This is a continuation of our blog from last week, “Cash is Not Just Cash”. Read it here.
1.) Consider all cash as an asset that has worth. No matter how short or long your cash is needed, there are options to receive immediate income on those funds without jeopardizing safety or liquidity.
2.) Given new federal regulations, the top-tier banks will want your operating account, as referred in our past blogs. Community and regional banks will want both operating and capital reserve funds, unless they hit their cap level of public deposits.
How will you know which banks want your money? One was is by the rates they offer. Short-term deposit rates can range from .0% to .50% or more depending on the length of time. The farther you extend the maturity time frame, the lower the rate you will see from the top-tier banks, while you will see higher rates from local and regional banks.
3.) A strong banking relationship is essential to managing your cash. Take your banker’s phone calls and meetings. The stronger your banking relationship, the higher rates you may see for your deposits.
4.) Consider a state short term investment pool as an option; it automatically meets all state and local regulations. Such pools may or may not have different maturity options, but with the right liquidity data you can remain safe and liquid while achieving a steady stream of income on your cash.
5.) A Bank Deposit Investment Account (BDIA) should be considered as a viable liquidity option to maximize value in the marketplace while remaining safe. A BDIA is an actively managed portfolio of U.S. treasuries using your liquidity data. The safety of U.S. treasuries can be matched to the time needs of your cash, producing a greater level of cash. The funds still remain with your bank and managed by an RIA money transfer. The rates on a BDIA will vary based on average maturity. This can be used in all 50 states.
We hope to see you at some upcoming events:
GFOA Annual Conference of The United States in Canada in May
Last week we presented at the GFOA of South Carolina on “Trends Impacting Municipal Banking”.
We’ve posted our presentation online you can find it here.
Have any questions or comments for the author? Reach out below!