Budget Box: Cash Management

By Karl Stephens - karls@landings.org
General Manager/COO

The Landings Association Staff and Investment Committee members strive to research and implement sound fiscal options that will maximize returns on the assets we currently hold...your Association dollars. Fiscal responsibility involves more than paying vendors on time, forecasting revenue and expense, and reporting financial results accurately. It also includes cash and investment management. Cash management is the corporate process of collecting and managing cash, as well as using it for short-term investing.

During 2019, TLA entered an Insured Cash Sweep program offered by Ameris Bank. An Insured Cash Sweep is a service that allows depositors to work directly with one bank to access multi-million-dollar Federal Deposit Insurance Corporation (FDIC) limits through partner banks, earn interest, and receive one regular monthly account statement.

In addition, The Landings Association currently has $6M in short-term CDs and US Treasury Bonds that earn interest at an average rate of 2.49%. The investments are placed with a ladder affect, that results in maturities each month. This structure allows for maturing investments to be re-invested into vehicles that are offered at market rates. The current investment environment is showing positive trends in higher interest rates compared to the last two years. The latest purchase is earning 4.65% for a nine-month CD. Reserve expenses are spread over several future years, so investing this money for short-term interest provides additional income to help offset those expenses.

By participating in these cash management tools, the Association will be putting more cash to work by earning additional interest income and ensuring all funds are covered by FDIC insurance limits. The minimum, annual additional net interest income is projected to be $166,000 in 2023.