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.

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.


The Crystal Ball

The Crystal Ball

Just imagine if you could look into a crystal ball and see the future. The power of this knowledge could help guide you to make better decisions, avoid the potholes, and allow you to make money that otherwise would go unnoticed.

Just imagine the ability you’d have to alter the future and its outcome.

Just imagine the edge that knowledge would give youespecially if you had the ability to alter the outcome well in advance.

Just imagine if during each calendar quarter you could assess your previous predictions and use that information to chart the course of the next quarter with 95% accuracy.

Just imagine what all of this could mean for you, your office, and those you serve. 

For most of us, this would only be wishful thinking or pure science fiction. 

At three+one® all this is now a reality! 

With the development of our new technology and the rollout of our cashvest® MC forecast model, the ability to predict the future is now possible. The letters “MC represent the initials of our data analyst, Manel Chaibthe designer and developer of the proprietary cashvest® forwardliquidityforecast model.

The MC forecast model will take 24month-longhistorical look at each financial transaction and determine the future patterns 120 days into the future with 95% accuracy or better. In one case, the MC model was within $163.00 of daily liquidity on a budget of over $360 million looking out 120 days. 

Just imagine, knowing the future of your liquidity down to a few dozen dollars in advance—120 days to be exact. 

The power of such knowledge will allow you to determine:

• The time horizon on future cash for investment.

• The need (or lack of need) in borrowing money for upcoming cashflow/liquidity needs.

• The ability to determine budget surpluses or gaps down to the dollars and at what point of time. 

• The leverage in advising your bank(s) on the value of your cash deposits and if there is an upcoming cash needwith no unexpected surprises.

• No need to hold on to uninvested cash for “justincase” circumstances.

• The power of your forecasting your entities liquidity (quantitative & qualitatively) for rating agencies.

This is exciting news and yes, it’s possibleThe technology to look into the future exists right here at three+one.

Let our proprietary cashvest® MC forecast model become your crystal ball. The power of looking forward will provide great sources of comfort and revenue that can truly alter the future of your entity.

Cash Flow vs. Liquidity: Why You Need to Know the Difference

Cash Flow vs. Liquidity: Why You Need to Know the Difference

If you still think cash flow is the same thing as your liquidity, you may not be maximizing the value of all dollars in deposit. Our cashvest® tool is the answer to additional revenue. Liquidity is an exact data science; harness that data to put your cash to work and earn greater interest income for your taxpayers or higher-ed entity.