The cashVest Effect Will Lead to More Revenue in 2025
By William Cherry
Director of Public Partnerships at three+one®
Some budget officers and public finance officials may be feeling resigned to the idea that their municipality will have to make do with lower interest earnings in 2025 because of the recent rate cuts enacted by the Federal Reserve. In general, it’s true that lower interest rates directly correlate to reduced earnings revenues for public entities. BUT…that doesn’t necessarily have to be the case!
What has become known by public finance officials all over the country as “the cashVest effect” can actually result in an increase in interest earnings despite the impact of Fed cuts and lower market-interest rates. How is this possible? Can less really mean more?
The answer is a resounding YES. It’s based upon the fact that municipalities and public entities that use cashVest to help them monitor and effectively manage their liquidity generally see an increase of anywhere from 1.5% to as much as 3.5% on the rates they earn on their cash.
That means that as a direct result of “the cashVest effect,” a medium-sized county government with an average of $100 million on deposit could generate an additional $1,500,000 to as much as $3,500,000 in earnings revenues over and above what their earnings would be without the benefit of cashVest.
That’s because cashVest helps finance officials put more money to work earning interest instead of having cash sitting idly by in low or no-interest accounts. cashVest also identifies the highest and best interest rates being offered by local and regional banks. Public entities can often generate sharply higher interest earnings without switching banks or moving money. We also accurately measure future liquidity levels and project future cash-flow needs, which allows CFOs to confidently invest in fixed income for longer terms thus locking in higher rates. Put all those tools together and you can see how the “cashVest effect” can save you time and add 1.5% to 3.5% to your entity’s earnings.
Please send me an email or give me a call and I’ll be glad to share my thoughts on how much the cashVest effect could benefit your particular public entity. These days, public officials are all being asked to do more with less. With cashVest less can actually become more!
