Interest rates are up, so it’s time to think about the time-value of money.
No, I’m not talking about an ice cream float or floating down the river. I am talking about a financial float — the “in-between possession” time of cash flow. It’s been awhile, probably. Interest rates were at historic lows for years following the Great Recession. And now cash moves from one place to the next almost instantaneously. But it wasn’t always that way, and with interest rates on the rise, it may be time to revisit the subject.I am old enough to remember traveler’s checks.
The concept of a float doesn’t only apply to checks, however. It reminds us of the leverage provided by having cash in hand and its resulting earning power. I remember a time when I changed the fee revenue receipt timeline for a company where I once worked. We cut two to three weeks out of the monthly cycle so the company received its cash sooner.
Interest rates on savings are back on the rise. I’ve seen them as high as 4 percent. It’s time to pay attention again.
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