There is no doubt liquidity and collateral requirements have made it more difficult for your financial institution’s to provide you with more value for deposits. You can understand the difficulty banks have been going through, trying to bring viable solutions to non-operating deposits that are on-balance sheet that can also increase yields for entities like yours.
One thing is for sure: with rising short-term interest rates, your deposits could be worth a lot more. However, as small, medium, and large banks begin to roll out different deposit alternatives, you need to ask yourself, “What is best for my entity?”
Even though your financial providers may offer several deposit alternatives, are they really the right ones for your entity? How can you be sure?
There’s a reason so many types of cars exist today. Yes, every car will get you from point A to point B. But when you’re in the market for a car, you’re looking for more than just transportation! You want to ensure your next vehicle meets your specific needs, on many fronts.
If your bank’s relationship manager suggests you begin to use your balances in different ways, ask what is your entity’s best plan going forward. Just like a car, you identify the one that works best for your needs. Sure, you may be able to bring more value to your deposits from a product the bank offers, but how do you maximize the benefit of those products? Are there even better products that fit your entity’s unique needs?
Alternatives to deposits may be a great opportunity to increase yield, but not all deposit alternatives are created equal. How flexible are your liquidity needs? How should you match your operating cash with available marketplace investments without sacrificing safety and liquidity—while still increasing yield?
The answers to these questions and more can be answered through a cashVest® analysis. Using this tool, three+one can identify what’s best for your entity’s needs—and help you achieve new levels of profitability.
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