PACE - Financial Policies - Cash Management

Cash Management Policy

1. PURPOSE - The purpose of the cash management policy is to fulfill the fiduciary responsibilities of the City and its departments in handling, safeguarding, and investing the funds of the City. The Cash Management Policy provides guidance on internal controls to assure the safety of the cash.
2. SCOPE  -  All departments and employees who process payments on behalf of the City.
3. POLICY - It is the policy of the City to follow prudent cash management practices to ensure the availability of funds for the payment of bills and payroll; properly safeguard the collection of cash and ensure timely deposit; maintain an accurate accounting of cash inflows and outflows; facilitate the investment of idle cash to maximize revenues; and monitor the level of funds necessary to meet short-term needs. Each City department is responsible for monitoring all funds within the purview of its budget to ensure that cash positions remain non-negative at year-end.
4. PRACTICE

• Cash Pool

All monies from the City’s different funds are centralized in the City’s main bank account. Unless stipulated under federal, state or legal provisions to be segregated. For financial reporting purposes, the monies are reported in the appropriate fund.

• Centralized Depository

​​​​​​​Various City departments have the capability to accept cash payments. All cash received will be deposited to the City’s bank account within 24 hours unless there is a written exception from the Finance Director. Only the City Finance Director (City Treasurer) is authorized to establish bank accounts for the City with the approval of the City Administrator. Monies collected after the deposit is made are kept secure with access limited to authorized personnel.   All funds receipted by the City should be in connection with the business of the City. Under no circumstances should any checks be cashed and/or substituted for cash on hand. All checks should be dated with the current date and the City will not accept post-dated or third-party checks.                  

• Other Deposits

​​​​​​​The City contracts for other payment processing services which include:

1. Lockbox Services with Remote Deposit Capture – This service processes utility payments sent through the mail with a remittance and check. The service deposits the checks electronically into the City’s bank account and sends the City a daily file to post the payments.
2. Payment Consolidation Services – This is a bank bill pay service which sends an electronic payment to the City’s bank account and sends the City daily electronic file to post as payments.
3. Electronic Payments – City also receives wires, ACH, and direct transfers as payment into the City’s bank account.

• Credit/Debit Card Acceptance

Credit/debit cards are accepted as a payment method as convenience to the City’s customers. The City will not charge fees for usage of the credit/debit cards but instead will take any convenience costs into account when structuring charges for services, unless it is a third-party pass through fee.  The City maintains compliance with the Payment Card Industry (PCI) data security requirements for security controls over customer card data.

• Online Services

​​​​​​​The City will encourage the payment of fees or charges through the use of the City’s online payment systems.

• Internal Controls

A segregation of duties is mandatory to ensure proper handling of cash collections and to be in compliance with annual audit procedures.

• Petty Cash

​​​​​​​Cash drawers are housed in secure and locked locations and are limited in access. The petty cash fund is the responsibility of the department where it resides and is monitored by the Finance Department periodically. Reimbursements to the petty cash funds are made through the Finance Department.

• Bank Reconciliations

The City maintains various bank accounts which are reconciled daily with an overall reconciliation completed monthly. To maintain proper segregation of duties, the bank reconciliation duties are divided among employees that have no direct responsibility for the collection or disbursement of cash in the account for which the reconciliation is performed. The City is required to bank with a qualified public depository as defined by RCW 39.58.080 and Council designates the bank from the list by RCW 35A.40.030. The Public Deposit Protection Commission for the State ensures public funds deposited in banks are protected if a financial institution becomes insolvent.

• Cash Flow Monitoring

Temporarily idle cash is invested until needed. Cash inflows and outflows are monitored daily to ensure that the supply of liquid cash is available to meet appropriation requests. During peak construction periods, cash outflows increase in which the City may utilize the Line of Credit to meet appropriation requests. This decision is made by the Finance Director who notifies the City Administrator of the decision and quarterly reports to the City Council on the usage of the Line of Credit.

• Vendor Disbursements

On a bi-monthly basis, the Finance Director approves the list of vendor payments to be disbursed the following Council Meeting. Vendor payments are disbursed generally the Tuesday following the Council Meeting. Vendor payments are paid from a bank account specifically set up for that purpose.  Exceptions to the bi-monthly cycle include the need for an electronic transfer for payment of payroll taxes, bonds, investment securities, sales tax remittance, etc. Purchase card payments are made weekly with an automatic debit to the City’s main account. The City strives to make timely payments and take advantage of every applicable discount possible. The City is actively moving away from checks to electronic payments.

• Payroll Disbursements

Payroll is issued monthly and is paid from a bank account set up specifically to disburse payroll. Payroll taxes and payroll-related transactions are paid from a bank account specifically set up for vendor disbursements. Monies are transferred from the City’s main account, as needed, to cover payroll disbursements. City employees are encouraged to have their payroll checks to be directly deposited into their respective bank accounts.

• Fraud Protection

The City utilizes Positive Pay to protect the City from fraudulent checks. Payments made to vendors by the City via Electronic Funds Transfer (EFT) or Automated Clearing House (ACH) are only permitted to approved vendors.

• Receivables

The City actively pursues collection on returned checks, electronic payments, and bad debts. Returned checks and electronic payments are subject to additional processing costs incurred by the City. Checks will not be accepted from individuals who have a history of writing bad checks.  Returned checks are not processed a second time.

• ​​​​​​​Unclaimed Property

All refunds of monies are remitted back to the rightful owners, as applicable. The City makes every possible effort to find the owner of the property. If refunds are “unclaimed” the City will abide by Washington unclaimed property abandonment periods per RCW 63.29 before remitting it to the Washington State Treasurer’s Office.