In response to the financial disruption caused by COVID-19, our partners at the New York State Association of Counties (NYSAC) distributed a critical list of recommended action items to their members.
We share this information because NYSAC is an expert advocate for public management & funds, and because NYSAC has recognized our cashvest liquidity management program as one of those critical steps to emerge from this crisis with strength, and more importantly, confidence in your financial data.
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three+one® is a proud partner of NYSAC®
During these challenging times, three+one® is working to bring solutions to public entities and higher Ed institutions, allowing them to operate without disruption, while creating savings and new sources of revenue to offset any budget gaps that result from the economic slowdown from the COVID-19 pandemic.
Through strong communication, three+one® will adhere to several best practices to help you do more with less:
1. We understand that you need a clear framework for the investment of public
funds. Without regular in-person board or committee meetings, updating your investment policy statement may not be possible for the moment. For many three+one® clients, we have advocated building in the necessary latitude that allows entities to take advantage of all state guidelines so, when unusual circumstances arise, your cash can still generate revenue to the bottom line. Although the Fed has lowered rates, there is a robust marketplace to earn more value on cash that can lead to potential rates of over 1.0%. It all depends on the time-horizon data of your funds. Do you know how long you will have each dollar on deposit down to the day?
How to do more with less: Review the latitude your investment policy offers with your team; communication is paramount. If it is outdated, let three+one® enhance it for you. As a CFO, having the confidence that you are using the right tools provided to you, through your IPS, is vital to ensure your constituents and board know you are earning and saving the most you can on all dollars.
2. With time and geographic constraints on your team, reliable data becomes more fundamental. Cash flow today is paramount, and it doesn’t require you to liquidate all investments and move all cash out of liquid-earning options. Liquidity matters when you don’t have time. The ability to determine the change in liquidity is essential when calculating the impacts of a crisis. Is data guiding every step you take in managing your cash today?
How to do more with less: Many three+one® clients use our cashvest® MC forecast model to help with short- and medium-term cash projections. When evaluating lower sales, occupancy tax or other revenue sources, stress testing dollars to see where your cash balances could be in four months is important. If you are not using this tool yet, start digging into the numbers to see what the impact is on your entity.
3. Making payroll, running A/P, conducting bank transactions, inputting GL entries just got a bit more complicated. The need for entities to have staff work remotely has caught many entities unprepared. Let’s work together on creating a framework for an electronic payment policy and the like to prepare for future remote finance offices.
How to do more with less: Please, please, please have an electronic/digital banking policy statement. We have heard time and time again how low on the priority list this type of policy is, but suddenly we all have a different opinion. When you have these in place and the tools to accompany them, life will be easier for you!
4. Now that the Fed has lowered interest rates TWICE, it is impossible to know how your banking stacks up against your peers. Is my earning- credit rate (ECR) good? What should I be earning in interest? Where can I earn interest? Are my fees where they should be? All entities just got a reset, and it is the data that helps ensure you are relying on the math—not an opinion—on where you measure up.
How to do more with less: We understand that you don’t have time to look this over continually, but three+one®’s rfpPrep® alleviates you from having to wonder if you are getting the best price, rates, and services.
5. When refinancing, liquidity matters. The lender will pay the fee for a new rating, and a lot of that will accelerate; but to get the best rating, as was mentioned in a previous blog, (S&P blog) entities need to prove that they have the best chance to repay to get a higher rating and reduce debt-service costs.
How to do more with less: three+one® can “vest” you with the best chance in paying lower interest on borrowed money. Entities need to change the way they supply data to rating agencies because times have changed.
6. Easing the fear of liquidity or lack of cash when you need it can be extremely stressful. During the 2008 financial crisis, the fear of not knowing if you needed cash was top of mind, leading to a run on the banks and financial instruments. During that period, many entities had to wait for liquid pools to unravel portfolios so cash could be accessed.
How to do more with less: You are not alone. Everyone is scared, wanting to know where the best place is to put their cash. If you have been following your provided time-horizon data, you are still getting over 2.0% on a portion of cash, and your liquid dollars are available in proportional levels to operating and “cushion” dollars. In times of crisis, you need peace of mind. Our cashvest® program is providing clients with that peace of mind when it is needed most.
The underlining value of three+one®’s services applies in both times of opportunity and challenge. Confidence, peace of mind, stewardship, productivity, safety, proactiveness, and accountability are three+one®’s top priorities as we help during these critical and unforeseen times.
COVID-19 has hit our society hard and it feels like it came out of nowhere. Just a few short weeks ago, the stock markets were at all-time highs, unemployment was at historic lows, consumer confidence was strong and, in general, things seemed to be going pretty well for most of us.
But then, like a tsunami that washes in from the sea with little or no warning, COVID-19 came ashore. Over the period of a few short weeks, we have come to realize that the landscape we are familiar with will almost certainly be changing in unexpected ways, and we wonder how our families, our professions, and our future will be impacted.
While most of us who are not medical professionals have had no direct experience in dealing with a contagious pandemic, many of us have had experience in dealing with other natural disasters and the resulting long-term recovery. What we are all experiencing now is a bit like the anxiety people feel when some natural disaster of epic proportions is heading their way. Think how residents of New Orleans felt as Hurricane Katrina was barreling their way in 2005, or how the people on the east coast were feeling as Super Storm Sandy swept north towards them in 2012, or how the people living in Paradise, California, felt as the wildfires engulfing northern California in 2018 were blown in their direction by the hot Santa Ana winds.
The three steps to dealing with any natural disaster are: (1) preparation and anxiety about the impending event; (2) providing emergency services when and where they are most needed as the situation actually unfolds; and (3) long-term recovery from the disaster.
No matter what the disaster looks like, having experienced experts at your side helping you to prepare for, then deal with the emergency itself, is critically important. Equally important is the planning and organizational changes that take place in order for your public entity or higher Ed institution to financially recover from the disaster. To our existing clients, we are here to help you best address what we expect to be a changing financial landscape. To our other colleagues in the public finance sector, we offer our assistance at a time of need.
At three+one®, we know how to use data, liquidity analysis, and financial assessment to help you best prepare for the fiscal impacts of an emergency.
COVID-19 is likely to have a negative impact on your organization’s cash flow, sales tax revenues, and future interest earnings. We are not miracle workers and we can’t make COVID-19 go away. But we can help you best deal with this changing financial landscape by advising you on ways to strategically manage your liquidity while maximizing the interest earnings on your cash.
At times like these, it’s good to have experienced experts in your corner. And to know that the team at three+one® is here to help.
We all are watching, witnessing, and possibly participating in the unfolding of this unprecedented response to an increasing world challenge. The spread of COVID-19 is sucking the oxygen from all other headlines. It is making us review our business continuity plans. Ultimately this will help us all to be in a better place. One area of business continuity to consider is how you will continue to accept and receive payments.
One piece of advice we have given to every client over the past few years is that they reduce their dependence on checks. Before the current COVID-19 outbreak, this advice was based on the demographic shift of younger adults entering the workforce—a group of individuals unfamiliar with checks. However, this becomes more pertinent and acute when travel restrictions are suddenly imposed, offices are closed, and work-from-home requirements are put in place.
How then will you collect payments when you cannot be at an office to open mail, take checks over the counter, or create a deposit? How then will you pay your vendors, employees, and otherwise make any reimbursements or refunds?
We live in a time when we already have the answer—but we must make the decision and do what’s necessary to change. Here are some suggestions to help you transition to more digital receipts and payments:
- Share wire and ACH payment instructions with constituents who may have normally paid by check. They can easily make these payments through their online banking portal as long as they have the right information.
- Explore PayPal, Venmo, Square, or other possible methods for constituents to transfer money to you.
- Talk with your Account Receivables module provider to know what your system supports and understand what they are doing to enhance the module for digital payments.
- If you have not done so already, implement Remote Deposits so you can avoid going to a bank.
- Should payments be delayed because of an office closure, explore a line-of-credit option with your banking provider. You want to ensure making payroll!
- Adopt a digital-payments policy. Let your vendors know that within a two-, three-, or five-year period you will no longer be making payments with checks.
- Explore multiple options to make payments digital, to include ACH, ePayments, PayPal, Zelle, etc. Your vendors and constituents will appreciate having options.
- Talk with your Account Payable module provider to know what your system supports and understand what they are doing to enhance the module for digital payments.
- Urge employees to sign up for Direct Deposit or alternatively offer payroll card options as well.
These items will help you transition away from the dependency of checks. However, your employees and office must equally be prepared, especially if all are required to work from home. Here are considerations to prepare your office:
- Explore online banking user rights for those authorized to make payments. Ensure you have appropriate dual authorizations in place so that no one can operate alone.
- Have trained redundancy as well, should employees be unable to perform their work.
- Make sure digital banking users take laptops and security tokens home with them to perform secure transactions if necessary.
- Ensure you are set up for ACH/Wire digital banking.
- Provide home and cell phone numbers to all members of the team to ease communications when working remotely.
- Create, test, and practice your remote procedures. Be aware that, during challenging times, fraud can increase. Train your employees in the right procedures to verify and approve any payment requests.
Above all, remain calm. These situations stimulate creativity. As the adage goes: Necessity is the mother of invention. We will all find ourselves better prepared and more confident in our ability to press forward and move onward.
As always, with our broad experience in the finance industry, we stand ready to help you make this check-free transition.
Our cashvest® liquidity analysis and data have proven to provide five major benefits to public entities and higher-Ed institutions:
1.) It helps an entity boost or maintain its credit rating for debt refinancing through qualitative and quantitative liquidity-analysis reporting. Such reporting has become an important factor to all three major rating agencies. This is especially significant as the10-year Treasury rates have been reaching lower than usual levels. Financial advisors will be advising entities to refinance their current debt. A stronger liquidity position coupled with a stable credit rating will help reduce lower borrowing costs.
2.) The data from our cashvest®’s MC liquidity forecast model® provide an entity with a future liquidity outlook that can be used for cash and debt requirements. This level of analysis can go out for days or even months.
3.) It helps identify all cash as a revenue-generating asset that can lead to additional sources of revenue and help preserve current interest earnings.
4.) As a lower interest-rate environment becomes more challenging for banks, it should be expected that they will respond with lower deposit rates and potentially higher bank fees. Our cashvest® liquidity analysis will help an entity monitor these changes and implement new technologies. It can also serve to reduce bank fraud, thus drive up an entity’s savings and preserve its cash assets.
5.) Finally, the ability of cashvest® to provide ‘peace of mind’ during periods of financial stresses (from natural, health or human-inflicted crises) is critical. The 24/7 inundation of news from the mainstream and social media can be truly unsettling. As a calming source of comfort, three+one provides its clients with fact-driven analyses and data, just what is needed in times of stress.
cashvest® by three+one® has been ahead of the curve in a changing marketplace over the last six years. Our mission statement is to provide value by forging through new innovation, technology, and use of liquidity analysis and data in helping public entities and higher-Ed institutions better serve their clients, customers, and students every day.
Liquidity analysis provides great value to those who utilize it, especially when it comes to maintaining or increasing a credit rating, predicting the future of liquidity, identifying cash as a revenue-generating asset, monitoring bank fees and deposit rates, while providing ‘peace of mind’ through a crisis.