May 19, 2020

Understand Money Market Savings Accounts

money matters
money market savings account
Bizclik Editor
3 min
Understand Money Market Savings Accounts

The August edition of the Business Review Canada is now live!

By: Aimee Claire

With the global economy in a continuing state of uncertainty, individuals and businesses can spend large chunks of valuable time looking around for the best place to earn decent rates of interest on savings and capital. In such generally unstable fiscal conditions, the security of the deposit is another key consideration. One investment possibility that checks the boxes for both good income and capital security is a money markets savings account.

What is a money market savings account?

A money markets savings account is similar to other fixed-term deposit accounts. However, it has an advantage over flexible rate accounts and checking accounts in that a deposit is placed in the account for a specified period of time, with a return based on a guaranteed rate of interest. This means that there is a sound basis for financial planning, as the return on investment is a known factor from the outset. In addition, money market savings accounts are generally guaranteed at national level, which means there is minimum risk on the investment capital. Insurance is provided by a federal agency, so even if the financial institution managing the account goes out of business, the capital in the individual money market savings account is safe.

How does a money market savings account work?

Money market savings accounts work on the basis that the capital paid into the account is used, in turn, by the bank or credit union to make larger-scale loans and investments. The fixed-term nature of the account guarantees the capital for this to happen and the return on investment gained by such large capital loans is then fed back to the customer in the form of interest. On the downside, it also means that there may be penalties for withdrawing funds before the fixed-term period of investment expires.

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Why is it important to choose the right account?

As with any other financial decision, it is important to be sure that a savings account is suitable for the needs of the investor. Interest rates vary from account to account, not only on the basis of the amount of capital invested and the length of the investment, but also from bank to bank. For up to the minute information on CD rates an online money market savings graph should be consulted. The information provided will help to indicate clearly where the most profitable certificate of deposit accounts can be found. It should also be noted that differences in penalties for early withdrawal of funds apply, depending on the bank selected.

How are money market savings accounts good for businesses?

Money market savings accounts are best used when a fixed amount of capital is available over a certain time frame. This suits businesses with foreseeable expenses and liquid assets in the bank. In such conditions, a business can usually find better than average rates of return in a money market account, especially if large amounts of capital are involved. Similarly, the fixed rate of interest offered by these accounts means that financial planning is made easier for the business making the investment.

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Jun 8, 2021

Six issues at the top of tax and finance leaders’ agenda

Kate Birch
4 min
As businesses accelerate their transformation journeys, tax leaders are under increasing pressure to add strategic value. Deloitte reveals six tax trends

New Deloitte research reveals that tax leaders are under increasing pressure to add strategic value as companies accelerate business model transformation, from undergoing digital transformations to rethinking their supply chains or investing in green initiatives.

According to Phil Mills, Deloitte Global Tax & Legal Leader, to “truly deliver value to the business, the tax function needs to rethink its resourcing model and transform its technology infrastructure to create capacity and control costs”.

And the good news, according to Mills, is that tax and business leaders have more options at their disposal to achieve this.

Reflecting the insights of global tax and finance executives at global companies, Deloitte’s Tax Operations in Focus study reveals the six issues at the top of tax and finance leaders’ agenda.

Trend 1: Businesses seek more strategic counsel from tax

Companies are being pushed to develop new digital products and distribution channels and accelerate sustainable transformation and this is taking them into uncharted tax territory. Tax leaders say their teams must have the resources and skills to give deeper advisory support on digital business models (65%), supply chain restructuring (49%) and sustainability (48%) over the next two years. This means redrawing the boundaries of what tax professionals focus on, and accelerating adoption of advanced technologies and lower-cost resourcing models to meet compliance requirements and free up time.

According to Joanne Walker, Group Tax Director, BT Group PLC, "There’s still a heavy compliance load today, but the vision for the future would be that much of that falls away, and tax people become subject matter experts who help program the machine, ensure quality control, and redirect their time to advisory activity.”

Trend 2: Tipping point for resourcing models

Business partnering demands in the tax department are on the rise, but 93% of tax leaders say their department’s budget is remaining flat or falling. To ensure that the tax function can redefine itself as a strategic function at the pace that is required, leaders are choosing to move increasing amounts of compliance and reporting to a combination of shared service centers, finance departments, and outsourcing providers that have invested in best-in-class technology.

Trend 3: Digital tax administration is moving faster than expected

in addition to the rising focus of the corporate tax department partnering with their business counterparts, transformative changes to the way companies share tax information with revenue authorities is also creating an imperative to modernize operations at a faster pace. Nine in 10 (92%) respondents say that shifting revenue authority demands on digital tax administration will have a moderate or high impact on tax operations and resources over the next five years—and several heads of tax said the trend is moving faster than expected.

"It’s really stepped up in the last couple of years," says Anna Elphick, VP Tax, Unilever. "Tax authorities don't just want a faster turnaround for compliance but access into a company’s systems. It's not unreasonable to think that in a much shorter time than we expect, compliance will be about companies reviewing a return that's been drafted by the tax authorities."

Trend 4: Data simplification and lower-cost resourcing are top priorities

Tax leaders said that simplifying data management (53%) and moving to lower-cost resourcing models (51%) must be prioritized if tax is to become more proactive at delivering strategic insights to the business. Many tax teams are ensuring that they have a seat at the table as ERP systems are overhauled, which is paying dividends: 56% of those that have introduced NextGen ERP systems are now highly effective at supporting the business with scenario-modeling insights. Only 35% of those with moderate to low use of NextGen ERP systems said the same.

At Stryker, “we automated the source P&L process for transfer pricing which took a huge burden off of the divisions," says David Furgason, Vice President Tax. "Then we created a transfer price database to deposit and retrieve data so we have limited impact on the divisions. We are moving to a single ERP platform which will help us make take the next step with robotics.”

Trend 5: Skillsets are shifting

Embedding a new data infrastructure and redesigning processes are critical for the future tax vision. Tax leaders are aligned — data skills (45%) and technology process experience (43%) are ‘must have’ skills in a tax department of the future, but more traditional tax specialist knowledge also remains key (40%). The trick to success will be in tax leaders facilitating the way these professionals, with their different backgrounds, can work together collectively to unlock lasting value.

Take Infineon Technologies, which formed a VAT technology and governance group "that has the right knowledge about how to change the system to ensure it generates the right reports", according to Matthias Schubert, Global Head of Tax. "Involving them early was key as we took a greenfield approach, so we could think about what the optimal processes would look like and how more intelligent systems could make an impact 

Trend 6: 2020 brought productivity improvements

Improved productivity (50%) and accelerating shifts to remote working (48%) were cited as the biggest operational benefits to emerge from COVID-19-driven disruption. But, as 78% of leaders now plan to embed either hybrid or fully remote models in the tax function long term, 34% say maintaining productivity benefits is a top concern. And, as leaders think about building their talent pipeline and strengthening advisory skill sets, 47% say they must prioritize new approaches to talent recognition and career development over the next two years, while 36% say new processes for involving tax in business strategy decisions must be established.

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