Do You Have Good Liquidity or are You Just All Wet?

In the T.V. series Lou Grant, the character nicknamed "Animal" marvelled at his friends financial acumen (I am paraphrasing here) "I have a friend that is some kind of financial genius . . . when he gets too much money in his checking account, he sliiiides it over to a savings account, this way he earns interest on his money!".

Managing cash is particularly challenging in this interest rate environment. Loans can be difficult to come by, the direction of interest rates is anyone's guess, members have pulled their money out of the stock market and into your shop, etc. So it is tempting to just leave it in your Corporate account until things settle a bit. However, effective use of your cash is as important as ever. But where do you put all this cash? Depends upon your ALM position.

At the risk of stating the obvious, be sure to put any idle cash to work, even if it's in short-term CDs or investments. The income adds up. Complete a cash pro-forma each month (informal is fine for a small credit union) so you can determine how much cash you will have and plan accordingly.