Assessing Cash Flow Forecasting in Public Financial Sector
Introduction
Most common work of the public institutions is to serve the society in the most caring service they can give. From supporting the education to saving the lives of the children, institution varies according to their objective in serving the community. Institutions can be form of the government or private wherein there is a need of a common fund to spend in their vast list of programs. In a public institution, the funds came from different sources. It can be from the donations of the groups that supporting their goals, from the solicited donations, investments, or lending resources. From the various financial resources, public institutions should manage their funding well to use in the most appropriate program.
Importance of Cash Management: Cash Flow
Controlling the financial resources are the best attributes of every institutions. Public institutions need to ensure the efficient implementation of their proposed budgets. This can be done if there is an effective cash management. Spending is easy but gathering the resources is hard to find, therefore, the resources should be kept in a most reliable way and be spent in a timely manner. Cash management is the appropriate term in utilizing the financial resources while at the same time, minimizing the borrowing or liabilities from other institutions. It is very common in any institutions or businesses to handle the sound management and balancing the assets and liabilities. Out of the funds, the public institutions can create and handle the activities that are suitable in their objectives.
Through the budget preparation or execution, management of the financial operations and other related task is risky. It includes the broad aspect of accounting, auditing, and evaluation and just like the businesses natural activity, public institutions should also establish informative financial reports. The financial reports can cover the different function in controlling the financial resources, as well as informing the leaders and helping them to decide on their next decision. Through the specific functions in treasury, the objectives and activities of the public institutions can be emphasized.
Purpose of Cash Management
Cash management established the vital purposes such as control in fund spending, implementing the budget efficiently, minimizing the liabilities, and maximizing the opportunity in using the resources. Controlling the cash is the key element in budgeting and the accountants or mangers should commit themselves in managing the funds. It is important that the accountants follow the appropriate guidelines such as collecting or paying the liabilities to minimize or lower the interests. The accurate and timely transactions are advantages for the public institutions for they can plan well on their next activities and ensure the budgets.
In Relation to Government, Business, Banking, and Accounting
Like in government spending, the cash management is also important to support the aim of the country for development. The focus of the public institutions in the cash management is complying in the allotted budgets and apart from the daily cash needs to secure that there is no financial issues within the organization.
Cash means opportunity in all aspect of businesses and government sectors. Therefore, this opportunity should use wisely and be appropriate on the situation. A good cash flow management is a technique that describes the step in achieving the goal from the framework of all the organizations activities. By the simple means as an element of business, cash is the most liquid current asset. Through the relation of assets and liabilities in accounting, the cash is the greatest factor wherein a government, businesses such as banking institutions can perform well. In the proper utilization of cash, the payable liabilities can be deducted and the other receivables can transform into cash and turn into the other public activities. As for the public institutions, the cash should be managed in a cycle where the length of the operations of the institution can be satisfied.
Conclusion
The cash management policies can help maximized the daily cash flow and protect against the fraudulent actions. The public institutions can gain the confidence and have a great access in capital flow through the financing options and industry expertise. In addition, the benefits that the public institutions can gain are the flexibility and broad finance projects intended entirely for the community. If a person is dedicated to the organization, the services of the public institution can be well delivered. Through the expertise in cash management, the integration of the policies and the objectives can be achieved and the financial solutions can be available.
Sources:
ADB – Cash Management and the Treasury Function [Online] Available at: http://www.adb.org/documents/manuals/govt_expenditure/chap8.pdf [Accessed 16 February 2011].
Maysami, R., 2009. Understanding and Controlling Cash Flow – Financial Management Series, U.S. Small Business Administration [Online] Available at: http://www.sba.gov/idc/groups/public/documents/sba_homepage/pub_fm4.pdf [Accessed 16 February 2011].
Regions Bank, 2007. Public Sector Banking [Online] Available at: http://www.regions.com/virtualDocuments/public.pdf [Accessed 16 February 2011].
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