Energy & Resources
Maximize the yield on a portfolio of cash instruments by automating investment selection
Powerful accelerator maximizes the yield on cash investments
Liquidity management is an essential role of the CFO office. During times of economic stress, the importance of having a disciplined liquidity management process in place is particularly critical. It can allow an organization to avoid liquidity shortfalls, to redeploy capital into higher yielding assets, and to optimize short-term and long-term investment yields. Looking ahead, a pickup in investment yields will have a significant impact on cash investment returns. Having the ability to react to real-time rate changes can significantly improve the bottom line.
BCG’s Working Capital Optimization accelerator formulates a set of cash investments as a constrained linear optimization that uses state-of-the-art integer programming techniques. The optimization maximizes interest on cash investments while maintaining minimum balances, balancing short-term and long-term investments, and still meeting deposit/withdrawal requirements.
Liquidity model integration
Seamlessly incorporate working capital optimization into existing liquidity models and corporate-level P&L, balance sheet, and cash flow statements.
Yield curve, safety margin, and periodicity constraints
This solution provides input for safety margin, minimum deposit, yield, and range of maturities that should be considered in each investment period, providing a customizable set of constraints to formulate the problem.
- Optimization summary
- Summary of optimal working capital investment allocation, including:
- Beginning and ending cash balances
- Maturing principal
- Interest payments
- Purchase quantity for each cash investment
- Cash deposits/withdrawals
Highly automated process
Avoid highly manual processes for working capital management by leveraging a more disciplined, mathematical approach to working capital optimization.