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NYS Comptroller

THOMAS P. DiNAPOLI

The Academy for New York State's Local Officials

Cash Management: A Tutorial for Local Governments and School Districts

Module 4: Monitoring Cash Balances

Overview

Another tool to use for effective cash management is to monitor cash balances using a cash flow analysis. This tool helps you to forecast or estimate your cash situation and enables you to manage your money effectively.

Why should you prepare a cash flow analysis?

  • It can aid you in enhancing your credit rating by showing you have sound cash management practices in place, and showing your ability to determine the cash requirements of your municipality. Therefore, it may help to reduce the cost of borrowing if the need to borrow money should arise.
  • It can help you to identify any potential budget difficulties such as revenue shortfalls or extreme disbursement requirements. Being able to identify revenue shortfalls may give you time to explore short-term loan options such as interfund loans, revenue anticipation notes (RANs), tax anticipation notes (TANs) or budget notes.
  • Preparing a cash flow analysis may also help improve your investment earnings by identifying excess balances available for investment and ensure liquidity for disbursements.

To help you to discover whether your local government or school district can better monitor your cash balances, a self-assessment questionnaire, which can be taken at any time, is provided for this topic. The results will allow you to focus on the practices that will provide the best opportunities for improvement. There are also links to an overall discussion and the most important concepts and ideas pertaining to this topic.

  Module 4: Assess Your Practices - Questionnaire

  Next: Select the Cash Flow Analysis Period