Cash management approach outlined


The issue is to appropriately describe the uses that Mifos will enable in terms
of cash management and accounting. That is, in the current release, we have
limited functionality and all implementations will need to pay attention to the
manner in which the application is used. This starts with the "straightline"
rather than edge cases.

Use cases at an MFI

  • Loan officers take money to and from the field and need to reconcile these
    amounts with portfolio accounting (interest earned, interest paid, loans
    disbursed, loans repayed, savings deposited, fees and penalties paid)

  • Cash moves between the local MFI branch and the head office via third parties
    or directly.

  • Cash moves between the local MFI branch and the local formal banking

  • Reconcile movememt of cash between local formal banking branches

  • Reconcile movements between internal accounts that are held in a single local
    bank account.

  • Interest and fees are earned and recognized either on an accural or cash basis
    by the MFI

  • Interest paid on savings accounts are recognized as expense

  • Project interest payable and interest receivable

Use cases supported in Mifos

  • Designate portfolio transaction for loan product is either from local treasury
    (aka Petty Cash) or from account (bank) during product definition

  • Pre-fixed transactions to/from accounts in the GL setup

  • Recognizing cash income from fees, interest

  • Recognizing cash expenses for savings

  • Generating amts due in future - based on schedule of payments

  • Note source of funds for product

  • Generate interest receivable based on schedule --> in reports

...more here...

How to apply the Mifos functionality to the use cases

  • Maintain a ledger of movement of cash between different entities (bank
    accounts) that exist outside of Mifos GL entries

  • For cash basis and internal treasury scenario, use petty cash and create entry
    for cash in/out prior to daily activity from collection sheets.

  • For cash basis and external treasuries (local bank accounts), do one of
    several approaches: 1) create entries of cash into bank accounts before making
    savings/loans transactions 2) create entries of cash into bank accounts after
    making savings/loans transactions 3) create entries in cash account and then
    keep movement to/from external treasuries in separate ledger

  • In all scenarios, it is best to create transactions that as accurately as
    possible reflect the true movement of cash. [principle of accounting]

--> this will require the functionality of "ad-hoc" entries into Mifos.

...more here...

These need further detail work and testing during field work.


Platform: All, OS: All


February 7, 2008, 10:56 PM

Closing all old issues so that issue tracker is clean for v1.1 QA processes.

Kay Chau
November 6, 2008, 10:41 PM

clean up, update to target milestone Release 1.0

Jeff Brewster
January 5, 2010, 12:19 AM

cleanup old issue.

Ed Cable
December 12, 2011, 11:21 PM

Re-opening this issue as it contains good data on use cases relative to building in accounting functionality in Mifos and improved cash management.

km Krishnan
February 9, 2012, 5:14 AM

(as indicated by Ed)
We will use the content from this issue in a more actionable manner in other issues that will address some of the needs.
Some of the needs around accounting will be addressed on the roadmap for accounting.
The needs around cash management are on the roadmap for Marie J

In the interests of focusing on specific actionable items, i am closing this issue, and will edit or open new ones with specifics


km Krishnan



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