Improving Municipal Finances through Working Capital Management

With the advent of the Municipal Management Finance Management Act, (Act 56 of 2003), working capital issues have been legislatively forced onto managers¿ daily agenda. Municipal finance officials have been given a clear mandate to focus greater attention on issues such as debt and cash management and stricter policies relating to short term credit financing. The MFMA allows for the unlocking of the fiscal powers of a municipality to generate its own income. Compliance dictates that adherence to staute will bode well for the financial prosperity of a municipality. South African municipalities face challenges in exploiting their income earning potential. Will the implementation of sound working capital policies assist in unlocking these municipalities' fiscal capacities?