Synchronize Term Deposits

Big transport firms often have seasonal financial needs which are fairly consistent or predictable over a period of time. For example, bus firms have steady inflows of cash each day which fall into a regular pattern but the cash outflow is often an irregular business. This is because bus firms can need cash for emergency repairs on broken down bus units, for example. This is why bus firms need to have ready access to cash and this is where term deposits can come in handy. If the bus firm is progressively managed, there would not be any need for emergency cash as its cash flows are accurately forecasted. This means expenses are scheduled well ahead and this good management will greatly benefit the firm with regards to its management of excess cash. Extra cash can be put into term deposits that will earn good deposit rates than would otherwise be possible.

Using term deposits for other purposes is very suitable for such capital outlays like a bus re-fleeting program. A well-planned re-fleeting program will allow firms to acquire new transport units without unduly straining its cash resources. This is because only a few designated units will be replaced each year instead of making a big outlay only once. In other words, the re-fleeing is done in stages based on the cash flows of the firm. That means the purchase and acquisition of new units will be based on what is manageable financially. Term deposits can be synchronized to mature on the time when new units will be purchased to maximize returns.