We understand that cash flow management continues to be a source of trepidation for many communities, given the volatility in revenue streams resulting 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 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 streamline your local government budgeting.
What is a cash flow model?
A cash flow model is a detailed look at an organization’s income, expenditures, assets, and liabilities, which are projected forward year by year through extrapolating inflows and outflows.
The benefits of a cash flow model
A government cash flow model should be a priority for your organization because it provides several benefits. Cash flow modeling:
- Presents an array of financial scenarios and outcomes
- Allows you to make better, more informed decisions for your organization
- Shows how minor changes can dramatically impact your local government’s financial future
- Can avoid your organization from running out of money
- May help minimize liabilities
- Offers a well-rounded picture of your local government’s financial health