FIN.15:5.1 - Choose a placement after establishing the surplus

Continue the 160/100/20 plan above. Three alternatives are attainable within the existing mandate, including its provider and concentration limits. Each comparison allocates the same 40 on day 0. There are no upfront charges or taxes; the quoted charges below are withheld from the placement proceeds when returned. All parties perform the stated terms. These are constructed cash offers for this comparison.

A fixed placement returns principal 40 plus interest 0.40 on day 30, less a charge of 0.10. It permits no early withdrawal or sale. A notice placement accrues simple interest of 0.20 for 30 days, proportionally for fewer days, and charges 0.05 on full withdrawal. A notice received before the provider’s deadline makes the money usable before payments on the next operating day; all named notice and return days in this case are operating days. Keeping the 40 in the current payment account earns no interest and incurs no additional charge.

For either placement, the unplaced balance is 120 initially and 20 after the day-7 payment. Under the original forecast, both therefore preserve the reserve until principal returns, and the fixed placement gives the highest net cash gain among these alternatives. Its additional return depends on being able to wait until day 30. The stated provider limits and assumed performance are part of this comparison; a changed credit assessment or access condition returns the choice.

Now suppose a further payment of 30 previously due on day 31 is brought forward to day 20, and that change is known before placement. Locking all 40 until day 30 would leave only 20 for that payment: cash would fall to −10, which is 30 below the required reserve. The revised cash plan permits at most 10 to remain locked over day 20. Placing a smaller amount would require the actual terms available for that amount.

For the same 40 under the notice alternative, give notice on day 19 before the deadline and withdraw on day 20 before paying. Net proceeds are 40 + 0.20 × 20 / 30 − 0.05 = 40.0833, rounded to four decimals. After the payment, total usable cash is 20 + 40.0833 − 30 = 30.0833. Retaining the 40 in the payment account would leave 30. The timely notice placement earns a positive net return while preserving the reserve; the fixed placement of 40 is infeasible on these revised grounds.

The instruction deadline is consequential. If notice can only be given after the day-19 cutoff and proceeds arrive on day 21, that withdrawal cannot fund the day-20 payment. Retain sufficient usable cash, change the placement amount or obtain a separately feasible funding response. If the fixed placement was already made before the forecast changed, comparing alternatives does not release it: FIN.2 must establish a funded response under its actual terms. FIN.15 performs and verifies the resulting placement, notice or withdrawal within the existing authority.