Confidence in the Data

Confidence in the Data

It’s already happening! Banks and advisors are setting expectations with clients for more upcoming rate cuts by the Federal Reserve. These will lead to lower deposit rates and yields on short-term cash for next year.

As mentioned in prior blogs, you shouldn’t fall into the trap that lower interest rates mean that the value of cash cannot be a valuable revenue-generating asset. 

three+one Banking Consumer Rates

The right data will enable you to plan on making more interest income next year.

A number of public and higher-Ed institutions keep more cash than necessary on the sidelines, so liquid that the cash becomes dormant. Doing so leads to a lost opportunity in creating or preserving interest income.

There are three steps you should take to make more interest income on your cash, even in a declining interest-rate environment.

First, have a liquidity analysis performed by three+one®. Keep in mind that a liquidity analysis is far different from a cash flow analysis. Looking at all financial transactions from an entity’s perspective—and comparing each transaction that flows through its financial institutions—will lead to valuable data for all parties involved. The more information you have when you actually need cash, not just when you think you need it, will create a level of confidence as you seek to put all cash to work.

Second, the time horizon of short-term cash will allow you to understand the value of cash in the marketplace. All cash has value, whether for a day or for two or more years. Having the confidence to make the decision is a matter of having the necessary information at hand. Our proprietary cashvest® platform can provide you with all the data you need to manage your cash, while also providing a road map to your financial institutions, with sound advice in the management of deposits or investments.

Third, trust the data. While short-term interest rates may rise or fall, the ability to leverage the time value of your cash will allow you to capture or preserve interest income on all cash. In doing so, you should have confidence in what the data is telling you. The ability to have accurate information at your fingertips will allow you to make timely investment decisions with your financial institutions, while always having access to cash when it is needed.

This is the time to start preparing for next year. Let our cashvest® platform provide you with the accurate liquidity data necessary to put all of your cash to work. You’ll be taking advantage of the time value of all cash and preserving your interest income.

Having the right data will enable you to instruct your financial institutions on the steps you plan to take to make more interest income next year. That’s better than having them tell you to expect lower-interest earnings.

cashvest® by three+one® is here to help you demonstrate that kind of confidence.

5 Must-Do’s to Maximize Shared Services

5 Must-Do’s to Maximize Shared Services

Across the country, local public entities find themselves in the same predicament: trying to do more with fewer resources, smaller staffs, and greater demands.

In today’s environment, these issues are virtually universal, in cities, towns, villages, and school districts within a given county—and adjacent counties.

On top of these constraints is a steady stream of unfunded federal and state mandates that public entities must implement, with ever fewer dollars to cover day-to-day overhead expenses.

It should come as no surprise that more and more entities are looking to work together to eliminate duplication of services and reduce unnecessary overhead. As a result, shared-services initiatives are gaining popularity, ranging from public works, public safety, self-insured healthcare plans, and cooperative purchasing programs.

The ability to join forces can have an immediate and beneficial financial impact. The one impediment is jurisdiction of control. Entities involved in sharing services should have a long-term perspective of outcome and address this clearly upfront—and in writing.

The need to consider or expand shared services may not be desirable, but rather an absolute necessity to survive. This is especially true for smaller entities within larger jurisdictions. In the minds of taxpayers, a proper business attitude is to be applied, rather than an emotional wrestling match over control.

Under a shared-services agreement, the concern of lost identity should not be raised; the initiative is a joint effort in providing/receiving services for the participants’ mutual benefit. In general, the initiatives should focus on saving money and/or generating revenue.

Here are 5 financial shared-service initiatives to consider: 

1. Conducting a universal banking services Request for Proposal. A banking RFP would create a large volume of buying power to use in negotiating competitive pricing on bank fees and deposit rates. A collaboration like this could include villages, towns, cities, school districts, and the county government, all at once. The end result could lead to hundreds of thousands—if not millions—of dollars in savings and or additional interest income. rfpPrep® by three+one® is the first-ever electronic banking RFP (Request for Proposal) service, entirely online and specifically designed to facilitate the bidding of banking services. Visit our rfpPrep site for more resources. 

2. County governments can be a source of purchasing the short-term paper of related entities as they come to market. As local villages, towns, and school districts issue Bond Anticipation Notes (BAN) or Tax Anticipations Notes (TAN), a county could be a bidder of such notes, as allowed by legal statutes, for investment purposes. As such, the county can be an additional bidder, helping to lead to lower rates and greater competitive pricing on cash for investment. 

3. Counties can provide additional resources and expertise through their finance offices in helping smaller local entities identify and manage their cash. It would still be expected that associated entities would control their cash, but alleviate the stress associated in identifying and investing cash. 

4. Combining technology efforts can be effective and beneficial both in financial and banking transactions, especially in the flow and protection of collections and payments. 

5. Finally, consider consolidating tax collection. In the future, all tax collections will be automated. The need to have a counter or have the control of check collection will become obsolete. Having one point of contact for tax payment and options payment can lead to major personnel and banking cost savings. 

Sharing services can be pathway to strengthening the financial well-being of all those involved. Let three+one help you in setting up and managing your shared-services initiatives.  What may seem as a major undertaking can be simplified with through our proprietary liquidity analysis and modeling capabilities.

As always, our mission is to help public entities to do more in serving their communities.

 

Budgeting Interest Income for 2020

Budgeting Interest Income for 2020

It is my expectation that average earnings on short-term cash in 2020 will range between 1.50% to 2.00%.

With short-term rates currently hovering just above 2.0% and recent indications by the Federal Reserve to lower short-term rates, one would expect lower budget interest earning projections for 2020.  However, that doesn’t need to be the case.

2020 Budget Cycle

Municipal public entity and higher-ed budgeting of interest income for 2020 fiscal year is critically important.

A majority of public and higher Ed institutions continue to keep many levels of cash on the sidelines for “just-in-case” circumstances. For them, that means leaving sizable balances in low interest-bearing accounts.

Here are three steps you can take now to preserve and increase your interest income earnings for next year:

1. Perform a liquidity analysis around all your cash. This is far different from a cash-flow analysis. A liquidity analysis not only looks at the ebbs and flows of a month’s highs and lows of cash, but also includes the float of every dollar as it relates to actual daily transactions that occur all across your entity and your financial institutions . By monitoring your liquidity, the ability to pay your bills while also investing all other cash will allow you to maximize the value of all of your dollars, not just some of them.

2. Be aware that the valueof cash in the marketplace depends on the amount of time you have on your cash. Currently, money invested for 30 days is receiving higher rates than that invested for 90 days or longer. However, this can change, so having an active dialogue with your financial providers to establish an investment strategy is important. In the past eight months, there have been a couple of times we’ve seen 12-month rates jump up; they allowed those who paid attention to lock in higher rates. For your bank or investment advisor to take advantage of such opportunities relies on your ready response, always knowing what monies can be put to work, and the necessary approval processes are in place to implement upon their specific recommendations.

3. Remember that this is also good time to keep an open dialogue with your banker(s). Proactive involvement with your bank(s) will help you strategize against any reactive rate moves the bank could make in a changing rate environment.

If you don’t where to start – or don’t have the time or resources – let the team at three+one® help. With the support of our proprietary liquidity analysis and data, we can gauge critical time horizon on all your cash. That will enable you to capture the highest marketplace value for your cash and help preserve and increase your income this year and all next year.

Though it appears that rates will be slightly lower for the next budget year, that doesn’t mean you have to lower your interest-earnings outlook. It just means you need to know what tools are out there to help you make the most of  your cash on hand.

Your 2020 budget can reflect an increase in interest earnings through a proactive management style and the liquidity data of three+one®.

Prepare for Change

Prepare for Change

At recent GFOA conference, we surveyed attendees and discovered a startling disparity in the experience levels among municipal officers as 25% were comparatively new to their positions. With 50% of finance officials now age 55 or older, preparing for your entity’s leadership depth is essential.
 
In the near future the largest group of public finance officials will be new to their office. Today’s vlog introduces 5 key strategies to prepare you & your office for those changing demographics.
Anxiety + Worry = Stress

Anxiety + Worry = Stress

Do you ever enter your office to face a wall of anxiety and worry that results in unexpected stress, triggered by questions like:

How are we going to balance our budget with unexpected costs?
Are we fraudproof?
Are we getting the best rates?
Are we prepared for the annual audit?
Do we get the most out of our banking relationships?
Do we have strong liquidity just in case?
How will the public and press react?
Where can we save more money? 
Where do we find new sources of revenue? 
How do we handle all this work with less staff?

three+one Finance Liquidity AnalysisThese are just a few of the worries that go through one’s mind in a finance office that create anxiety and lead to stress – not an uncommon occurrence for those serving public entities or higher Ed institutions, especially given the lack of resources, budget pressures, and ever-increasing expectations of accountability by those they serve. 

There are some stresses that can be alleviated, however, allowing one to perform more finance functions that can actually lead to new sources of revenue.

Here are five ways to ease stresses on your staff and yourself:

1) Look to outside partners who can fill voids. Bring in additional expertise. View vendors not as an expense, but rather as cost saver or revenue-center provider.  This should not be seen as a weakness but rather a strength and a confidence builder in driving results, efficiencies, and cost savings or new revenue initiatives. 

2) Drive for greater technology, allowing enhanced productivity and filling in for lower staff levels.

3) Conduct weekly team meetings to provide transparency and allow feedback. The more involved all team members are in decision-making and projects, the greater their productivity and positive attitude.

4) Treat the public as customers by caring, listening, and striving to solve their problems. When a taxpayer walks to the counter, a positive response to your assistance will result in a positive outcome, even if a problem could not be entirely solved. Caring goes a long way and the level of tension does not escalate.  A terse exchange can make everyone’s day stressful. Statistically, one bad experience will be passed on to 25 other people, which causes major reputation risk. 

5) When vendors come knocking at the door, treat them with respect. As a public official and business owner, there have been many times I have been given a cold reception without an opportunity to even introduce myself. You never know who that person may be or whom they know. A brush-off or a disinterested attitude at the front counter can easily spread throughout the office and be interpreted as an acceptable behavior that may carry over to phone calls and emails. 

At three+one® our mission is to alleviate stress, create new sources of revenue for those you serve, while providing stronger bonds between you and your financial institutions. Through diagnostic liquidity analysis, three+one® is able to provide time-horizon data, allowing an entity to maximize marketplace value on all cash.

Just imagine creating a new revenue source without all the anxiety, worry, or stress. Now that’s something to celebrate with those in your office and with those you serve.