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TRANSCRIPT
Managing Cash Flows
Dominick J. Cristofaro, Senior Finance Manager – Treasury
Overview
• Forecasting cash flows
• Monitoring cash flows
• Investing cash flows
What is cash flow?
• The movement of funds in and out of a
business. • You should be tracking this either weekly,
monthly, or quarterly.
Cash Inflows
Your inflows are your revenues:
• FEFP
• Property Taxes
• Impact fees
• Sales Tax
• Grants
• Bond Proceeds
• Food and Nutrition
• Enterprise Funds
• Deposits
Cash Inflows
Cash Outflows
Your outflows are your expenses:
• Salaries
• Payroll Taxes
• Benefits
• Retirement (FRS)
• Debt Service
• AP Check Runs
• P-Card Purchases
• Fees
• Transfers Out
Cash Outflows
Forecasting Cash Flows
• Begin with annual numbers then break them
down to monthly amounts
• Look at your annual budget
• Project out 12 months
• Look at past numbers. What is the history?
• Adjust using currently known information
• Enter amounts in the months they are expected
• i.e. Debt service, payroll, etc.
Monitoring Cash Flows
• Review cash flows at least weekly and make
adjustments to your monthly numbers
• Bank account balances
• Accounts payable activity
• Payroll
• At the end of each month record actuals
• Compare against your forecast and to prior
years
• Extend your forecast out one more month
Investing Excess Inflows
• Safety of Principal
• Liquidity of Funds
• Return on Investment /
Income
• Investment Policy
Investing Excess Inflows
Investment Options
• Pooled Investments• Local Government Investment Pools (LGIPs)
• Money Market Accounts
• Insured Deposits
• Short-term Bond Funds
• Separately Managed Accounts• Self-managed
• Investment Advisor managed
Investing Excess Inflows
Local Government Investment Pools
Investing Excess Inflows
Local Government Investment Pools
• Stable Net Asset Value (NAV)
• Dollar In /Dollar Out
• Same Day Liquidity (wire transfer)/Next Day Liquidity (ACH)
• Redeem by 2pm
• AAAm/AAm
Investing Excess Inflows
Local Government Investment Pools
• Stable Net Asset Value (NAV)
• FDIC Insured
• Commercial Paper – two highest categories
Investing Excess Inflows
Local Government Investment Pools
• Floating Net Asset Value (NAV)
• Designed for longer term reserve funds
• Next Day Liquidity/Bi-weekly Liquidity
• AAAf/AAf Fund Rating
Investing Excess Inflows
Local Government Investment Pools
• Floating Net Asset Value (NAV)
• Enhanced Cash
• Next day liquidity/Bi-Weekly liquidity
• Term Series (30 to 365 days)
• Choose predetermined maturities up to one year
• Liquidity similar to a Time Deposit
• Subject to “…significant penalties for any redemption prior
to agreed-upon redemption date.”
• See the information statement /prospectus for details
Investing Excess Inflows
Local Government Investment Pools
• Floating Net Asset Value (NAV)
• Core Reserves – typically an average maturity of less than two years
• Next day liquidity/bi-weekly liquidity
• AAAf/AAf fund rating
• Atlanta Capital Management (part of Eaton Vance) - Sponsored by
Florida League of Cities
• Payden Rygel - Sponsored by Florida Association of Counties
• Wertz York Capital Management Group - Open to all public
entities including higher education and insurance trusts
• Review prospectus for investment policy and fees
Conclusion
• Forecast cash flows over 12-month rolling periods
• Monitor and adjust cash flow projections daily/weekly
• Bank Accounts - Keep enough balance to offset all bank
service charges
• LGIPs - Make sure you are comfortable with sponsor,
investment manager, fee structure, investment policy,
liquidity structure
• Talk to your peers to get an “unbiased” opinion
