Transcript www.finance.gpg.gov.za

DEVELOPMENT OF A CASH FLOW
MANAGEMENT
MODEL
by LEON KAPLAN: MUNICIPALITIES PROJECT LEADER
Gauteng Department of Finance
Municipal PPP Conference
18 FEBRUARY 2010
AGENDA
• Background
• The SAICA Developed/Facilitated Cash Flow
Model for municipalities
• Application of the CFM to Capital Projects
• Way forward
BACKGROUND
BACKGROUND: MOTIVATION FOR
DEVELOPING A CASH FLOW MANAGEMENT
MODEL
• SAICA’s response to ‘Cash Crunch’ & Municipal needs for
meaningful Management Information
• Reduced household disposable incomes (unemployment/increased
tariffs etc)
• Increase bad debts and reduced collection rates (consumer boycotts)
• Unrelated Income & expenses (Reduced Revenue and Actual
Collections v Budgeted Expenditure)
• Grants (‘ring-fencing’)
• Capex v. Opex?..(service delivery!)
• Balance Sheet Projections
• Risk of unidentified Cash Flow viability (unreliable/non-existent cash
flow projections; timing of cash flows)
5
Cash Flow Model….. features
•
12 step process utilising wide range of MS Excel functions (including
explanatory notes for first time users)
•
Daily, Weekly, Monthly and Yearly Cash Flow Projections
•
‘Flash’ report for Management with relevant indicators (early warning system
for potential future financing/cash challenges; basis for assessing and
developing an adjustments budget (eg: based on reduced revenue receipts)
•
Debtors collection rates to be based on previous year’s actuals rather than
budget
•
Distinguishes between “own funding” and grant funding which requires to be
ring-fenced
•
Tracking Capital Projects (% complete v funding needs)
Cash Flow Modelling process…Inputs
•
Assistance from Budget office to complete 3 year MTREF
•
Assumptions used in model to be historically accurate and achievable based
on the current economic climate (Adjustment budgets catered for)
•
Regular (daily, weekly) updating of the system to maintain the model
•
Active engagement with the cash flow management reports by CFO and senior
management to inculcate new financial discipline of on-going cash flow
management and forecasting
•
Capital Projects data input
Daily Cash Flow Report
Page 1
Today:
31 July 2009
Reporting Date:
30 July 2009
DAILY BANK BALANCES
BANK ACCOUNT NO'S.
NO.62045242469.
NO.62045243491.
NO.62045231074.
NO.62081720114.
DESCRIPTION
SUNDRY REVENUE.
MAIN REVENUE.
MAIN EXPENDITURE.
TRAFFIC.
PREV BAL
CHEQUES
CASHED
CASH INFLOW
100,000.00
100,000.00
7,857,904.33
1,510,068.87
3,480,202.00
-
9,567,973.20
3,480,202.00
EFT PAYMENTS
-
-6,701,956.00
-
-6,701,956.00
R/D'S
BANK CHARGES
-
DIRECT
PAYMENTS
BALANCE.
-
-
100,000.00
100,000.00
4,636,150.33
1,510,068.87
-
-
6,346,219.20
GRANT ACCOUNTS
BANK ACCOUNT NO'S.
NO.62127674358.
DESCRIPTION
TEST Mun GRANTS ACC
PREV BAL
CHEQUES
CASHED
CASH INFLOW
EFT PAYMENTS
BANK CHARGES
2,956,170.19
-
-
-
-
-54.02
Committed Investments
Bank
NEDBANK
INVESTEC
Type of Investment
Call - MIG Grant
Fixed - Loan Security
STANDARD BANK
FNB
Fixed - Loan Security
Call - Social Services Grant
Balance before
Balance after
projected
projected
withdrawal /
withdrawal /
Interest Rate
placement
placement
10,000,000
10,000,000
7.25
9.00
25,000,000
25,000,000
9.00
7.25
Sub Total
15,000,000
10,009,382
15,000,000
10,009,382
60,009,382
60,009,382
Uncommitted Investments
Type of Investment
Interest Rate
Balance before
projected
withdrawal /
placement
2,956,116.17
-
2,956,116.17
PROJECTED CASH FLOW FOR TODAY
31 July 2009
Available balance in bank account
Projected Payments incl Outstanding Cheques
Available Balance
Less - Transfer to Grants Acc
Less - Provision for Retention Fees
Plus - Transfer fromGrants Acc
Plus - Projected Revenue Cash Inflow
Projected Cash Surplus / Shortage
Plus - Projected Investments Redeemed
6,346,219
46,154,027
(39,807,808)
Balance after
projected
withdrawal /
placement
-
-
-
Projected Bank Balance at end of day
60,009,382
60,009,382
21,189,950
(18,617,858)
-
-
-
Less - Projected Investments Placed
Total
BALANCE.
30 July 2009
INVESTMENTS AS AT
Sub Total
DIRECT
PAYMENTS
-54.02
2,956,170.19
Bank
R/D'S
(18,617,858)
Application of the CFM to Capital Projects
•
Caters for ‘Own’, ‘Grant’ and ‘Loan’ funded projects
•
Budgeted figures for projects obtained from the municipality’s Capital Budget
•
The model highlights monthly actuals v. monthly budget & total budget
•
The model allocates the timing of expected Capital Grants receipts and
payments (daily; monthly)
•
The model highlights surplus funds (including Grant funding) to be ‘ringfenced’ for short term investment
•
Multi-year funding is tracked
Capital Projects : Grant funding inflow
2009/2010
CAPITAL GRANTS FUNDING RECEIPTS
Date
Project
Source of Funding
Budget
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
KAGISO CEMETERY UPGRADERURAL CEMETERIES UPGRADE KAGISO REGIONAL PARK
LUSAKA EXT 2&3
RURAL WATER & SAN NEW M'DRIFT RESERVOIR
MIG
Actual Receipts MIG
Actual Receipts MIG
Actual ReceiptsMIG
Actual Receipts
MIG
Actual Receipts MIG
Actual Receipt
1,616,274
1,616,274
780,955
780,955
530,849
530,849 5,458,064 5,458,064
3,779,442
3,779,442 1,140,447 1,140,447
269,379
269,379
269,379
269,379
269,379
269,379
269,379
269,379
269,379
269,379
269,379
269,379
130,159
130,159
130,159
130,159
130,159
130,159
130,159
130,159
130,159
130,159
130,159
130,159
88,475
88,475
88,475
88,475
88,475
88,475
88,475
88,475
88,475
88,475
88,475
88,475
1,616,274
1,616,274
780,955
780,955
530,849
530,849
909,677
909,677
909,677
909,677
909,677
909,677
909,677
909,677
909,677
909,677
909,677
909,677
629,907
629,907
629,907
629,907
629,907
629,907
629,907
629,907
629,907
629,907
629,907
629,907
5,458,064 5,458,064
3,779,442
3,779,442
190,075
190,075
190,075
190,075
190,075
190,075
190,075
190,075
190,075
190,075
190,075
190,075
1,140,447 1,140,447
Capital Projects : Grant funding outflow
2009/2010
Grant Funded Capital Projects
Month
Project
Source of Funding
Budget
Rollover
Total Budget
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
KAGISO CEMETERY UPGRADERURAL CEMETERIES UPGRADE KAGISO REGIONAL PARK
LUSAKA EXT 2&3
RURAL WATER & SAN
Budget
Actual Expenditure
Budget
Actual Expenditure Budget
Actual Expenditure
Budget
Actual Expenditure
Budget
Actual Expenditu
MIG
MIG
MIG
MIG
MIG
1,616,274
780,955
530,849
5,458,064
3,779,442
1,616,274 1,616,274
780,955
780,955
530,849
530,849
5,458,064
5,458,064
3,779,442
3,779,442
269,379
269,379
269,379
269,379
269,379
269,379
1,616,274.00
269,379
269,379
269,379
269,379
269,379
269,379
130,159
130,159
130,159
130,159
130,159
130,159
130,159
130,159
130,159
130,159
130,159
130,159
#########
780,955.00
780,955.00
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of Exp Page
88,475
88,475
88,475
88,475
88,475
88,475
88,475
88,475
88,475
88,475
88,475
88,475
909,677
909,677
909,677
909,677
909,677
909,677
530,849.00 530,849.00 5,458,064.00
909,677
909,677
909,677
909,677
909,677
909,677
629,907
629,907
629,907
629,907
629,907
629,907
629,907
629,907
629,907
629,907
629,907
629,907
########## ##########
3,779,442.00
WAY FORWARD……CFM ‘vision’
WAY FORWARD
• Phase 1
 Roll-out to remaining Gauteng municipalities
 SAICA Endorsement
• Phase 2: Future Improvements ( subject to funding)




Development of Grants Registers
Web based portal for Gauteng Municipalities to input Cash Flows
Integration with Municipal financial systems to import daily Cash Flows
Usage of common chart of accounts (NT GFS codes) for reporting purposes &
consolidation aligned to the new NT reporting Regulations
 NT Endorsement and ‘National’ roll-out
CONTACT DETAILS
Leon Kaplan
(Municipalities Project Leader)
[email protected]
0828005154
Colleen Robinson
(Municipalities Project Co-ordinator)
[email protected]
0836312183
Q&A
THANKS