Cash management as an innovative tool for managing the state’s financial flows

Abstract

Importance: cash management in the public sector as an innovative tool for managing free balances of budget funds. Purpose: to study the essential characteristics and functional features of cash management in the public sector in order to build a domestic system of liquidity management of the Unified Accounting System. Research design: the distinctive features of the concepts of « liquidity management» and «cash management» in the public sector are analyzed. It has been established that due to the lack of generally accepted regulatory and methodological foundations for cash management in the public sector, national Treasuries of countries are building their own system of public liquidity management. The characteristics of the modern elemental composition of domestic cash management are provided, the key ones being high-quality liquidity planning and targeting of cash balances on the Unified Accounting System, which allow determining the timing and parameters of the Federal Treasury’s entry into the financial market, taking into account the recommendations and restrictions of the Ministry of Finance and the Bank of Russia. Results: the conclusion is substantiated that identifying the definitions of «cash management» and «liquidity management» is not entirely correct. Based on the analysis of the state of liquidity management carried out by the Federal Treasury, the goal, objectives, and elements of domestic cash management in the public sector are formulated. It is proven that modern models of state cash management should include a strategy and processes for cost-effective management of short-term state cash flows and free budget balances, and the main task is to ensure timely financing of public expenditures in the context of limited resources and an unstable foreign economic situation in compliance with the principles of economy, efficiency, and risk management.