YieldAdvantage: bringing efficiency to GFOA members: the process of investing funds can be time-consuming and labor intensive. GFOA's newest service, an Internet based auction platform called YieldAdvantage, streamlines the investment process and drives up yields.

• Author: Anastopoulos, Sofia
• Position: Solutions

As a member-driven association, GFOA supports state and local government finance officers in the professional financial management of the governments they serve. GFOA accomplishes this by identifying best practices in public financial management and promoting these practices through a variety of programs and services. These programs and services include books and periodicals, training seminars and conferences, consulting services, technical inquiry services, and technical recognition.

In keeping with this central mission, GFOA offers its newest service to members--GFOA YieldAdvantage, an Internet-based auction platform for investing in money market instruments. Tapping the power of technology and the Internet, YieldAdvantage automates the steps involved in creating, holding, and awarding investment solicitations.

WHY YIELDADVANTAGE?

The process of investing public funds can be time consuming and labor intensive, often taking longer than half a day. Typically, the investment manager contacts a number of financial institutions via fax or telephone. These may include banks, broker-dealers, or other financial institutions that are on a government's preapproved bidder list. Oftentimes, state laws as well as individual investment policies specify a minimum number of required bids, which are received by fax or telephone. The government spends time evaluating and ranking the bids, fielding questions, confirming participation, and, possibly, seeking bid improvements from the bidders. When the bid collection and evaluation process is complete, settlement instructions are exchanged and settlement occurs. Records of the entire process are created and archived for auditing purposes.

In contrast, YieldAdvantage automates these steps, saving time and streamlining the entire investment process. Governments can use YieldAdvantage for investing both operating and bond funds. Through the automation, a larger number of financial institutions can participate in the bidding process, thus increasing competition. As a result, YieldAdvantage improves both the investment process and investment performance.

As a Web-based platform, YieldAdvantage does not impose additional software or hardware requirements on either the government investor or the financial institutions. All that is needed is access to the Internet. Both large and small governments have taken advantage of this new tool.

BECOMING A USER

Davenport Community School District, the third largest school...