How to develop your local government cash flow model

Use our three-step process to build a cash flow model for your community.

We understand that managing cash flow continues to be a source of trepidation for many communities given the volatility in revenue streams that results from delayed or decreased tax receipts and unplanned expenditures. We also know government entities cannot simply close up shop when cash dries up.

While figuring out how to create a cash flow management model might seem overwhelming, we have designed an easy-to-follow three-step process to help you navigate your cash flow analysis during the COVID-19 pandemic and for years to come. Your model might be created in Microsoft Excel or a business intelligence tool such as Microsoft Power BI™ or Tableau^®, to name just a few options. Whatever tool you choose, these three steps will help set you up for success.

1. Determine cash.

Start by determining current cash on hand, including reserves. Keep in mind rules regarding use of individual funds, and flag any funds that might be used only for specific purposes. Be sure to review your community’s cash management and fund balance policies, too, and build these requirements into the model as appropriate.

2. Model inflows.

Next, determine your cash inflows and expected timing (for example, by month), including tax receipts, revenues from charges and fees, intergovernmental transfers, and proceeds from planned debt issuances. For more information on how to build a model for your revenues specifically, refer to this article.

3. Model outflows.

Finally, determine your cash outflows and expected timing (for example, by month), including cost of operations, interest on debt, capital outlays, assistance and subsidies to other entities, insurance benefits and repayments, and other expenditures to your community. For more information on how to build a model for your expenditures specifically, refer to this article.

Once you have these three pieces in the model, you can create visualizations and charts to determine where you might have a deficit in your cash balance. You then can go back and analyze revenue streams and expenditures to determine where you might be able to increase revenues and cut or delay expenditures to create a positive cash flow situation for your community.

To help with this, we have built a tool with preconfigured dashboard and modeling capabilities to easily import and quickly analyze your data.

Microsoft Excel and Power BI are either registered trademarks or trademarks of Microsoft Corp. in the United States and/or other countries.
Tableau is a registered trademark of Tableau Software in the United States and/or other countries.

Crowe Financial Scenario Planner for Local Government

Learn more about our newly released, online financial expenditure modeling tool. A fully hosted tool for this moment, this solution is powered by Microsoft Power BI and comes with consulting and technical support to assist you as needed.

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Cash flow analysis & modeling webinar

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We are here to help. Reach out to us and let’s have a conversation about your community’s unique cash flow modeling needs and how the Crowe Financial Scenario Planner for Local Government might help.

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Alicia L. Antonetti-Tricker

Principal, Consulting

+1 317 208 2469

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Tim Berry

Managing Director, Consulting

+1 317 677 1933

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