Treasury Management - All about Canada Flashcards
What is cash management?
*Definition: Cash management is the process of collecting and managing cash flows.
So, we want to optimize the balance by:
-accounting for forecast
-the inflows - the outflows = + surplus – overdraft (a deficit caused by drawing more money than the account holds).
What are the elements to evaluate if their is cash movement attached to revenue/expenses?
Elements/criteria to evaluate:
- Timing (is crucial for investment firms)
- Uncertainty
- Depreciation/amortization (There to remind you that there are No cash movement associated with them. It is just a book entry)
Can you name me some industries that large banks in Canada will not Finance?
Gambling, guns, and prostitution.
What is the most important thing to have when Banking relations in Canada?
-Documentation is a MUST, time and expertise should be allocated accordingly (remember it often takes longer that anticipated)
Tell me about the Canadian clearing.
- Payments Canada*
- Defines clearing rules.
- ACSS (Automated Clearing Settlement System)
- LVTS (Large Value Transfer System)
- Unique Canadian System
- 12 direct clearers
- Around 100 other indirect clearers that have to maintain accounts with one of the 12 direct clearer.
Tell me about Payments Canada mandate.
is a not-for-profit association created in 1980 by an Act of Parliament. The CPA’s mandate is to what?
(a) to establish and operate national systems for the clearing and settlement of payments and for the making or exchange of payments;
(b) to facilitate the interaction of its clearing and settlement systems and related arrangements with other systems or arrangements involved in the exchange, clearing or settlement of payments; and
(c) to facilitate the development of new payment methods and technologies.
What are some of the system that Payment Canada operates for the clearing and settlements of payments?
the retail system known as the Automated Clearing and Settlement System (ACSS)
the Large Value Transfer System (LVTS) soon to be replaced by Lynx in 2020
the U.S. Bulk Exchange (USBE) system is used for the clearing of payment items in U.S. dollars.
Tell me about Corporate Creditor Identification Number (CCIN)
is a non-transferable identification number assigned by Payment Canada to businesses, governments, and other billers to facilitate payments to these organizations through their financial institutions (FIs). (ex: Assurance Lareau).
Payments Canada Modernization
A modern payments system is fast, flexible and secure, promotes innovation and strengthens Canada’s competitive position.
The Vision identified eight needs of a modern payments system
Provide definitions and examples for needs of a modern payment system (VERY IMPORTANT)
- Faster payment options:
- Data-rich payments:
- Easier payments:
- Transaction transparency:
• Faster payment options: should make near real-time payments available.
EXAMPLE: I forget to give a cheque to my kid, i should be able to transfer funds so my kid can have a spot guaranteed for the field tip before the deadline.
• Data-rich payments: In Canada, ISO 20022 is being pursued as the global message standard to provide expanded and standardized information with each payment.
EXAMPLE: A company receives a payment that automatically reconciles in its accounting system against the invoice that was paid.
• Easier payments: Payments should be possible with just an e-mail address, telephone number or even with social media.
EXAMPLE: As a shopper, I should easily be able to get a credit refund by e-mail, without requiring bank account information.
• Transaction transparency: Notifications to payor and payees should provide updates on the status of payments.
EXAMPLE: new homeowner is notified that their mortgage funds have been deposited and the keys officially belong to them.
Provide definitions and examples for needs of a modern payment system (VERY IMPORTANT)
- Cross-border convenience:
- Activity-based oversight:
- Open & risk-based access:
- Platform for innovation:
- Cross-border convenience: Consumers and businesses should have access to practical and convenient methods to make payments to those in other countries.
EXAMPLE: A Canadian with a condo in the NewYork finds it is much simpler to pay their property taxes in the U.S. - Activity-based oversight: Rules and regulations should focus on services provided, instead of the type of institution that provides them.
EXAMPLE: Whether using the latest app or a cheque, Canadians know their payments are safe and private. - Open & risk-based access: Foster competition and innovation, and clearly define requirements for payment system access – without compromising security.
EXAMPLE: A startup enters the payments ecosystem, providing a valuable new payment service to Canadian consumers and small businesses - Platform for innovation: The payments system should be flexible and adaptable, providing a platform for innovation, decreasing costs and delivering ongoing efficiencies to payors and payees.
EXAMPLE: A financial institution leverages the payments system to create a new and unique mobile payment app.
Tell me about LVTS (Large value transfer system).
*is an electronic wire system that facilitates the transfer of irrevocable payments in Canadian dollars across the country.
*Through LVTS, funds can be transferred between participating financial institutions virtually instantaneously, and funds can be credited to the recipient’s account on a timely basis. As all LVTS payments are immediately final and irrevocable.
Lynx will achieve same but through ISO 20022 standards, due date 2020
What are the key outcomes of Lynx? (replacement of LVTS)
Continue to ensure payments finality and settlement certainty.
Flexibility for future technologies.
Enhanced cyber security and resiliency capabilities
Enhanced safety and soundness
