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.