Cash Management and Capital Planning
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Cash Management and Capital Planning

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Cash Management and Capital Planning




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Presentation on theme: "Cash Management and Capital Planning"— Presentation transcript:

Slide1

Cash Management and Capital Planning

Practical Thoughts on Cash Flow Planning and Capital

Slide2

For our Discussion Today:

Cash Management vs. Budget & Capital Planning

Cash Management in General

Cash Flow Planning & Capital Planning Nexus

Pulling it all Together: Practical Application

Please stop me and ask questions.

Slide3

Cash Management vs.

Budget & Capital Planning

vs.

Accounting

Cash Management = Having funds on hand to pay the bills.

The actual outflow and inflow

of

resourcesBudget = The Legal Authority to Spending. Fulfilling the Legal Requirements Satisfying the Pre-Audit StandardAccounting = The appropriate recording of the outflows and inflows.Appropriately processing transactions

Slide4

Government Finance is like a three legged stool.

Budget & Capital Planning

Cash Management

Accounting

Government Finance

Slide5

Cash Management in General

Understanding Your Organizational Spending

How Much Do you spend monthly?

Not All Months are Equal

Knowing the Outstanding Commitments

Foundational to Cash Flow Planning

VS

Slide6

Cash Management in General

VS

Understanding Your Risk Tolerance.

What is your organizational exposure?

How much “cash” should you keep on hand?

Not Necessarily Fund Balance Policy

Risk Assessment vs. % Basis

Emergencies vs. Contingencies

Slide7

Cash Flow Planning & Capital Planning Nexus

Ensuring You Have Enough Money in the Bank to Pay the Bills.

Striking a Balance with Liquidity.

Chase Security not Return

Slide8

Cash Flow Planning & Capital Planning Nexus

Have a Capital Plan:

The Three Fundamental Finance Questions

How Much?

What Will It Be Spent On?

When Will you Spend It?

Remember Budget v. Cash Flow

Asset Life Considerations

“If you fail to plan, you are planning to fail.” – Benjamin Franklin

Slide9

Cash Flow Planning & Capital Planning Nexus

Know Your Funding Sources

Debt Funding?

Reimbursement Resolutions & Tracking Costs

Working with The LGC

Know Your Market Access

Know Your Timing

Pay-as-You-Go FundingGrant FundingHow is Grant Funding Received?Other Requirements

Maximize the use of your Financial Advisor and your Bond Counsel

Slide10

Cash Flow Planning & Capital Planning Nexus

Know Your Expenditure Expectations

Assess Contracts

Work With the Project Managers

Encumbrance Schedules?

How will progress payments be made?

Will there be retainage?

Will there be large 1x expenses?The LGC may require you to have bid a project before they will let you issue the debt.

You must communicate with the project managers!

Slide11

Pulling it All Together: Practical Application

The BASE amount you should keep on hand?

Estimated Monthly Operating Expenditures

Estimated Monthly Operating Revenues

Estimated Monthly Debt Services

Applying Your Operational Risk Tolerance

Add Your Estimated Monthly Capital Spend

Estimated Progress PaymentsEstimated 1x ItemsEstimated Non-Operating RevenuesApplying Your Capital Risk Tolerance

Slide12

Pulling it All Together: Practical Application

Invest the Excess

Using your expenditure Plan to Gauge Maturities

In Accordance with General Statutes

Not All Months are Equal

Apply Your Risk Tolerance

Chase Security not Return

Slide13

Pulling it All Together: Practical Application

If you are using Debt:

Are you reimbursing yourself?

Have your FA Plan an Issuance Calendar

Feasibility Studies

Rate Models

Regulatory Issues

GO Bond ElectionsType of Debt to be IssuedCommunicate with the LGCLGC CalendarLGC Documents Needed

Issuance Calendar

Type of Issuance to be Done

Maximize the use of your Financial Advisor and your Bond Counsel

Slide14

Closing Thoughts: Other Items

Investment Policy: Have One!

Pooled Cash vs. Funds

May Need an Interfund Loan Policy

Talk to Your Auditors

Know the General Statutes

Debt Policy: Have One!

Talk to your FATalk to your Bond CounselCapital Policy: Have One!Cash Flow Management is Critical, Don’t Set it and Forget it!

Slide15

Questions?

Thank You!