Treasury Management

Treasury management in local government plays a pivotal role in ensuring the efficient and effective use of public funds. Local government entities are entrusted with managing taxpayers’ money, which must be used to support public services, infrastructure, and community well-being.

One of treasury management’s core functions includes managing cash flow to ensure enough liquidity to meet day-to-day operational needs such as paying wages and providing essential services while maximizing investment return on idle funds. UHY’s GEARS services can help local governments and school districts analyze current and anticipate future inflows, such as tax revenues and grants, and outflows, such as payroll costs, debt servicing, and other operational and capital costs.

What You Need to Start:

• Annual Budgets – both operating and capital
• Financial Statements
• General Ledger
• Bank Statements

Mapping Cash Inflows and Outflows

We start by understanding all the revenue sources your entity receives and all the expenditures it must make to maintain its operations and provide services. We collect all cash inflow and outflow data over a specific period using the above sources.

We then look at your process to estimate those future cash inflows based on historical collection trends, depositing activity, and policy changes such as anticipated tax changes or expected grants. We can then project cash flows by reviewing historical spending patterns, expected increases in operational costs such as salary adjustments, and capital expenditures planned for the year. This helps you assess the integrity of your budget development process. It also forms the basis for helping you manage your fund balance reserves for that future “rainy day.”

Once the revenue data is collected and forecasted, we can prepare a cash flow statement that summarizes or maps out all cash inflows and outflows during the given period. This can form the foundation for a treasury management plan that allows you to invest your idle cash in higher-yielding financial instruments, maximizing returns. Lastly, we evaluate the net cash flow and conduct a variance analysis of actual cash inflows and outflows against budgeted amounts. This helps determine whether you are managing your cash flows effectively and efficiently.

Local governments can avoid liquidity crises and continue to serve their communities effectively by collecting accurate data, forecasting future cash flows, analyzing variances, and conducting stress tests. Let UHY’s GEARS services guide your organization toward healthy financial management practices.