Citi has launched a new cash concentration capability designed to mobilize and concentrate liquidity seven days a week.
This new offering is available for Citi’s institutional clients, a Citi spokesperson told Traders Magazine.
“We are seeing demand for seven-day sweeps across our entire client base, but particularly from fast-moving, high-growth technology and e-Commerce companies,” a spokesperson said.
Changing consumer behavior, the increased use of instant payments, and a proliferation of new e-business models are moving treasury management toward real-time.
Cash concentration is a corporate treasury practice that involves the transfer and sweeping of funds from multiple accounts to a single account to help optimize the use of available funds for business expenses or investments.
At Citi, institutional clients use sweeps to automatically transfer cash balances between accounts held at Citi branches based on pre-standing parameters or instructions of periodicity, timing and amount.
Historically, the automated sweeping of funds among accounts in a client’s cash management pools has not been executed on weekends and holidays, creating an inconsistent cash concentration experience.
During those times, funds would need to be manually transferred, ensuring sufficient liquidity to mitigate paying overdraft fees associated with increased credit utilization caused by payment activity on non-business days or after hours.
“The increasing proliferation of instant payments and other seven-days-a-week operating activities is driving ebbs and flows in liquidity levels, which means that cash concentration structures have to be able to respond quickly to those fluctuations,” a Citi spokesperson said.
Citi’s 7-Day Sweeps solution is designed to address this need by extending the automated funding of negative balances and centralization of positive balances to non-business days, helping to reduce risks, increase efficiency and optimize liquidity all year round, a spokesperson added.
Citi 7-Day Sweeps is being rolled out in a phased approach, initially focusing on key treasury and cash concentration centers catering to real-time payments.
Citi has enhanced its Global Concentration Engine platform, with new functionality for this upgrade and will continue to invest in technology to help ensure a consistent client experience globally.
The offering is now available for domestic cash concentration structures in the U.S. and South Korea, with plans to expand to additional markets.