Cannon County Cash Management Policy

Goal: To establish an optimal monthly cash balance in all funds for efficient operation and to avoid the use of Tax Revenue Anticipation: Notes (TRANS).

Actively Monitor Cash Flows

Improving cash management begins with analyzing actual cash receipts and disbursements and developing accurate cash flow’ forecasts. To perform a detailed cash flow analysis, one must first identify major revenue and expenditure types and their expected timing reviews historical data to determine typical cash inflows and outflows throughout the fiscal year, and review and monthly bank statements and account reconciliations.

Timing of Invoices

Cash receipts and disbursements are not collected or paid in an even twelve-month installment plan. The majority of revenue’ for property tax receiving funds are received in the months of December through February. The county will attempt to schedule payments of more expensive invoices during these months, where incoming cash flow is the highest.

Receivables and Payables

Fund balance contains receivables which may or may not be spendable when needed.

The county will be mindful that poor tracking of accounts payable (especially at June 30 balance sheet date) can greatly impact available cash for operations at the beginning of the fiscal year. The county executive’s office will take into consideration the amount of payables at June 30th.

Cash Flow Forecast

County management and the trustee will work closely together to develop accurate cash flow forecasts for the upcoming fiscal year by month for all funds (e.g., payroll and essential services cash needs arc adequately funded prior to realization of’ property tax/other large revenues). They will ensure the county has optimal cash balances in all funds each month, especially during the months of July through November to avoid issuing TRANS. The budget committee and county commission will review the projected cash flow statements to determine appropriate levels of working capital available and make adjustments as necessary.

The county executive’s office will produce· cash flow statements each month that indicate actual cash receipts and expenses and forecast the forward months based on year-to-date actuals and remaining appropriations. They will provide the current monthly cash flow statements for each fund to the county commission, along with detailed explanation of any budget-to-actual variances.

Cash Balances

The budget committee will focus on cash requirements by month when they prepare the budget. County financial management will provide accurate estimates or cash flow needs to the county commission for that purpose.

County management will provide accurate fund and cash balances monthly to the budget committee. This requires good purchasing/accounting policies that include the use of encumbrance accounting and payable tracking.

County Commission has established a minimum fund balance policy that provides for an adequate amount of available liquid assets for operations until cash receipts arc realized (Sec Fund Balance Policy).

County management recognizes the importance of good cash management Without good cash management, a county can have a sizable cash reserve on July 1 and still cash flow problems throughout the fiscal year.

The county commission will not approve budget amendments that allow spending that will lower the fund balance below the minimum required amount as stated in the adopted fund balance policy.

The county executive’s office will not authorize nor issue disbursements that will lower any fund’s cash below the minimum balance as slated in the adopted fund balance policy.

County management will be mindful that cash/ fund balances contain restricted monies for statutory spending by state law. These may include data processing fees, DUI treatment fines, etc. County management will not spend any money that is restricted in accordance to Tennessee Code Annotated for other than its intended use.

 

Approved this 2′”‘ day of February 2017.

APPROVED

Mike Cannon, County Executive