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Office of the State Comptroller - Local Government & School Accountability

Local Government and School Accountability

Cash Management

A Tutorial for Local Governments and School Districts

Elements of a Successful Cash Management System

Cash management is the coordination of five essential activities:

  • Forecasting cash flow
  • Circulation of cash flows through collections and disbursements
  • Bank relations
  • Temporary investment of available funds
  • Information and control.

Although most of you have developed a cash management system that is effective, this module may help you improve your system.

A successful cash management system consists of:

  • Documentation - Having fully documented policies and procedures enables you to make informed and efficient cash management or investment decisions.
  • Communication - Communicating policies and procedures to internal users (departments) and external users (banks) promotes a clear understanding of what is expected and what you want to achieve.
  • Control - Establishing good controls over cash helps safeguard this important asset, cash.
  • Audit - Review of your cash management system and investment decisions can give you specific ideas to improve your system.

As a local government official, you determine in your professional judgment how best to manage your governmental entity's cash within the legal authority granted by State and local statutes. As you read about the opportunities discussed in this module, consider the size of your organization, how much cash you may have available for investment at any given time, the resources available to perform this function, and the costs involved in making changes.

  Next: Module 1 - Speeding Up Collection and Deposit of Receipts