Five Benefits to Liquidity Analysis

Five Benefits to Liquidity Analysis

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 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.

Just in Case… Financially Preparing for Crises Like Coronavirus

Just in Case… Financially Preparing for Crises Like Coronavirus

The media outlets have been inundating us all with a barrage of updates on the spread of the coronavirus and the threats it poses worldwide, including here in the U.S.

Even the threat of a pandemic with severe consequences is having rippling economic effects, over and above the mounting stresses on the medical community. As warned by CDC recently, it is not a matter of “if” but rather “when” it will become a major concern in North America.

Though the level of severity of this virus is still in limbo, what’s happening in China clearly shows the degree of havoc such an outbreak can have within a single country.  And it’s already being spread worldwide.

Whether a crisis is health related, a natural disaster, or human inflicted, the need to be prepared on a local level is essential. Being alert to warning signs can impel us to be ready for any “just-in-case” scenario.

Every public-serving entity must consider the economic and financial impact a potential crisis could have going forward. Being ready to protect, support, and care for those it serves is paramount. The responsibility on the shoulders of any public-entity leader is especially massive in time of crisis.

Managing a crisis requires precise information and the ability to address “what-if” questions. One such question is: “How many dollars do we need on hand to confront and manage our public’s needs?”

In addressing such concerns, the information provided to leaders must be with a level of confidence, so rational action steps can be taken. Any delay in the decision-making process, due to the lack of financial readiness, is not an option—especially in the public’s mind.

At three+one®, our cashvest® liquidity modeling provides a precise level of accuracy in cash that is on hand and that can be made available immediately for unexpected events. The level of data that three+one® collects enables us to provide great confidence in financial implications on an entity’s liquidity, both in “days out” or “months out” periods.

The power of cashvest®’s MC forecast modeling can provide a level of precision that is unique in the public marketplace, allowing strong confidence in making immediate decisions and actual expected outcomes.

Time is one commodity that cannot be sacrificed or wasted when it comes to addressing an emergency situation. Having accurate financial data and modeling leads to stronger crisis management and better decision making. At the same time, the confidence of knowing that one’s liquidity is being managed as an asset if such an emergency does not emerge, which demonstrates sound financial and fiduciary management.

Let the power of three+one®’s cashvest® liquidity modeling be a tool to your financial office in helping manage your entity through any “just-in-case” occurrence. The power of our liquidity data will lead to better decision making in helping those you serve when they need it the most.

The 2026 Tidal Wave

The 2026 Tidal Wave

The ability to see trends developing well in advance—while planning for future challenges—is Job #1 for any fiduciary serving in the public or private arena.

One trend surfacing over the last several years has been the upcoming enrollment challenge for educational institutions.  

The correlation between hard economic times and a lower birth rate exists. This is especially true for the period of 2008-2009, when our country encountered one of its greatest financial crises since the Great Depression of the 1930s. During that period of uncertainty, a lower birth rate (by double digits!) occurred.

Years later, the results of that lower birth rate are having a dramatic effect on secondary schools with lower enrollments, also in double digit decrease. This has directly affected the infrastructure, personnel staffing, and financial levels that are all based on a historically normal school student body size.

While the lower birth rate indicates a bounce back from 2010 and years hence, the window of opportunity to address a smaller student body is present if addressed proactively. Any reaction would be seen as too late to protect against a significant financial downside.

It is important to note that this effect on secondary education now will become an inevitable tidal wave to hit higher Ed institutions in a relatively short time.

The financial and competitive environment in 2026 and 2027 could be enough of a factor to reshape an institution or even threaten its survival. 

This is the time for higher Ed boards of trustees and administrators to plan for this event, especially since the trend is an undeniable fact.

The university for which I serve as a trustee is already planning for this upcoming period. With a proactive liquidity strategy put in place three years ago, this university has viewed and managed all cash as an asset that will generate over $7 million in new revenue. That “cushion” will serve as a reserve for possible disruption in tuition cash flow over the coming years.

The ability to put a strategy in place for such a disruption will be expected by fiduciaries to institutions serving the public and student bodies.

At three+one®, our proprietary cashvest® platform can formulate a liquidity strategy while also providing a new source of revenue that can be used to build your reserve funds to strong and surprising levels.

The year 2026 need not be higher Ed’s Achilles heel. Rather than inducing panic, this pivotal year, just six years out, should be viewed as an opportunity to reshape the financial strength of higher Ed. We see the future of education to be extremely bright, with greater diversity and eager minds with a global perspective.

With sound financial planning, started well in advance, we can preserve the foundation of great education, today and for generations to come.

Shifting Focus on Liquidity

Shifting Focus on Liquidity

Liquidity data has, again, come into focus as S&P Global Ratings has reassessed its local government ratings measures to include seven new criteria of which one is “liquidity.” The new “Liquidity Score” actually measures the availability of cash (and cash equivalents) in the short, medium, and long term. Liquidity now makes up 10% of the framework for local GO ratings at S&P.

According to S&P, the chart below outlines a summary of the basis for providing a local government’s GO rating.

Among the other qualitative factors that positively affect this Liquidity Score, two of the most often highlighted are: (1) Liquidity projections for the current year and the following year, and (2) “Robust and stable” cash-flow capacity compared with peers.

We all know governments carry cash on the balance sheet for liquidity needs, reserves, etc., but do you have a forward-looking analysis evaluating cash and how it can be used to provide stability and generation of value to your taxpayers? According to S&P, this can increase your Liquidity Score and potentially have a positive impact on your entity’s credit rating.

In assessing your entity’s readiness to prepare for more attention and scrutiny regarding liquidity, here are four questions you should consider:

(1) What ongoing mechanisms are in place to help your liquidity management?

(2) Does your entity have control and oversight of liquidity data?

(3) How does your entity qualitatively and quantitatively provide liquidity data to help maximize the value brought to the taxpayers on cash?

(4) What is your entity’s cash-flow capacity compared with peers?

Aside from credit rating agencies placing an emphasis on liquidity, liquidity data have also come into focus as FASB issued an Accounting Standards Update (ASU) requiring not-for-profit entities to disclose in the notes to their financial statements relevant information about their liquidity position. These liquidity disclosures require numerical details about the actual liquidity position of a not-for-profit.

Your entity may have controls, internal experts, and time to provide and perform these types of analyses on a regular basis, and if not, three+one® can provide you with the tools, data, and peer comparisons to ensure you’re always prepared to have a credit rating that looks its best.