I’m often asked about the difference between a cashflow analysis and a liquidity analysis. 

The difference is that a liquidity analysis lets you take advantage of up to 73% more cash vs. what a simple cashflow analysis would tell you.

Here’s how we look at it:

• Cashflow analysis tracks the ebbs and flows of dollars that an entity sees on a daily, weekly, monthly, and annual basis. The view one gets is a rather narrow internal perspective. Once a check is written or money is transferred it is essentially “off the books.” 
• Liquidity analysis looks at the flow of each financial transaction, following the path from your entity through your financial institution and all the way to the final recipient. As you’ve no doubt learned firsthand, that process can actually take several days or even weeks. The float is still your money to invest. The historical patterns you get from a proper liquidity analysis show you a data path on when the money was actually needed to clear your financial institution, rather than assuming the funds were gone “off the books” from day one.

The ability to view 73% more cash can lead to 30% or more of investment income your entity can use, which could mean thousands, hundreds of thousands, or even millions of new dollars in revenue for your entity. 

It’s time to ask your finance office to consider doing ongoing liquidity analyses in addition to traditional cashflow analyses. The additional revenue can mean having a balanced budget and not a budget gap. 

If you’re ready to take liquidity analysis to the next level, consider our innovative cashVest ® liquidity-analysis platform.

There is no other solution like it in the marketplace—and it’s being used by public entities nationwide. To learn why the National Association of Counties (NACo) has named it a best financial-management practice, click here.