&A pipeline and ensure you have the funding to move forward with strategic deals.
  • Operational Resilience: Look for opportunities to strengthen your supply chain and diversify operations to reduce reliance on single points of failure.

Don’t Wait for a Crisis to Act

The world isn’t going to get less complicated, and waiting for the dust to settle could leave your company vulnerable. By taking steps today to secure financing, you can protect your business against uncertainty and position it for growth.

If your treasury team is ready to evaluate financing options or needs expert guidance on navigating the current landscape and answering these critical questions, Redbridge is here to help. We can help you evaluate your current capital structure and potential opportunities and vulnerabilities. Visit our website to learn more about how we support corporate finance teams in building stronger, more resilient businesses.

Redbridge & Thoughtworks Press release Thumbnail

CHICAGO AND HOUSTON — January 28, 2025 — Thoughtworks, a global technology consultancy that integrates strategy, design and engineering, has partnered with Redbridge Debt and Treasury Advisory (DTA), a leading provider of payments, treasury and debt advisory solutions, to modernize and scale the digital platform to provide more advanced data and analytics to elevate the advisory experience for clients across all markets.

The Payments Industry exists in a state of constant flux. Redbridge helps its clients – companies navigating the world of credit card, debit card and other electronic payment forms – optimize all aspects of the payments value chain. With the rise of big data and competing interests of data privacy, Redbridge saw the opportunity to position itself as a leader in both analytics and advisory, delivering expertly crafted industry intelligence.

Redbridge Debt & Treasury Advisory has built its reputation on delivering best-in-class advisory services in payments, treasury and debt. With a clear vision on the future needs of payments advisory, Redbridge has partnered with Thoughtworks to engineer a cloud-based platform on the industry’s bleeding edge.

This collaboration will enable Redbridge to further streamline data ingestion aspects of machine learning, robotic process automation and other advanced processing capabilities, offering clients unparalleled transparency in payment transaction cost, fees, and interchange rates. The platform on AWS will provide Redbridge with rich, cross-market insights, allowing them to identify further areas for value creation and greater precision in cost-savings opportunities.

“Redbridge has always prioritized strategic investments to provide our clients with unmatched value,” said Dan Carter, Sr. Director & Head of Global Payment Strategy, Redbridge DTA. “Partnering with Thoughtworks will allow us to realize our strategic vision. This partnership brings together our goal of delivering deep learning, data-driven results with an expert interpretation allowing us to positively impact the bottom line for our clients.”

“Across the financial payments landscape, technology is driving business modernization. We’re seeing more clients adopt platform-thinking and cutting edge technology to remain at the forefront of innovation,” said Craig Stanley, Executive Vice President, Thoughtworks Americas. “We’re extremely pleased to bring our 30+ years of experience in integrating strategy and continuous delivery to leaders like Redbridge DTA who are always on the lookout for ways to deliver more value and data-based insights to their clients.”

This partnership marks a key milestone in Redbridge’s ongoing digital transformation strategy. By leveraging Thoughtworks’ global expertise in platform modernization and cutting-edge technology, Redbridge is positioned to deliver greater efficiency and a better client experience across its payments portfolio. As the payments industry continues to change while relying more and more on data, this effort continues to establish Redbridge’s role as a trusted partner as an extension of clients’ payment systems.

Supporting resources:

About Thougtworks

Thoughtworks is a global technology consultancy that integrates strategy, design and engineering to drive digital innovation. We are over 10,000 Thoughtworkers strong across 48 offices in 19 countries. For 30+ years, we’ve delivered extraordinary impact together with our clients by helping them solve complex business problems with technology as the differentiator.

Media contact:
Linda Horiuchi, global head of public relations
Email: linda.horiuchi@thoughtworks.com
Phone: +1 (646) 581-2568

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, Chicago, 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.

Media contacts:
US – Michael Denison
mdenison@redbridgedta.com

EU – Emmanuel Léchère
elechere@redbridgedta.com

With the Federal Reserve cutting interest rates recently, you have probably noticed the effect on your company’s interest earnings from cash balances. With another possible rate cut coming this month, it’s important to be prepared.

The good news is, there are steps you can take to better navigate these changes, and Redbridge is here to help.

The Challenge at Hand

Interest rates are falling, and that makes having transparency on and ensuring fair yield rate reductions a key priority.

fed funds graph

After the Fed’s rate cut in September, many companies felt the impact on yield earnings from cash balances. If you are managing relationships with multiple banks, chances are you have seen most of them lower their rates. On average, our clients experienced a 0.45% decrease (vs 0.50% FFR cut), which directly affects earnings and cash flow.

Companies have handled this situation differently:

  • Accepting the Changes: Some choose not to challenge the rate decreases at this time, as they want to see how their banks react with subsequent rate cuts.
  • Taking Action: Others decided to negotiate with their banks or sought expert help to lessen the impact.

These experiences show that having detailed visibility and being proactive can really make a difference in protecting your company’s yield earnings.

How You Can Respond

Here are some steps you can take to tackle these challenges:

#1 Understand Where You Stand

Take a close look at your bank agreements. What do they say about rate changes? Do your banks adjust rates fully or only partially when the Fed makes a move?

#2 Analyze Your Recent Data

Review your September and October statements to see exactly how the rate cuts have affected you. Which banks changed their rates, and by how much? Spotting these trends can help you plan your next steps.

#3 Challenge the current level of your rates

If the rates you are receiving are already well below the Federal Funds Rate (FFR), then there’s no justification for your bank to reduce them further when the Fed announces a cut. In this situation, it’s worth pushing back and reminding your banking partner of your existing rate structure. By doing so, you can help ensure they stick to what you have negotiated rather than automatically passing along rate decreases that were never intended to apply in your case.

#4 Have a fact and analysis-based discussion with your bank

Don’t wait for the next rate cut to start a conversation. Start by gathering the facts and data needed to have a productive conversation with your banks. This requires viewing, analyzing, and understanding the data found on your bank statements. This process will help you negotiate better terms — for instance, there may be a chance you can get your bank to pass through a smaller percentage of the rate decrease.

#5 Consider Expert Guidance

Think about getting help from professionals. Treasury advisors can offer valuable insights and assist you in negotiations. Also, tools like our bank fee monitoring software, HawkeyeBSB, will help you monitor your bank rates in real time, giving you an edge.

Why Acting Now Matters

By taking action sooner rather than later, you can:

  • Protect Your Earnings: Reduce the negative effects of rate cuts on your financial statements.
  • Build Stronger Relationships: Show your banks that you are proactive and informed, which can lead to better collaboration.
  • Stay Ahead: Prepare for future changes so your organization continues to thrive.

If you don’t act, you might miss out on opportunities and face more financial challenges down the road.

Next Steps to Take

A key challenge companies face in acting promptly is the lack of resources, time, data and expertise and competing other priorities.

We understand that and at Redbridge Debt & Treasury Advisory, we have the dedicated resources, market leading software, proprietary benchmarks and expertise to optimize your yield rates in a falling rate environment – as you focus on other priority areas.

We’re Here to Support You

We understand that dealing with these changes isn’t easy. At Redbridge Debt & Treasury Advisory, we’ve helped clients navigate similar situations, protecting their earnings and improving their treasury strategies.

You don’t have to face this challenge alone. Contact us today to set up a consultation and take control of your organization’s financial future.

About Redbridge Debt & Treasury Advisory

At Redbridge, we’re committed to helping treasury professionals like you succeed. We offer personalized advisory services and innovative tools to help you navigate the complex world of finance with confidence.

Want to stay updated? Subscribe to our newsletter for the latest insights and strategies.

Payroll processors need a strong banking relationship to contribute to their overall financial health and success. Banking visibility plays a key role in maintaining not only the cash flow on-hand, but understanding the dynamics of various services that contribute to the day-to-day efficiency of the underlying Treasury Department roles.

Due to the high payment transaction volumes payroll processors regularly handle, maintaining transparency, streamlining processes, optimizing bank payments, and leveraging merchant services are essential for efficiency and accuracy. In this article we provide an overview of the key bank payment services payroll processors use, how they can optimize costs and efficiency across bank, FX fees, and yields on deposits.

Managing High-Cost Bank Fee Services: ACH and Paper Check Challenges for Payroll Processors

High volume bank fee services, such as ACHs and checks, significantly add to overall bank fee costs. For payroll processors, frequent reliance on these services can lead to higher banking expenses.

ACH Processing

ACHs are one of the main services used by payroll processors daily to process payments ranging from wages & salaries, travel & expense reimbursement, retirement plan disbursements, garnishment payments, and tax related payments. ACHs are the lower cost option compared to traditional paper checks and are also more secure to prevent lost or stolen payments. However, ACH processing takes two to three days for clearing and is subject to monitoring by the National Automated Clearing House Association (NACHA) rules and regulations. Payroll related payments processed are also subject to national and regional regulations that require accurate beneficiary banking information and payment.

Relying on underlying customer data for payroll processing can create a liability that is unavoidable at times by the performing payroll processor. A payroll processor can implement data checks and request the underlying customer to attest the data in the payroll file is true and accurate, but sometimes the payee’s/beneficiary’s information is not accurate. These instances can create ACH returns, rejects, or repairs requests from the originating bank, and fees assessed by the originating bank to the payroll processor.

NACHA has established threshold ratios for return rates on ACHs. These thresholds are segmented into unauthorized debit entries at 0.5%, administrative return rates at 3.0%, and overall return rates at 15%. Should ratios exceed these thresholds, payroll processors could be subject to NACHA fines.

It is important to monitor any returns, rejections, or repairs  on a monthly basis and determine if these return codes are repeated with a particular underlying customer or beneficiary. Requiring underlying customer data to be verified and accurate can reduce the risk of any payment interruption and reduce these punitive charges.

Paper Checks

Paper checks follow ACH as a high-volume service utilized by payroll processors. Although it is costly compared to ACH payments, it provides a method of payment for those who do not wish to share their banking information or those who do not have a bank account. This method carries additional support costs, including positive pay item verification and management of stale-dated checks. Paper checks are also prone to being lost or stolen, increasing the risk of fraud for issuing payroll processors, as sensitive information such as bank account and routing numbers are displayed on the check. In addition, paper checks that are not cashed by the payee/beneficiary are subject to escheatment regulations, adding another layer of complexity to their management.

International check payment processing can incur additional costs as well. Payroll processors will need to convert their currencies to fund each disbursement account. These currency exchanges can be costly and could possibly have timing delays in the funds clearing the intended account(s). Planning these fundings and monitoring the exchange rates can reduce expenses incurred by payroll processors.

Optimizing Foreign Exchange Transactions: Strategies for Payroll Processors

Payroll processing is global and requires the processor to be able to fund payments in the required currency. Payroll processors should have lead time to plan for funding or fund conversion for the outgoing disbursements. Often time processors will utilize a trading platform to aid in currency conversion, such as FXAll or 360T; however, the data used for pricing is contingent on the trading activity of the processor themselves.

When FX trades are executed, an exchange rate is applied as well as a margin by the banks. An exchange rate is the market price for one currency exchanged for another currency. This rate is influenced by many factors such as inflation, interest rates, local regulations, and market exceptions.

However, an FX Margin is the bank assessed fee for executing the foreign exchange and is influenced by:

  • Liquidity – The global FX market has associated risks with the pairs of currencies that are up for each transaction. The higher the liquidity for the currency pair, the lower the risk and lower margin. Currency pairs with high liquidity are defined as G10 currencies and include: United States Dollar (USD), Euro (EUR), Great British Pound (GBP), Japanese Yen (JPY), Australian Dollar (AUD), New Zealand Dollar (NZD), Canadian Dollar (CAD), Swiss Franc (CHF), Norwegian Krone (NOK), and Swedish Krona (SEK).
  • Tenor Length – the shorter the tenor, the lower the risk
  • Number of banks the payroll processor is using to execute the trades – by spreading the trades amongst banks, payroll processors are able to compare margin costs offered between banks.

A lack of transparency for margins assessed by banks in these trades is common with payroll processors. When submitting a trade request, the bank provides a quote inclusive of all-in costs to execute the currency conversion. Determining the bank assessed margin and exchange rate from this quote can be difficult. Although billing for these trades with the banks is commonly presented in an accumulative total, the banks should be able to provide accounting detailing the all-in costs upon request.

Maximizing Cash Yield: Evaluating Earnings Credit Allowances vs. Hard Interest

Payroll processors have a seasonality to their cash balances that coincides with the local jurisdictions’ timeline for tax payments. Most processors utilize these cash balances in an eligible yield earning account, such as Earnings Credit Allowance and/or Hard Interest.

Earnings Credit Allowances (ECA) are often utilized not only in seasonal accounts as mentioned above but also in operating accounts or other special use accounts that hold cash balances. The bank will offer an Earnings Credit Rate (ECR) and will work with processors on identifying the accounts that qualify for eligible cash balances. Eligible cash balances are balances for applicable accounts receiving the ECR less any required balance reserves or any restricted balances. The ECA is then calculated monthly and is used to offset the reporting month’s bank fees. One of the advantages of utilizing ECA is that it’s not considered revenue, which means it is non-taxable and payroll processors will not be subject to the business income tax at year end on the allowance given. The downside of an ECA is the allowance given may only be used in the month it is accrued and any excess will not carry over.

Payroll processors have utilized Hard Interest-bearing accounts to maximize revenue in the recent high-interest rate environment. This allowed interest revenue to be generated on cash balances and increased the top line revenue for payroll processors. The rates offered by the banks are factored on the type of balances (operational or non-operational), the current Fed Fund Rate, inflation, and other futures. Hard Interest revenue is subject to the processor’s business income tax rate. The interest revenue can be paid directly by the bank to the processor or netted against the assessed bank fees monthly and then the net amount is paid to the processor. This setup could be beneficial during a high-rate environment as the revenues generated far exceed the liabilities associated, making the Treasury departments a profit center versus a cost center.

Minimizing Costs and Maximizing Efficiency in Payroll Cash Management

Understanding the cost of services associated with daily activities executed with the banks allows payroll processors to minimize costs and remain as efficient as possible. Redbridge can aid payroll processors in their cash management departments and assist in efforts to educate and consult on areas of opportunity for improvement.

Since early 2023, the banking industry has faced considerable turbulence, with high-profile failures and acquisitions that have reshaped corporate financial strategies. While the immediate crisis has stabilized, the collapse of Republic First Bank and the acquisition of Independent Bank highlight ongoing risks that demand continued vigilance from businesses across the spectrum.

The Current Banking Environment: Beyond the Regional Crisis

The regional banking crisis that erupted last year has largely stabilized, but it left a lasting impact on the industry. High-profile incidents, such as the seizure of Republic First Bank and the rescue of Independent Bank, were symptomatic of a broader crisis that challenged smaller and mid-sized banks’ operational stability. Though the immediate wave of failures seems to have subsided, the underlying issues remain. Industry experts, including Howard Lutnick from Newmark Group, warn that the financial system is still under strain, with the potential for additional bank failures in the near term.

This situation stems from a variety of complex issues:

  • Market Disruption and Reduced Lending Capacity: Regional banks have traditionally handled more speculative and higher-risk deals. With the recent instability, these deals are either not materializing or shifting to more expensive private lending markets or equity. This shift is compelling businesses to reassess their financial strategies, as the dynamics of the banking economy continue to evolve.
  • Deposits and Liquidity Challenges: Mid-sized and regional banks experienced a significant loss of deposits in early 2023, as they were perceived to be riskier than their larger counterparts. Even though the situation has stabilized, the pressure remains. Larger banks are also feeling the strain as depositors seek better yields elsewhere, driving up the marginal cost of funds and challenging banks’ ability to retain and attract capital.
  • Commercial Real Estate Vulnerabilities: A significant portion of U.S. bank loans to commercial real estate firms is held by small and medium-sized regional banks. With office vacancies still high and higher interest rates squeezing property owners’ cash flows, these banks remain vulnerable. The lower equity requirements imposed by banks in recent years leaves them particularly exposed to financial distress.
  • Regulatory Pressures: The failures of 2023 have led to heightened scrutiny across the banking sector, with a focus on both regional and larger institutions. Increased capital requirements, particularly under the Basel III endgame, are pressuring banks to bolster their resilience. Regulatory bodies are also enforcing stricter loan-to-value ratios for commercial real estate loans, aiming to prevent the crises of the past such as the S&LL crisis or the financial crisis in 2008 and beyond. Recent election results may be positive for the banks from a regulatory perspective, but uncertainty remains.

Strategic Financial Planning Is Essential

For businesses that rely on loans or operational funding from regional and even larger banks, strategic financial planning has become imperative. Though the worst of the crisis has passed, the landscape remains unpredictable. Identifying stable banking partners and developing comprehensive financial strategies are critical steps to safeguard against ongoing instability and the broader shifts within the banking sector. Companies must remain vigilant, ensuring their financial health is resilient enough to weather any future disruptions.

Proactive Measures and Alternatives

  • Diversifying Banking Relationships: To mitigate the risks associated with banking instability, businesses should diversify their banking relationships. Engaging multiple financial institutions for different needs or implementing syndicated credit facilities can reduce the risk of being overly dependent on any single institution. Understanding how your banks evaluate and prioritize relationships is critical. This strategy not only spreads risk but also offers the potential for more competitive terms as banks vie for business.
  • Adopting a Forward Looking Financing Plan: companies should use their strategic plan to model alternative future cash flows to identify future financing needs:
    • Timing: if the debt will be outstanding for a longer period of time, a fixed rate might be attractive, but prepayment penalties/call premiums should be avoided if the debt will likely be prepaid early
    • Ratings/Credit Profile: if the company is on on upward trajectory, it may be possible to refinance early or tap alternative financing sources in the future
    • “Black Swan” Scenarios: make sure the capital structure is sufficiently flexible to withstand future economic, market, business and geopolitical disruptions
  • Exploring Alternative Funding Sources: As traditional banks tighten lending criteria, businesses should explore alternative funding sources:
    • Institutional Debt: Larger companies might consider issuing corporate bonds or private placements, which can offer longer term fixed-rate financing on an unsecured basis, or Institutional Term Loan B’s, which are typically floating rate, prepayable secured debt with low amortization.
    • Direct Lending: Non-bank institutions like private equity firms or credit funds can provide more flexible albeit typically more expensive financing options during times of banking instability and due to a lower regulatory burden.
    • Receivables Factoring : These modern financing methods connect businesses directly with investors and lenders, bypassing traditional banking channels altogether.
    • Leasing and Asset-Based Financing: Companies with significant physical assets might find these options provide liquidity without the need for traditional bank loans.

By adopting these proactive measures, businesses can safeguard their operations against ongoing risks in the banking sector while positioning themselves to seize opportunities as the financial landscape evolves. These strategies underscore the importance of adaptability and forward-thinking in today’s dynamic economic environment.

Regulatory Considerations and Future Outlook

The banking failures of 2023 have led to heightened regulatory scrutiny, particularly concerning commercial real estate loans and capital requirements. Navigating this evolving regulatory landscape is vital for maintaining financial stability and compliance. Businesses must stay informed about these changes and adapt their strategies accordingly to remain on solid financial ground. complications.

Summary and Next Steps

The banking sector may have stabilized, but businesses must remain vigilant. With proactive financial management, they can navigate ongoing challenges effectively. At Redbridge Debt & Treasury Advisory, we offer expert advice and strategic insights to help your business thrive in this complex environment.

Schedule a consultation with Redbridge to safeguard your business against future banking shifts.

Your company, like many corporate treasury teams, is likely under pressure to optimize payment processes while minimizing costs and staying agile. But payment environments are complex, and identifying the areas most in need of improvement can be tricky.

Here’s a look at five common payment challenges and practical steps for addressing each:

1. High Acceptance Costs, Complex Fee Structures, and Interchange Optimization

Payment acceptance fees are one of the most significant financial challenges treasury teams face, especially when processor and acquirer charges are layered and difficult to analyze. Organizations that don’t have a firm & detailed understanding and ability to review these costs may be paying more than they realize or may overlook optimization opportunities that are hidden in layers of data.

A substantial portion—typically 75% or more of these costs comes from interchange fees, which require treasury teams to find the time and effort to decode, analyze, and improve the qualification or mitigate with other payment methods.

Interchange optimization can have a huge impact on the bottom line, so it’s essential to map out the structure of these fees and pinpoint areas for improvement.

2. Detecting and Preventing Fraud

Fraud costs you money and consumes time and resources that you could spend on strategic work. Yet many treasury teams don’t have the tools or insights they need to identify fraud patterns before they become costly.

A detailed assessment of your current fraud detection environment will provide insights into your authorization rates, where vulnerabilities might exist, and help identify steps to mitigate risk. Implementing tools like tokenization or machine learning can be an added advantage, but you must first have the data to analyze and understand the trends. This process helps you work smarter against fraud, aligning your strategy to fit your specific risk factors.

3. Streamlining Payment Processes

When payments come in through multiple channels—whether via e-commerce, POS systems, or online platforms—managing them efficiently can become difficult, especially with disparate systems or outdated platforms. For companies planning CRM or ERP integrations, payment processes that aren’t optimized can complicate things even further.

Before launching new integrations, your team should make an effort to streamline your payment environment. An upfront evaluation can reveal opportunities to consolidate payment points, minimize chargebacks, and automate reconciliation. Reviewing the architecture of your payment system ensures that new integrations are seamless and effective, saving you time and reducing operational drag.

4. Adding New Payment Options

Expanding your payment options is an effective way to meet customer expectations, but it also comes with its own considerations. Each new option—whether it’s virtual cards, ACH, or international payments—adds complexity and potential costs.

Make sure your team conducts a cost-benefit analysis before implementing new payment options. This includes understanding regulatory requirements, assessing fees, and determining the customer impact. Companies looking to expand internationally should pay close attention to cross-border fees, local payment methods, and FX risks to avoid unnecessary complications.

5. Clarity Through Comprehensive Reporting

Payment systems require comprehensive reporting to track and evaluate performance across vendors, regions, and channels. Standard reports don’t always offer the in-depth view needed to drive strategic decisions.

Has your team adopted or upgraded reporting tools? Many of our clients are actively looking to centralize data across multiple payment sources because having access to robust reporting systems allows treasury teams to monitor performance in real time and access the information they need to support strategic initiatives. Custom reporting can simplify contract negotiations, enable better forecasting, and streamline monthly reviews for teams working with large or varied vendor bases.
initiatives. Custom reporting can simplify contract negotiations, enable better forecasting, and streamline monthly reviews for teams working with large or varied vendor bases.

Final Thought: Optimizing Your Payment Environment

Tackling these payment challenges can help your treasury and payments teams cut costs and build a more efficient treasury function. By identifying and addressing these issues ahead of time, your company can simplify its payment environment and stay competitive in the marketplace with your customers and in new relationships with banks and financial partners.

For treasury teams that need an extra hand, Redbridge’s GPS team provides a data-backed approach to help clients optimize, monitor, and streamline payments across complex environments.

For many corporate treasury teams, Treasurers and CFOs, optimizing bank fees often doesn’t top their priority list. Yet, left unexamined, these fees can accumulate unnecessary expenses and create inefficiencies in cash management.

If your company encounters any of the following scenarios, it’s time to reassess your bank fees and services. A structured, objective assessment of your bank and services can uncover savings, streamline services, and align banking costs with your company’s needs – as well as improving your overall banking relationships due to improved transparency across your bank fees and services.

Here’s how to tell if it’s time to take action:

1. Multiple Bank Relationships

When companies grow through acquisitions or maintain legacy systems, they often retain multiple bank relationships each with multiple accounts—sometimes more than necessary. This can lead to duplicate services, redundant fees, missed volume discount opportunities and a lack of unified oversight on bank accounts. With hundreds of accounts spanning multiple banks and countries, it’s easy for treasury teams to lose visibility, and fees multiply unnoticed.

A treasury department’s trust in existing banking relationships can sometimes lead to replicating services and settings for new accounts without assessing actual needs. This practice may result in unnecessary and inefficient services, such as printed statements, CDs, and paper check return fees.

Optimizing bank relationships means reviewing the necessity of each account, understanding individual bank service line strengths and weaknesses and consolidating wherever possible. Cleaning up accounts and services can yield immediate cost savings and streamline cash management practices, especially when aiming for centralized oversight across the organization.

2. Lack of Transparency in Pricing

A common pain point for treasury departments is inconsistent or unclear pricing. It’s not unusual for companies to find disparate rates for identical services, even when using the same bank across different entities. Without a detailed pricing grid that maps out service costs across banking relationships in different countries, these discrepancies can become costly.

Creating a transparent and consistent pricing grid is essential for informed financial decision-making. Understanding exactly what you are paying for – as well as what fair market prices are – can help avoid unnecessary fees, clarify service value, and equip your team for stronger negotiations with banking partners.

3. Unchanged Pricing Despite Volume Growth

As transaction volumes increase, pricing should reflect this growth by offering unit rate reductions. Many organizations miss this opportunity, instead paying the same (or even higher) fees per transaction despite higher volumes. When bank service costs don’t account for volume discounts, companies may face fees that don’t align with the scale of their business activities.

Treasury teams should leverage their higher transaction volumes to negotiate better rates. Banks benefit from this increased volume, and it’s reasonable to expect corresponding reductions in fees. It is recommended to review bank fee pricing every 3 years and renegotiating terms based on volume to maximize savings as your company grows.

4. Evolving Rate Environment

Interest rate trends directly affect bank fees. In the past, higher interest rates may have allowed companies to offset significant portions of their bank fees with earnings credits. However, as rates decrease, these credits may fall short of covering fees, resulting in higher out-of-pocket expenses.

Reviewing bank fees in light of changing rates is essential. Companies previously unaffected by fee changes due to offsetting credits may find themselves newly exposed to these costs. Adapting to the current rate environment allows treasury teams to maintain cost-effective banking arrangements that align with both their cash flow and interest rate conditions.

5. ERP Implementation and SWIFT ISO 20022 Compliance

Updating ERP systems to meet new SWIFT ISO 20022 standards or consolidating disparate ERP systems across entities can bring significant benefits to treasury departments—but also added complexity. When implementing a new ERP, companies have a unique opportunity to reassess their bank fees and eliminate redundant or unnecessary services.

The ERP setup process is typically long and involved. Taking the time to identify and correct inefficiencies and streamline bank accounts before or during ERP implementation can save both time and resources. Treasury teams that align bank fee structures with ERP capabilities can avoid duplicate setup costs and achieve a more efficient, transparent system from the start.

How Redbridge Can Help

If any of these scenarios resonate, it’s a good indication that your company could benefit from a comprehensive bank fee and service review. Redbridge specializes in identifying optimization opportunities, improving transparency, and negotiating favorable terms that align with your company’s size, growth, and specific treasury needs. This requires only minimal effort on your part thanks to our unique delivery platform with dedicated teams that carry out the heavy lifting in the background so you can focus on your key priority areas.

Contact Redbridge today to see how we can help you optimize costs, improve efficiencies, and position your company for sustainable growth.

This spring, Redbridge hosted its inaugural Banking and BBQ corporate roundtable event in Dallas, TX. The event brought together corporate treasurers from some of the city’s and the world’s largest companies to engage in meaningful discussions about the latest trends in cash management, payments, and corporate finance. Set against the warm and inviting backdrop of Lane’s OAK’d BBQ’s newest location in Addison, the day was a perfect blend of insightful conversation and top-tier barbecue.

Banking & BBQ group photos

What’s Hot in Banking?

The event’s discussions were fueled by the latest developments in banking and treasury management. Here’s what was top of mind for our attendees:

  • Payment Data Insights: The potential for using payment data to gain a 360-degree view of consumers was a recurring theme. The discussion extended into the emerging applications of Generative AI (GenAI) in payments and customization, signaling a new era of data-driven decision-making.
  • Buy Now, Pay Later (BNPL): Still a favored tool among younger consumers, BNPL continues to challenge traditional credit models, with many treasurers weighing its implications for their financial strategies.
  • Rising Costs of Depository Services: Attendees voiced concerns about the drastic increases in cash and coin services, highlighting the growing pricing power of depository service providers.
  • Cost-Cutting Fatigue: As banks compete aggressively in RFPs, treasurers are experiencing frustration with the lack of tangible movement in business allocations, reflecting a fatigue in cost-cutting measures.
  • AI, APIs, and RTP Buzzwords: While banks are excited about these advancements, many treasurers are more focused on practical solutions that directly impact their operations.
  • Yield Proposals: Despite some indications that current yield offers may have peaked, they remain a strong component of treasurers’ investment strategies.

Why These Discussions Matter

The insights shared at the roundtable are critical for corporate treasurers as they navigate an increasingly complex financial landscape:

  1. ISO 20022 Interbank Deadline: This upcoming deadline will significantly impact which file formats banks can provide if they are using correspondents. Staying ahead of these changes is crucial for maintaining operational efficiency and most of the attendees were not aware of the impact.
  2. Rising Credit Costs: As access to credit becomes more expensive, treasurers must carefully evaluate their funding strategies to ensure they secure the best possible terms.
  3. Inflating Costs of Depository Services: With depository service providers gaining more pricing power, companies need to be proactive in locking in favorable rates and minimizing the impact of rising costs.

How Redbridge Can Help

At Redbridge, we’re committed to helping our clients navigate these challenges:

  1. Navigating the Payment Landscape: We offer expert guidance on streamlining your payment ecosystem, from customer checkout to reconciliation, ensuring you’re equipped to handle the latest industry shifts.
  2. Reviewing Capital Structures: Our team can help you evaluate alternative funding sources and structures, providing the flexibility and favorable terms needed in today’s market.
  3. Securing the Best Rates: By locking in the best fees and rates on cash management services, we help reduce the impact of rising costs and falling interest rates.

What’s Hot at Lane’s OAK’d BBQ

Our Banking and BBQ event was more than just talk—our attendees also got to sample some of the best barbecue Dallas has to offer at Lane’s OAK’d BBQ in Addison. Known for its craft barbecue, everything at OAK’d BBQ is made in-house from scratch. Pitmaster and chef Michael Lane even gave us a tour of their two massive pits, affectionately named Army and Navy.

Lane’s OAK’d BBQ has been recognized as one of the top BBQ joints in Texas by Texas Monthly and Dallas Observer, and it’s easy to see why. If you’re in the Dallas area—or lucky enough to live there—make sure to add this spot to your regular dining rotation.

Banking & BBQ restaurant photos

Key Takeaways from Our Event

Our survey results reflected the overall positive reception of the event:

  • Brisket and Desserts Were Favorites: Both the prime beef brisket and desserts like bread pudding and key lime pie received top marks.
  • Awareness of Rising Costs: A significant number of treasurers are seeing increases in banking fees and interest spreads, though many are still unaware of the full implications.

Whether you’re a corporate treasurer looking to stay ahead of industry trends or someone who appreciates top-notch barbecue, our Banking and BBQ event offered the perfect mix of both. If you find yourself in Dallas, don’t miss out on OAK’d BBQ.

And of course, if you’re navigating the complexities of today’s banking landscape, reach out to Redbridge. We’re here to help you find the best solutions for your business.

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.

Historical Fed Funds rate 2022-2024 for yield planning

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:

 

Redbridge clients ECR after negotiation for yield planning

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.

P-cards vs credit cards graphic

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 chicago office

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

A growing number of businesses are transitioning from traditional Lockbox payments to Automated Clearing House (ACH) payments to streamline their payment operations. This strategic shift not only optimizes transaction speed and accuracy but also significantly enhances overall financial management. At Redbridge, we’ve helped many companies make the switch and have identified the best ways to streamline the process.

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.

Houston, Texas — Redbridge Debt and Treasury Advisory (DTA) is pleased to announce the formation of Redbridge Global Markets, LLC, a new broker-dealer subsidiary specializing in capital markets transactions and other strategic advice. Registered with the Securities and Exchange Commission (SEC) and the States of Texas, Michigan, and New York, as well as a member of the Financial Industry Regulatory Authority (FINRA) and Securities Investor Protection Corporation (SIPC), this strategic expansion strengthens Redbridge DTA’s position as a trusted partner and accelerates its growth in the U.S. corporate finance sector.

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.
real time payments vs ach time difference graphic

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.

Facing fluctuating interest rates, businesses today confront the dual challenge of planning for periods of both hikes and declines. Federal Reserve rate increases to combat inflation as well as current market predictions of potential decreases create economic unpredictability for businesses like yours.

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.

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