Cash Management, Revenue Sources and Cost Effective Methods of Revenue Collection at Local Government Level

The main objective of this paper was to focus on the elements, objectives, goals and importance of cash management; and also to examine the sources of revenue and cost effective collections for local governments. The elements of cash management are identified as establishing bank relations, preparing cash flow statements, estimating collection receipts and analyzing cash flow and preparing a budget. Amongst the objectives of cash management is to ensure availability of cash resources at all times for efficient and unconstrained implementation of the annual budget. The primary goals of a good cash management system are to maintain adequate cash at hand to meet the daily cash requirements of the local government while maximizing the amount available for investment and to obtain the maximum earnings on invested funds while ensuring their safety. The local governments obtain their revenue through internal and external sources, the external sources of revenue includes federal statutory allocations and loans obtained from financial institutions and other agencies; while among the internal sources are revenue from market fees, fees collected from motor parks, street hawking fees, shop fees and other miscellaneous sources. Some of the cost effective methods of revenue collections are contracting out of revenue collections to private collection agency, designating collection points for convenience, application of e-collection method where the local governments device a means of allowing tax payers to pay their taxes online. It is recommended that proper management of funds, efficient accounting and auditing system is necessary for proper cash management.