Cash Management
World Bank Workshop
Ministry of Finance Officials, Afghanistan
Washington, D. C.
September 12, 2007
A. John Vogt, Professor of Public Finance &
Government, School of Government The
University of North Carolina at Chapel Hill
Elements of Cash Management
(Treasury Function)
{ Collection of taxes,& other revenues due
(Conversion of receivables to cash)
{ Safekeeping of collected cash: cash in
depository institutions, on hand, or elsewhere
{ Investment of temporarily idle funds:
objective (s), available investment instruments,
safekeeping of invested funds, etc.
{ Expenditure & disbursement of funds
{ Control of cash management
Importance of Cash
Management
{ Efficient and honest cash management is a
foundation for a government’s
credibility, for the confidence that citizens
and taxpayers have in government
{ Efficient and honest cash management can
enable a government to hold down or
reduce tax rates and fees or charges
Framework for Effective Cash
Management
{ Laws: tax and revenue assessment & collection,
use of depository institutions, investments,
expenditure & disbursement control
{ Policies & procedures:. Addressing, for
example, segregation of duties in
collections, investment objectives.
{ Surety bonds on officials collecting or
handling cash: Such bonds protect
governmental entity against officials & employees.
Types: honesty, true accounting, faithful
performance,
{ Periodic reporting on cash management
to governing authority, public, regulators
{ External or independent audit or check
of cash management activities & officials
Collection of taxes & other
revenues
{ Determine amounts due
{ Bill as soon or as possible
{ Decide on more centralized or
decentralized cash collection points
(control versus convenience to tax payers)
{ Determine/approve procedures for any
official collecting cash.
{ Take advantage of electronic collection
methods for taxes and fees.
Collection of taxes & other
revenues
{ Require daily or frequent deposit of
collections to deposit