MIMICS recently traveled on-site to the Eastern Caribbean Central Bank (ECCB) to assist its long-time client with implementing changes made necessary by the newly-adopted IFRS 9 regulations.
Effective January 1, 2018, IFRS 9 replaced IAS 39 as the new standard, employing an “expected loss” methodology as it pertains to entities issuing loans or other instruments of debt. It requires proper classification of clients, counterparties and transactions, as well as for the financial institutions to record data and generate reports based on the new criteria. Read more about the specific changes HERE.
The MIMICS IFRS 9 Option allows both clients and loans to be classified individually as low, medium or high risk. It allows reporting of credit scores for each client or counterparty, as well as ratings for each security from the bureau of your choice. It also allows for re-classification into one of the three buckets mandated by IFRS 9, and, optionally, the module can be configured to perform the provision calculation per your specifications.
Working together on-site allowed ECCB and MIMICS to most efficiently properly identify the bank’s specific needs for IFRS 9 reporting, and to get them fully compliant in a timely manner. We thank them for their hospitality and diligence in this successful endeavor.
If you are interested in setting up an on-site visit for IFRS 9 or other needs, or if you would like to see a demonstration of the MIMICS IFRS 9 Option, please CONTACT US.
Factoring (also known as invoice factoring) has gained popularity as a growth area with new potential revenue streams for financial institutions. Factoring is a transaction where a financial services company (the factor) buys accounts receivable invoices from various companies that, for cash flow purposes, would prefer to receive a discounted amount upfront rather than wait for their customers to pay later.
The factor gives the company a discounted price for their invoice, which is calculated based on the industry, invoice details, the company’s credit rating, the track record of invoice payments for this company, etc. There is often an additional percentage paid when the factor collects payment of the invoice if paid on time, with the remainder netted as profit.
For example, there is an invoice due of $10,000. The factor buys it from the holder for $8,000. Upon collection of the invoice from the customer, the factor pays out another $1,500 to the owner, netting a profit of $500. If the customer pays their invoice after the due date, a sliding scale would typically be applied to the reserve to compensate the factor.
Factoring is a niche market that can serve both sides well. The factor is able to earn a profit by assuming the risk over time, while the holder gets money up front, and does not have to worry about the accounts receivable and debt collections aspect.
To mitigate some of these risks, the factor may add fees for higher credit risk customers, those with a poor payment history, number of days it takes to pay, etc. And, since a common stumbling block for new factoring enterprises is having the capital on-hand to buy the invoices, another method utilized is re-discounting the invoices.
Re-discounting involves the factor essentially re-selling the invoices to a third party (usually an investor), at a discount. This provides the factor more liquidity and purchasing power, while greatly reducing their liability.
Factoring is essentially a collection service that can be mutually beneficial for two or three parties. MIMICS now offers a Factoring software system to handle all of your operational needs. Please contact us for more information or to view a demonstration.
MIMICS recently went on-site to the Central Bank of Barbados to assist in making several eleventh-hour changes in relation to the Debt Restructuring plan agreed to by the Barbados Government and the IMF. Per the IMF announcement:
“A comprehensive debt restructuring will complement the fiscal consolidation. The authorities have identified parameters that would provide debt relief without jeopardizing financial stability, and an exchange offer for domestic debt (Barbados dollar-denominated) to private creditors was launched on September 7, 2018. The proposed debt restructuring includes features, including a natural disaster clause, that are expected to help the authorities stay current on their future debt obligations. It is important to continue good faith negotiations with domestic and external creditors.”
This process was initiated with a June 1, 2018 announcement of a dramatic economic plan aimed at combatting an economy that has seen its debt skyrocket to unprecedented heights. The nation currently owes $15 billion, or 157% of the country’s GDP. By contrast, in 2007, the debt was $6.5 billion, as compared with a $9.1 billion GDP.
The new plan, known as the Exchange Offer, offers new debt instruments for holders of Treasury Bills, Treasury Notes, Debentures, loans and bonds owed by the government, loans and bonds owed by state-owned enterprises and other entities that receive transfers from the state budget and certain arrears owed by the government and its public sector.
The final details of the announcement were made in September 2018, with a take-effect date of October 5, 2018. This provided very little advance notice, both to Barbados government debt creditors and to the central bank itself, which is responsible for the back-office processing of all government debt.
The Central Bank of Barbados, which uses the MIMICS Debt Module to process Barbados public debt, immediately reached out to MIMICS for help. MIMICS and the central bank were able to come up with a list of required action items that needed to be accomplished, including:
· Analyzing and projecting the cash flows of many new “Series” of debt with complex cash flows (for example, those comprised of consolidated amounts across 11 strips calculated independently)
· Setting up the new Series and their projected cash flows
· Customizing an import to close out old debt holdings and issue holdings in the new Series’, including capitalizing all outstanding accrued interest, while retaining full history
· Customizing letters and forms based on the new debt structure
· Configurating various detailed rules and parameters related to the new debt structure
· Coordinating with the central bank on their data entry plan
MIMICS was able to provide the requested changes in the narrow timeframe provided, as well as to provide onsite assistance during it. A MIMICS representative spent a week onsite with the central bank, providing training and support on the new functionality in the MIMICS system.
MIMICS continues to provide ongoing support, as the situation evolves in Barbados. Updated plans are likely to be announced to provide additional relief to some segment of pensioner investors, and any changes to the plan by the government will be addresses by the central bank and MIMICS.
MIMICS is pleased to be able to help the central bank in these trying times, and wishes them all the best with the implementation of the new regulations.
Internet fintech platform bobsguide has named MIMICS one of the top 10 providers of mutual fund software. Part of the Trust engine of software, the MIMICS Mutual Fund Admin module is a powerful tool to help organize and simplify the processing requirements for mutual funds.
To quote the article…
“Where MIMICS outshines the competition is in its Mutual Fund Admin module. This tool enables managers to track an unlimited number of mutual fund issuances, and automatically handles the registrar, transfer agent and paying agent functions for all customer administration work. Meanwhile, the software automatically manages a buy/sell spread and can handle periodic dividends, daily dividends and interest bearing funds – not to mention front load, back load or no load funds.”
bobsguide has been connecting fintech buyers and sellers for twenty years now; it currently attracts over 70,000 visitors every month with its product directory, job listings and downloadable resources.
MIMICS has been making customized software solutions to meet the specific needs of our clients for over forty years now. We have over fifty products available, and a client base that includes commercial banks, central banks, insurance companies and more.
Contact us to see a free demonstration of Mutual Funds.
The MIMICS Web Portal opens up a wide range of possibilities for you in terms of functionality and ways you can interact with your clients. The customizability of the portals means there is no limit to the possibilities of usage. Here are some examples of what our clients use it for:
Brokerage A wanted to provide a portal for their clients to log on to see their real time positions, transaction history and to be able to download statements and other documents.
Bank 1 wanted a method in which it could somehow match buyers and sellers of CDs. MIMICS created a portal for Bank 1 that provides an online market-place through the MIMICS-developed web portal where buyers of CDs can be matched with sellers, including issuers of bulk omnibus CDs. The MIMICS web portal allows three different user-types to logon to the site: Investors, Brokers (the people matching the buyers and sellers) and the Custodians (the Bank where the CDs are held in custody). Through the MIMICS web portal, trades can be initiated, new investors can be set up, buyers and sellers can be matched up, and reports can be printed/downloaded. This portal interfaces to the bank’s internal MIMICS CD Custody system.
Bank 2 already had a customer web portal, but wanted to employ a Fed Funds-specific portal. MIMICS created a web portal for them that allowed downstream bank clients to view their positions and history. In order to provide a seamless transition between the two for their customers, MIMICS used a process wherein customers log in to Bank 2’s normal customer web portal, and when they click a link to view their Fed Funds activity, it launches the MIMICS web portal and passes an encrypted URL that sends account identifiers and a date/time stamp. The MIMICS web portal decrypts and validates that information, and if validated will log the user in automatically. This results in a process for the user where the Fed Funds portal generally appears to be a part of the main customer portal as opposed to a separate portal, ensuring a seamless customer experience.
Central Bank 1 was looking for a secure method to interact with commercial banks for various purposes. MIMICS created various portals to meet the following functionality:
· Currency Management. This portal allows commercial banks to log on and electronically enter information about currency (notes and coins) the they will be depositing to/withdrawing from the central bank. This information then flows into an approval queue in Central Bank 1’s internal MIMICS Currency Management system.
· Dormant Accounts. This portal allows commercial banks to log on to submit their annual newly-dormant accounts. These are manually entered through a grid entry for low volume or uploaded through a spreadsheet for high volume. The information is validated by the website and then flows into an approval queue in Central Bank 1’s internal MIMICS Dormant Accounts system.
· Exchange Control. This portal allows the commercial banks to submit information (daily, in this case) to Central Bank 1. This information is submitted through the web portal developed by MIMICS through spreadsheet uploads, and then flows through to the Central Bank 1’s internal MIMICS Exchange Control system.
Contact us see more examples or to discuss your portal ideas.