Improving cash management starts by assessing your current and potential interest earnings. The schedule to be used depends on how funds are deposited. This section of the tutorial pertains to departments that deposit funds directly into the chief fiscal officer's account.
If your local government does not handle deposits in this way, click on the appropriate link below to get the schedules you need:
- Information for departments that deposit directly into their own accounts
- Information for departments that remit directly to the CFO.
Departments Depositing Directly into the CFO's Account: The schedule shows the date of receipt and the date of deposit for each receipt. This schedule will also show the difference between the date of receipt and the date of deposit, and how often you expect the receipts to be deposited.
Step 1: Choose a specific period to review the departments (e.g., a three-month period).
Step 2: Determine how often you expect each department to deposit money into the CFO's account (e.g., every day).
For the period reviewed, base your potential interest earnings on the annual interest rate for the CFO's account.
- Show Me an Example
The following example illustrates potential interest earnings for departments depositing directly into the chief fiscal officer's account.
Number of Days Between Receipt and Deposit Date of Receipt Date of Deposit Current Proposed Difference Deposit Amount Annual Interest Rate Number of Days in Year Additional Interest Earnings 1/1 1/10 9 1 8 $100,000 2% 365 $44 1/11 1/31 20 1 19 $300,000 2% 365 $312 2/1 2/24 23 1 22 $250,000 2% 365 $301 2/25 3/11 14 1 13 $500,000 2% 365 $356 3/12 3/31 19 1 18 $450,000 2% 365 $444 Additional Interest Earnings Over the Period (1) $1,458 Enter Your Actual Interest Earnings Over the Period (2) $1,000 Total Potential Interest Earnings Over the Period [(1) + (2)] $2,458
RECAP: In our example, we assume the requirement is that departments deposit moneys daily. The above example illustrates that over a 90-day period, some of the funds did not earn any interest for up to 80 days of that period. We based our computations on a conservative 2% APR. You would use the interest rate applicable to your situation.