financial cash management

1. CASH MANAGEMENT

2. • Cash management is a Public Financial Management
Standard which ensures that the right amount of money is
made available to fund government expenditure in a
timely manner as well as meeting its obligation as they fall
due.
• Cash Management can be defined as having the right
amount of money in the right place at the right time to
meet government obligations in the most cost effective
way.
Introduction

3.  Managing cash flow effectively and efficiently;
 Cash planning to ensure optimal use;
 Realization of all inflows;
 Controlling outflow;
 Avoiding discretionary spending;
 Minimizing deficit;
 Borrowing with limits; and
 Investment of excess or idle cash.
CASH MANAGEMENT IS CONCERNED WITH:

4. Provides complete and timely information on cash position
of government.
Strengthens budget execution as government has full
information about available cash and therefore able to plan
and implement budget better.
Enables efficient cash management due to ease of having
regular cash position and better quality cash analysis.
Makes planning easier and allows for effective decision
making.
CASH MANAGEMENT IS CONCERNED WITH Cont.

5. • To support government budget execution and ensure that
sufficient cash is available as and when needed to meet
government commitments;
• To control aggregate cash flows within fiscal, monetary
and legal limits;
• To improve the management of government borrowing
programs;
• To integrate policy priorities into annual budgets and
thereby ensure that available resources are allocated to
priority sectors;
OBJECTIVES OF CASH MANAGEMENT

6. • To enhance operational efficiency through the provision of high
quality services to the citizens at minimal costs;
• To invest excess or idle cash;
• To ensure greater accountability for public expenditure and cash
operations/backing is kept within budgeted expenditure,
• To prevent unanticipated borrowing that might disrupt monetary
policies.
OBJECTIVES OF CASH MANAGEMENT Cont.

7. Proper analysis of Revenue and Expenditure
framework;
Preparation of Cash flow Statement;
Adoption of portfolio Management approaches to
optimize liquidity position so that Cash is
available when needed.
Timely collection, banking and accounting for all
revenues, grants and loans;
REQUIREMENT OF EFFECTIVE CASH
PLANNING

8. Better timing of decisions of large expenditure;
 Good banking relationships and rationalizing the
number of bank accounts;
 Managing cash pro-activity and having cash “just in
time” through accurate forecasting and monitoring of
needs and proper coordination all Agencies involved
in the Cash Management process.
REQUIREMENTOF EFFECTIVE CASH PLANNING Cont.

9. Centralization of Government Cash balances and
establishment of a Treasury Single Account structure;
Clear understandings on the scope/coverage;
Ability to make accurate projections of short-term
cash inflows and outflows;
Adequate transaction processing and accounting
framework;
FEATURES OF MORDERN CASH MANAGEMENT

10. Timely information sharing between the Treasury and MDA;
Appropriate institutional arrangements and responsibilities.
Utilization of modern banking, payment and settlement systems;
Integration of Debt and Cash Management;
Introduction of a Financial Management Information System;
FEATURES OF MORDERN CASH MANAGEMENT. Cont

11. Improved Institutional framework and capacity building for Cash
Management;
Adoption of financial reporting through:
(a) Introduction of IPSAS; and
(b) Departmental Financial Performance Reporting Systems;
Modernization of Internal Audit Arrangements.
FEATURES OF MORDERN CASH MANAGEMENT. Cont

12. Funds releases are not based on Ministries,
Departments and Agencies (MDA) needs;
Large idle cash balance in the bank accounts of MDA;
Low level capacity in Modern Cash Management;
Poor database for government financial transactions;
Lack of effective structure for Cash Management;
CASH MANAGEMENT CHALLENGES

13. Unauthorized use of Independent Revenue by MDA;
Excessive Ways and Means Financing (Overdraf)
from CBN;
Non Identification of MDA CBN/Commercial Bank
Accounts;
Lack of Revenue forecasting skills;
Lack of linkage of cash requirements to procurement
plans;
CASH MANAGEMENT CHALLENGES. Cont.

14. Poor Revenue Management and Accounting;
Untimely Bank Reconciliation;
Lack of clear policy on investment of idle funds;
Absence of on-line linkage of the Treasury with MDA;
Lack of strong inter-agency collaboration in the Cash
Management process.
CASH MANAGEMENT CHALLENGES. CONT.

15. It helps to maximize inflows, control outflows,
It avoids discretionary spending;
It minimizes deficits and borrowings within limits set by
government
It invests the excess or idle funds when it arises.
v. It gives confidence among the authorities
ADVANTAGES OF CASH MANAGEMENT

16.  Honourable Minister of Finance;
 Accountant-General of the Federation;
 Director-General, Budget Office of the Federation;
 Director-General, Bureau of Public Procurement;
 Director-General, Debt Management Office;
 Director-General, Millennium Development Goal (MDG)
Office;
 Group Managing Director, Nigeria National Petroleum
Corporation (NNPC);
 Chairman, Federal Inland Revenue Service (FIRS);
 Comptroller-General Nigeria Customs Service (NCS).
COMPOSITION OF CASH MANAGEMENT COMMITTEE

17. Inflow:
– Federation Revenue
• Value Added Tax (VAT)
– Independent Revenue
• PAYE
– Operating Surplus/Dividend
Outflow:
– Personnel
– Overhead Costs
– Capital
ROLE OF MDAS IN CASH MANAGEMENT PROCESS

18. It is a Public Financial Management (PFM)
reform designed to improve the
effectiveness
and efficiency in the storage of personnel
records and administration of monthly
payroll
of the federal public servants
INTEGRATED PAYROLL AND PERSONNEL
INFORMATION SYSTEM(IPPIS).

19. • To centralize data base of civil servants
• To reduce ghost worker syndrome
• To ensure integrity of employees data
• To minimize wastage of public funds
• To ascertain actual personnel
emolument of FGN’s staff
• To facilitate easy storage, updating and
retrieval of personnel records for
administrative and pension purposes
OBJECTIVES OF IPPIS

20. • Over one Million Public servants are on the IPPIS
platform from over 500 MDAs.
• Had saved FGN of over ₦300billion
• Improvement in Financial Reporting through accurate
projections of Personnel cost for planning purposes.
• Biometric data capture of personnel under IPPIS
• Storage of records in the centralised personnel database
• Timely processing of staff emoluments on a monthly
BENEFIT OF IPPIS

21. • Prompt deduction and remittance to
pension funds, cooperative societies and
other unions dues
• Easy Retrieval of personnel information
• Easy payment of civil servants
entitlements
• Monitoring of unutilized funds derived from
unpaid staff salaries
BENEFIT OF IPPIS. Cont.