Liquidity is like an iceberg… it’s the part that you can’t easily see that may be the most important to you.
County governments are complex, diverse organizations that encompass dozens of agencies, multiple segregated funds, and anywhere from 40 to more than 400 separate, individual bank accounts.
“Liquidity”’ is the cash that is sitting in those numerous bank accounts, in many cases going largely unnoticed on a day-to-day basis.
A ship’s captain needs information about the colossal part of the iceberg that lurks quietly beneath the surface of the water. Likewise, county leaders need information and data about exactly how much overall cash they have to work with, and precisely when that cash will be needed to meet spending obligations.
cashvest® is the proprietary financial tool, developed by three+one®, that can help your county identify that liquidity, precisely measuring its size and depth, and then help you put that vital information to work.
What can cashvest® do for you?
Increased Interest Earnings – The valuable data that your county will receive from the cashvest® dashboard will provide your CFO with ongoing critical information about the available cash balances in those dozens (in many cases hundreds) of different bank accounts. That cash can then be put to work earning interest—perhaps in certificates of deposit, converted into a money-market accounts, or even invested in U.S. Treasury bills. The results, and the increased revenues to your county, will surprise you.
Decreased Banking Fees – Banks are providing important financial services to your municipality. In many cases, banks will tell you that these services are being provided at no cost to the county. But of course, there is some “cost” in that your bank probably requires that your county maintain a “compensating balance” in order to qualify for those “free” services.
For example, let’s say your county is required to maintain a $10 million minimum balance in order to avoid bank service fees. And let’s just say that $10 million could be earning 60 basis points in interest, even in today’s low-rate environment. That means that your county could have earned $60,000 in interest on that money over 12 months. So, while you didn’t write a check to your bank, you still compensated it to the tune of $60,000 because they had the use of your money. Let cashvest® help you identify multiple smaller accounts which can result in lower compensating balances being required. By putting more of that $10 million to work, your county might be able to pocket a large chunk of that $60,000.
Other benefits of liquidity information include avoidance of unnecessary short-term borrowing, increased bond ratings, and lower interest rates when your county does need to borrow money. Why not give three+one® a call? You may discover that your iceberg is a lot bigger than you thought!