I love Motown classics, especially Marvin Gaye and Kim Weston’s It Takes Two. But when it comes to your public entity’s financial success, it doesn’t just take two—it takes three.
Finance, accounting, and treasury are all key if you’re to continually ace the fiscal scorecard. Each function is essential in planning for the future, working toward improvements, and maximizing everyday results.
Here is how I communicate the importance of these roles to the boards and administrators I communicate with on a daily basis:
Finance prepares for tomorrow. It budgets for the future and examines methods or practices that may require modifications in order to perpetuate improvements. It takes inputs from all of the entity’s departments and applies historical trends to extrapolate forward.
Treasury focuses on today. It maximizes every dollar to bring additional value through savings, interest income, banking efficiencies, etc. Treasury looks strategically at performance-enhancing decisions and works with financial partners (current and prospective) to provide optimal present-day results, enabling finance to work better going forward.
Accounting reconciles the past and suggests areas that need improvement. It looks back at past performance to better understand how well finance and treasury worked together to boost operations. Accounting draws conclusions that can help draft recommendations for both finance and treasury.
Why do I think this is good to remember?
Each respective role is essential today. If communications are non-existent between these three departments, I encourage each area to meet together and examine where enhancements can be made.
When gearing up for budget season, better collaboration can bring additional value to your taxpayers. When finance, treasury, and accounting work together, they can develop a financial strategic plan. This may include recommending/adopting new technologies, discussing a plan for a banking-services RFP, developing suggestions to offer legislators on how to save for future capital projects, etc.
We often lose sight of how important financial budgetary roles are. It’s easy to overlook how the treasury department can add significant value to the bottom line by means of interest income/savings. Likewise, accounting can become so customary that we manage to underestimate how it can help provide us with data that lead to several taxpayer enhancements.
It’s good to remember, in public finance, it takes three.
The most important factor in any relationship is trust. The threeplusone team earns the trust of its clients because of our unique role as an independent liquidity-data provider. This term may be unfamiliar to many people, so we chose to break it down in this week’s blog and showcase how threeplusone is different from banks and investment advisors.
Let’s start with liquidity-data provider. When public and higher Ed finance officials have the necessary data to ensure every dollar is valued appropriately in the marketplace, the increased savings and earnings are truly impressive.
The application of time-horizon data makes certain that all funds are earning their maximum allowable yield without sacrificing safety or liquidity. The data provided by threeplusone answer the challenging questions “How much?” and “For how long?” with statistically supported figures that ensure an entity is managing its liquidity in the most effective manner. This kind of information is only available through threeplusone’s liquidity analyses; it’s not offered by investment advisors or banks.
Another attribute that makes threeplusone unique is the fact that we do not take fiduciary or manage funds. Our proven track record in the public and higher Ed marketplace continues to prove there’s a value in having an independent firm that works solely to benefit the entity—not outside stakeholders—in achieving higher levels of savings and greater revenue.
When threeplusone provides time-horizon data, clients can be confident that each recommendation is quantitatively based and customized to each entity to help ensure that every dollar of taxpayer money is earning an appropriate value, allowing for more savings on treasury services, and earning a higher level of yield, dependent on the entity’s specific liquidity requirements.
Our goal is to help ensure that every dollar of taxpayer money is earning its appropriate value, whether it is on deposit at a bank, managed within an investment-advisory firm, or held in custody on behalf of the entity.
This type of relationship differentiates threeplusone from other financial providers. We are able to bring a completely objective outlook to all cash-management decisions because we do not collect fees based on the placement of funds. At threeplusone, our interests are completely and properly aligned with those of our clients; we have no incentive to have cash move in any specific direction.
This is why threeplusone is considered to be an independent liquidity-data provider.
Taxpayers are the true beneficiaries of the data that threeplusone provides to public entities and higher Ed institutions. We are not beholden to any interest other than theirs.
Now you know the threeplusone difference.
These numbers are real: from $20,000 to $418,000 in FY 2017 (June 2016-June 2017) to $605,000 in FY 2018 (June 2017-June 2018)—and now to a projected $950,000+ for FY 2019. These are the consistent numbers for the University of Redlands (Redlands, CA) on the interest earned on all their cash.
The numbers really add up and they’re meaningful. This is not an aberration, but rather the result of a proactive approach in managing cash as an asset. It has led to a continual flow of income for the university year over year. In fact, over a period of five years, the level of new income generated by this initiative will top $5 million.
Each of the clients threeplusone serves is seeing real numbers like these on a similar scale. While the nation’s strong economic climate, coupled with higher short-term interest rates are helpful components to higher interest earnings, the common dominator to higher yield is the underlying liquidity data used to unmask all levels of cash for investment.
So what does one do to get started? The simplest step would be to contact threeplusone. Our first step would be a comprehensive liquidity analysis on the entity’s total cash position, determining the time value of all its cash, and identifying its value in the marketplace. Our pure and independent data enables a proactive approach that can be used with your financial institutions to capture the highest level of interest earnings on all cash—without jeopardizing any necessary legal, safety, or liquidity requirement.
Impressed with University of Redlands’ numbers? With our help, they could be yours—and used to benefit those you serve.
For more about how the University of Redlands’ is leading the way please read our October 2017 Blog