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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 1: Speeding Up the Collection and Deposit of Receipts

Departments Depositing Funds Directly Into Their Own Accounts - Example

The following example illustrates potential interest earnings for departments depositing directly into their own accounts:

  Number of Days Between Remittances  
Date of Remittance to CFO Current Proposed Difference Remittance Amount Annual Interest Rate Number of Days in Year Additional Interest Earnings
1/15 15 3 12 $150,000 5% 360 $250
1/30 15 3 12 $900,000 5% 360 $1,500
2/14 15 3 12 $1,500,000 5% 360 $2,500
3/1 15 3 12 $1,500,000 5% 360 $2,500
3/16 15 3 12 $1,500,000 5% 360 $2,500
Additional Interest Earnings Over the Period (1) $9,250
Enter Actual Interest Earnings Over the Period (2) $3,000
Total Potential Interest Earnings Over the Period [(1)+(2)] $12,250

RECAP: This example illustrates that the department head remits money to the CFO every 15 days for the period of 1/1 to 3/31 (90 days) and that the remittance time established by the governing board is every three days. You would use an interest rate for investment opportunities that is available to your unit. Banks generally use a 365-day calendar for calculating interest earnings on deposit accounts and a 360-day calendar for certificates of deposit.

Again, when you are determining how often departments could remit money to the CFO, you need to consider the significance of the amounts and what is required by law. If the amount that remains on balance in a department's account is significant, the governing board may adopt a resolution requiring this department to remit money more frequently than required by law.

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