Cash is Power – Are you Putting Yours to Use?

Gone are the days of having cash and other liquid investments on our balance sheets earning a fraction of a percentage point. As many of our readers are experiencing, and an observation we’re noticing with the majority of our clients, is that cash reserves in transportation & logistics businesses are at an all time high. Profitability, government aide, and strong used equipment market has had a tremendous impact on companies’ balance sheets, enabling them to build cash reserves for what many have called the first time in years. The question now is: are you managing it wisely?

In addition to the above, we’ve noticed another observation within the marketplace, which is companies often times are not paying close enough attention to their cash reserves, and the accounts their sitting in. This stems from years over near zero interest bearing accounts being the standard, but with the rate hikes we’ve experienced over the past year, that landscape has changed — and so have the investment products. Many of the traditional checking and savings accounts that funds historically were held in are still, today, earning less than 0.40% — there are far stronger options available to you that will not have an impact to your daily operations, and will allow you to take advantage of the increased rates being offered.

Today, with no additional risk as compared to your checking and savings accounts, there are products like Money Market accounts and Treasury Bills that have yields in excess of 4.0% (conservative as of 3/1/23). This is tremendously powerful, as these options product quick liquidity to cash, with the added benefit of truly earning a return on your cash balances. As an example, if you have $2,500,000 of cash reserves sitting in a checking account with 0.30% interest, compared to investing those funds in a money market account at 4.50%, this change would result in additional net income of $105,000 to your business.

Our recommendation: we encourage you to review your cash and other liquid assets today to see what you’re currently earning, and speak with your CLA Advisor or other partners to see if there are better options for you and your business to take advantage of today.