by Joe Rulison | Oct 29, 2019 | Banking Relationship, Banking Trends, Cash Management Practices, Data & Technology, Fintech, Liquidity Analysis, News, RFP, Safety vs. Complacency, Time Horizon
While watching the news and catching up on emails the other night, I received an “888” call followed by an urgent text from my bank. It alerted me to fraud on my personal bank account and provided an authorized code and phone number to call. I dialed that number only to receive the same official bank voice/menu I knew from past calls I’d made to the bank.
Being suspicious, I proceeded to call the phone number on the back of my credit card, which was the same voice/menu as in the text message. Finally, having made my way through to customer service, I was advised that the text message was in fact a new type of fraud that the bank was trying to deal with. It had them as stumped as I was—and this was one of the country’s top three banks!
Clearly, the sophistication of fraud through technology and communication is rapidly escalating. The look and sound are so convincing that it’s tough to know what is real and what is fake. If you haven’t yet experienced such fraud attempts, it’s only a matter of time before you will.
So, what can public entities and higher Ed institutions do to protect themselves?
Here are some suggested tips:
1. Today’s phone texts are the new form of robo messaging. They look real and their reference to a link or phone call are only a lure to have you provide personal and confidential financial access to your bank accounts. Never respond to a text by a financial institution. Use it as an opportunity to reach out to your bank or banker and report the potential fraud.
2. If you receive a phone call from someone identifying him/herself as a financial representative looking to discuss a specific transaction or account, ask for his/her name and employee number. Then hang up and call your bank to report the incident and verify if such a person is on the bank’s staff.
3. Lately there have been a number of scams suggesting that your bank is looking to verify your information to update a “Know Your Client” (KYC) requirement. You may be told that if you do not respond, your accounts will be blocked. A bank would never reach out by text or email to verify your identity or personal information. Rather, they would do so either by letter or in person.
Scammers are using technology to gain access to your information and money. They use approaches that look real, urgent, and threatening. The only way to protect yourself and your organization is to be alert to and cognizant of these attempts.
If you ever have a question or suspect such activity, call your banker immediately. This should be your first level of defense against fraud. If your bank does not respond or provide fraud protection, then it’s time to look for a new bank that does. In today’s marketplace, there is no excuse for a bank to leave you unprotected.
Through rfpPrep® by three+one®, we can help you navigate through the bank and treasury services you should be receiving to protect your organization and the money of those you serve.
The world of fraud looks so innocent and real. Let us help you unmask the fraud and protect those dollars you have a fiduciary obligation to protect.
by Garrett Macdonald | Oct 1, 2019 | Banking Trends, Cash Management Practices, Data & Technology, Fintech, News, Predictions, Safety vs. Complacency, vlog
Finance is a continuous and rapidly evolving industry. Technology, regulatory requirements, and obligations to our taxpayers or higher-ed stakeholders are at the forefront of policy considerations.
In today’s vlog we discuss the importance of investing in the education of our finance officials. Professional development is vital to the success of your finance office and your entity.
by Joe Rulison | Jul 23, 2019 | Cash Management Practices, Fintech, Liquidity Analysis, Predictions, Safety vs. Complacency, Summer Blog Series, Time Horizon
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?
These 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.
by Joe Rulison | Jan 23, 2018 | Banking Relationship, Banking Trends, Safety vs. Complacency
A couple of weeks ago, a government banker was voicing frustration after learning that her bank lost a Request for Proposal (RFP) bid to another bank that claimed that their services were free; that bank had submitted a “zero-fee”-based bid for all its bank services.
She wondered if the comparison between both bids was fair, especially when beneath the surface there was a big difference in actual costs. For her bank, its fees were clearly stated while the competitor’s bid offered so-called “free banking” but actually required much higher bank-deposit balances. The end result: There were actually much higher costs in the latter bank’s services when all was said and done.
So how does one compare bank fees and deposit requirements when evaluating competitive bank RFPs?
My answer is that it all lies beneath the surface when it comes to the level of bank balances required to be kept on deposit.
In most bank RFPs, banks will separate out the price per item of its services. The number of items that have separate fees could be numerous. Some may be direct “hard” fees. Others may be embedded “soft” fees which are covered by Earnings Credit Rates (ECRs) that average in the range of .50 to .90%.
You may also see RFPs that promise “free banking” while requiring 200% to 300% more in deposits and offering much lower ECR levels (often in the .05% to .20% range). Such RFPs could cost an entity tens to even hundreds of thousands of dollars in added costs or in lost interest-earning opportunities.
As interest rates rise, the disparity between both strategies will widen drastically with an average ECR envisioned to be well above 1.00% by year-end.
Bottom line, when comparing bank RFP bids, be aware that “free banking” bids could cost you a lot more than those with clearly stated fees.
Let’s be honest. Banks do play an important role in serving public entities and the communities they serve, but it does not come for free. When reviewing RFP bids from competing banks, they must be compared diligently and critically to understand the true cost of banking.
At three+one, we know government banking since we are public officials and former government bankers. Nationwide, our clients are primarily public entities and higher Ed institutions.
When discovering the true costs of banking services, competitive RFPs have you comparing apples to oranges. We have extensive experience in evaluating and assessing banking RFPs. Time and again, our fair and agnostic analyses lead to entities gaining more advanced banking services at lower costs and with higher earnings on bank deposits.
In the end we will make the comparison fair – apples to apples!
three+one in the News!
three+one was featured in The Daily News during a Genesee County, NY Ways and Means Committee meeting regarding the county’s increased cash performance.
Read the Whole Article Here
‘Also Wednesday, a consultant noted the county earned almost $320,000 in interest income for all of its funds in 2017 — a situation which is good news for its taxpayers, he said.
Garrett MacDonald, vice president of Three + One of Pittsford, a firm which worked with the county to analyze its cash flow, told the Ways and Means Committee the county earned $319,480 in interest last year on all funds and $242,134 in interest for its general fund.
“That’s what they booked in 2017. That’s what the county realized,” MacDonald said after the meeting. “This is a big deal for the treasurer (Scott German) helping taxpayers to earn more.
“Rates are going to continue to rise, which is certainly going to help interest earnings,” he said during Wednesday’s session. “I think next year, the county will be in excess of $500,000 in interest income.”
For 2016, the county earned $162,151 in interest across all funds, MacDonald said.
He said among the things Three + One looked at was the county’s cash flow optimization — making sure the money is earning interest at all times, from the time taxpayers pay their bills to when the county pays its bills.
“The taxpayers’ money has to be safe — to not lose principal,” he said. “The county earned the highest cash vest score. That’s a way of rating how well the county is performing in the treasury operations.
“It’s the taxpayers’ cash, in a sense,” MacDonald said. “We want to make sure the taxpayers are getting the most for the money they are paying to the county.”’
by Joe Rulison | Dec 20, 2017 | Banking Relationship, Cash Management Practices, News, Safety vs. Complacency
In less than one year (from November 30, 2016 to October 31, 2017) the City of Beaufort, South Carolina, with an annual budget of about $20 million, has increased its interest earnings on its cash by over 900%. Their earnings jumped from $13,801 to over $147,000, without sacrificing safety and while maximizing liquidity. The city’s overall cashVest® score increased by 26 points and its estimated interest earnings for the next 12 months should exceed $180,000.
Here are some ways they did it:
1. The city increased its Warnick Rate Indicator (WRI) by identifying the investment tool that best met its goals, realized a net increase in interest, and used time-horizon data to increase the amount of cash that was available. The result: the city earned more interest while it ensured the right amount of liquidity.
2. By ensuring 100% of all cash balances provided value, either by earning interest or offsetting banking fees, every cent of the city’s cash worked its hardest.
3. By reevaluating the relationship with its bank, the city ensured both parties would see it as mutually beneficial. The city lowered its banking costs, adopted new technologies that fit its needs, and modernized its banking structure.
4. Most importantly, the city’s finance leadership realized an innovative cash-management strategy could bring substantially more value to its taxpayers. And they took the proper steps to put this strategy into action.
No matter how much cash your entity has, where the cash is, or what the cash is earning, it is possible to earn more and save more on that cash. Don’t think it’s possible? Just ask the City of Beaufort.
Happy Holidays From three+one!!!
by Joe Rulison | Nov 15, 2017 | Cash Management Practices, Safety vs. Complacency
Last week Joe Rulison discussed the need to request a higher earnings credit rate (ECR) from your banks. As noted, the Fed Funds Target Rate has increased from the range of 0% to 0.25% in late 2015 to 1.00% to 1.25% in June of this year.
Yet during that 18+ month period the ECRs barely budged. Asking will help get you a better ECR, but it may not have an impact beyond that.
Asking is only the first step.
A higher ECR is only good to the degree you manage your balances to the correct level. Let’s walk through examples to illustrate the power of managing your balances.
Example #1:
Average Bank Deposit Average: $10,000,000
ECR: 0.25%
Annual ECR earnings: $25,000
Annual Fees: ($25,000)
Total Value of Cash: $25,000
Realized Gain: $0
In the above example, you completely offset your banking fees for the year. But with a higher ECR, you will need to lower your balances, or the effective ECR is still the same. Typically any excess earnings credit is not given to you in the form of interest; it is simply lost. Here is the example if you asked for and received a higher ECR:
Example #2:
Average Bank Deposit Average: $10,000,000
ECR: 0.50%
Annual ECR earnings: $50,000
Annual Fees: ($25,000)
Total Value of Cash: $50,000
Unrealized Gain $25,000
In this example, if you did not adjust your overall average balance, then the higher ECR did you no good. This loss is compounded when you realize you could be making at least 1.00% on your money when investing in the safest, most liquid investments, i.e., U.S. Treasuries.
Now let’s take a look at an example employing this strategy:
Example #3:
Average Bank Deposit Average: $5,000,000
ECR: 0.50%
Annual ECR earnings: $25,000
Annual Fees ($25,000)
Investment Balance: $5,000,000
Investment Rate: 1.00%
Interest Earnings $50,000
Total Value of Cash $75,000
Realized Gain $50,000
In this example, by properly managing your balance you’d increase the value your cash provided your organization by a whopping 300%!
However, doing this successfully requires good information. There are many variables that can impact ECRs, e.g., your relationship with your financial providers, and your ability to invest wisely without sacrificing safety and liquidity.
As always, the three+one team can provide you with all the information you need to be successful in maximizing the value of your cash. We look forward to helping you profit from today’s higher ECRs.
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We are pleased to welcome Lena Smith to the three+one team.
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