Janet Clark: Currently volatility is the order of the day, and medium to large sized businesses must find a strong position in this ups and downs, when it comes to cash management and gaining the liquidity needed to perform operations optimally.
Bianca Bottes, a director at Citadel Global, joins us today to talk about some strategies for finding the best solution for your business. Citadel Global is a member of the South African Association of Treasury Advisors and adheres to the Fx Global Code.
Bianca, you are a lawyer of strategic cash-management solutions consisting of various accounts or funds. Can you explain why this is, and how it benefits a business?
Bianca Boats: The ability to manage cash more efficiently in a business is often overlooked. Many businesses focus only on having cash available when needed, and so we often find that these businesses are holding money in business accounts that are not actually giving them any kind of return.
By establishing more dynamic and proactive cash-management strategies, businesses can often increase revenue as well as improve their tax position on returns earned on such cash holdings.
So we at Citadel Global are excited to see these strategies, how we can optimize them, and make sure we add value to these underlying businesses.
Janet Clark: And what size business do you offer these services to? Will they be available for medium and large sized businesses and will they be suitable for them?
Bianca Boats: Those who have cash in hand can benefit by optimizing their cash holdings. However, to ensure that it is affordable, I would recommend that a business needs at least R500 000 hands to optimize these cash strategies.
Janet Clark: I know you mentioned earlier that many businesses have cash reserves deposited in non-interest-earned current accounts. Is there a way for businesses to earn a decent return from their cash reserves without subjecting returns at the general corporate tax rate?
Bianca Boats: Absolutely. I think when we start looking at cash management, we need to look at an array of products. I think people often get so caught up in overnight call accounts or money market accounts that they forget that there are different funds out there. Some of these funds are dividend funds, where a client will receive dividends instead of interest. Taxes on dividends are obviously at a lower tax rate than interest rates, which are taxed as earnings, and they can improve their tax position on those cash-earned returns by optimizing product selection rather than a simple call account or a money-market account. .
Janet Clark: Now, considering Rand’s volatility, what would be your advice for mitigating some of the business risks and the impact of that volatility on their available cash?
Bianca Boats: I think first and foremost it is important to make sure you understand the cash-flow cycle in your own business. We often meet with clients who have not actually mapped it, who do not know exactly what their exposure is going to be in three months, six months or nine months. There is an option to work with an expert who can advise you on what would be the best way to reduce these risks. When we start looking at risk, in terms of [a] In the business that needs to be imported, companies must first and foremost determine what their expectations are around the RAND and how they can mitigate the risk of potential RAND vulnerabilities. If it is expected that the rand could potentially be weak, we will offer the client a strategy where they can lock in the worst case scenario, but still benefit from a strong rand, for example, to optimize. [and] Make sure their results are guaranteed.
Janet Clark: Depending on the cash flow requirements of the business, working capital is definitely the biggest factor you need to evaluate. How does your strategy consider this and still optimize this cash return?
Bianca Boats: What makes Citadel Global unique is that we don’t have a cookie-cutter solution for any company. Our team of experts sit down with the decision makers in the business, and we see the unique landscape of that particular business. Every single business is unique, and so each business has cash flow, risk appetite, as well as cash requirements.
When partnering with Citadel Global, we sit down with financial decision makers to understand their specific needs and then build our strategies based on those specific needs using a combination of products and solutions. This strategy is that Citadel Global Compound is also dynamic and efficient. So, we make sure that we stay on top of that strategy, sitting down with decision makers on a quarterly or bi-annual basis to make sure that the strategy evolves as the business grows.
Janet Clark: Now there will be a few companies who can say, no, we can do it at home. Why would you argue that partnering with a Treasury company for a business is as helpful as helping them manage their own cash?
Bianca Boats: When you start looking at financial services providers in South Africa, we can name the top 10 in our heads. These companies all have different products, different funds that a client can choose from. Each of these funds comes with its own terms, returns, tax effects. For a business owner or a business financial decision maker who needs to focus on the core business of that business, it is now very difficult and conditional to make an informed decision about which is best for their specific needs by sorting through all this information.
A company like Citadel Global or us helps a business cut down on noise, provides them with a solution tailored to their specific needs and provides a clear and concise description of their specific product terms, as well as tax implications, makes it easier for them to digest information and have plenty of accounts. Or direct access to what they need instead of funds that are not really appropriate for their specific needs.
Janet Clark: Now, Bianca, if you look at the world we’ve got today – you just mentioned the South African financial services providers and funds and the myriad options they offer – do you see the world? Less complex or becoming more complex, and therefore actually adding motivation to find a cash-management partner for the business?
Bianca Boats: I think things are getting more complicated with the evolution of the world. New products and solutions come out, and those products and solutions need to be controlled. We often find that these rules make it very difficult for the average consumer.[person] Compare apples with apples on the street, mainly because of terms that are not often used outside of the financial services environment. So partnering with someone like Citadel Global or a treasury company that can reduce all of these elements for you, [will] Make sure the best product that suits your needs is actually delivered at the end of the day.
It is also important for a business owner to make sure that they choose their partner wisely. At the end of the day, you want an independent partner who will look at different types of solutions and give you the best possible solution, and not necessarily the one that stays in their house and where they stand to earn. Maximum fee.
Janet Clark: So just looking at Citadel Global quickly, what other services do you offer that compare to your cash management solution and put you in a better position to offer the best advice to clients?
Bianca Boats: Citadel Global is part of the larger Citadel Group. Within Citadel Group, we can focus on individuals specializing in asset management and corporate financial services. On the Citadel Global side, we focus on Forex management, we are an overall treasury management company, and we specialize in managing your risk and advising our clients.
Due to our internal strengths from our asset-management team, our team of economists and our currency experts, we have come up with a holistic solution for our clients that covers every single area of the financial market, as well as what is affecting them. The financial market at the moment. We are truly a consulting-driven business, ensuring that we provide the best solutions behind the best advice of our clients.
Janet Clark: Managing an increasingly complex business environment, including foreign exchange transactions and currency exposure, requires dedicated attention and an expert in the room.
Bianca Boats of Citadel Global joins us today, advising you to find the right partner to ensure effective cash flow and corporate cash management is available.
Citadel Global brings you.
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