Treasury Management for Governments

NEW!  (6/30/18)  A means of categorizing forecasting methodologies.   A general introduction to the aspects of forecasting to consider in designing a system.  The paper includes a vocabulary for designs.

An example of the advantage of "disaggregating" cash flows.  This Excel model presents two data series for forecasting: an aggregate (like the total cash balance) and a series of constituent individual cash flows.  The user is shown how disaggregation may make the problem easier.

NEW!  (1/15/19)  Forecasting in major economies.   Nam Sibyllam quidem Cumis ego ipse oculis meis vidi in ampulla pendere, et cum illi pueri dicerent: Σιβυλλα τι θελεις; respondebat illa: αποθανειν θελω.

A proposed methodology for forecasting cash balances.  Cash forecasting can be accomplished with a minimum of stochastic or econometric modeling.  This method begins by examining the constituent cash flows that net to the daily change in the cash balance.  Proper analysis of the individual flows can uncover approaches to model using accounting data. (Ver 4/22/16)

Cash forecasting collects, collates, or creates estimates of cash flows and consolidates these into a summary in advance of accounting reports of actual values.  The forecasts of components of the total cash flow may be drawn from the work of various operating units or sources or they may be created from a single, central office with access to the requisite data.  What are the methodological problems? 

To Read Further ... 

Forecasting cash balances.   What are the basic questions?

Designing a forecast.   What are the basic questions?  Some of the basic questions in designing a forecast concern basics of the time horizon, the granularity of the forecast, and the data requirements, including how the data must be prepared.

Using data sources and planning the forecast.   Before beginning the construction of a forecast, decisions about data availability, forecast horizon, level of detail, and mathematical considerations.

The role of forecasts in fiscal management.   What purposes and uses does a forecast support or make possible?  How does a cash forecast assist in debt management, liquidity management, budget execution, and capital budgeting?

Praxis: Cash -  Forecasting cash balances