Pathway to Recovery (Part II)
by Joe Rulison | Mar 26, 2020 | Banking Relationship, Banking Trends, Budgets, Cash Management Practices, Data & Technology, Fintech, News, Predictions
During these challenging times, three+one®️ is working to bring solutions to public entities and higher Ed institutions, allowing them to operate without disruption, while creating savings and new sources of revenue to offset any budget gaps that result from the economic slowdown from the COVID-19 pandemic.
Through strong communication, three+one®️ will adhere to several best practices to help you do more with less:
1. We understand that you need a clear framework for the investment of public
funds. Without regular in-person board or committee meetings, updating your investment policy statement may not be possible for the moment. For many three+one®️ clients, we have advocated building in the necessary latitude that allows entities to take advantage of all state guidelines so, when unusual circumstances arise, your cash can still generate revenue to the bottom line. Although the Fed has lowered rates, there is a robust marketplace to earn more value on cash that can lead to potential rates of over 1.0%. It all depends on the time-horizon data of your funds. Do you know how long you will have each dollar on deposit down to the day?
How to do more with less: Review the latitude your investment policy offers with your team; communication is paramount. If it is outdated, let three+one®️ enhance it for you. As a CFO, having the confidence that you are using the right tools provided to you, through your IPS, is vital to ensure your constituents and board know you are earning and saving the most you can on all dollars.
2. With time and geographic constraints on your team, reliable data becomes more fundamental. Cash flow today is paramount, and it doesn't require you to liquidate all investments and move all cash out of liquid-earning options. Liquidity matters when you don't have time. The ability to determine the change in liquidity is essential when calculating the impacts of a crisis. Is data guiding every step you take in managing your cash today?
How to do more with less: Many three+one®️ clients use our cashvest®️ MC forecast model to help with short- and medium-term cash projections. When evaluating lower sales, occupancy tax or other revenue sources, stress testing dollars to see where your cash balances could be in four months is important. If you are not using this tool yet, start digging into the numbers to see what the impact is on your entity.
3. Making payroll, running A/P, conducting bank transactions, inputting GL entries just got a bit more complicated. The need for entities to have staff work remotely has caught many entities unprepared. Let's work together on creating a framework for an electronic payment policy and the like to prepare for future remote finance offices.
How to do more with less: Please, please, please have an electronic/digital banking policy statement. We have heard time and time again how low on the priority list this type of policy is, but suddenly we all have a different opinion. When you have these in place and the tools to accompany them, life will be easier for you!
4. Now that the Fed has lowered interest rates TWICE, it is impossible to know how your banking stacks up against your peers. Is my earning- credit rate (ECR) good? What should I be earning in interest? Where can I earn interest? Are my fees where they should be? All entities just got a reset, and it is the data that helps ensure you are relying on the math—not an opinion—on where you measure up.
How to do more with less: We understand that you don't have time to look this over continually, but three+one®️'s rfpPrep®️ alleviates you from having to wonder if you are getting the best price, rates, and services.
5. When refinancing, liquidity matters. The lender will pay the fee for a new rating, and a lot of that will accelerate; but to get the best rating, as was mentioned in a previous blog, (S&P blog) entities need to prove that they have the best chance to repay to get a higher rating and reduce debt-service costs.
How to do more with less: three+one®️ can "vest" you with the best chance in paying lower interest on borrowed money. Entities need to change the way they supply data to rating agencies because times have changed.
6. Easing the fear of liquidity or lack of cash when you need it can be extremely stressful. During the 2008 financial crisis, the fear of not knowing if you needed cash was top of mind, leading to a run on the banks and financial instruments. During that period, many entities had to wait for liquid pools to unravel portfolios so cash could be accessed.
How to do more with less: You are not alone. Everyone is scared, wanting to know where the best place is to put their cash. If you have been following your provided time-horizon data, you are still getting over 2.0% on a portion of cash, and your liquid dollars are available in proportional levels to operating and "cushion" dollars. In times of crisis, you need peace of mind. Our cashvest®️ program is providing clients with that peace of mind when it is needed most.
The underlining value of three+one®️'s services applies in both times of opportunity and challenge. Confidence, peace of mind, stewardship, productivity, safety, proactiveness, and accountability are three+one®️'s top priorities as we help during these critical and unforeseen times.