Financial Couch Potato or Financial Fitness Routine

September 14, 2009 |
Valor

chartWhat is the financial condition of your agency? Is it more frightening to ponder the idea or not knowing what your current predicament is?  Many people talk about having diverse funding, creating a fund development plan, and doing financial forecasting.  All of these are excellent ideas that should be considered by your agency.
Before that bridge is crossed, you need to ask yourself, ” As of today, what is the financial condition of my agency?”

  • How is my agency ‘s current cash flow?
  • Do I have enough cash to cover this month’s payroll and operating expenses?
  • What are my on-going monthly operating expenses?
  • Are my billings to funders for reimbursements current?  What has been reimbursed and what is still outstanding?
  • What checks have cleared versus what checks are still outstanding.
  • What is my agency’s budget?  What are my revenues versus my expenses?

This is not an exhaustive list of questions but having these answers will give you baseline data to make informed decisions on financial matters.
An agency bank statement cannot be used by itself to get the information to the above mentioned questions.  Below are some action steps  that can help you know the financial condition of your agency. 

  • Generate a document that shows monthly expenses, year to date expenditures and identifies  how grant are allocated.  This can be useful in helping you determine spending deficiencies and over spending in categories.
  • Routinely reconcile your General Ledger with your bank statements and accounts payable.
  • Generate Cash Flow projections documents to identify when you may need more cash for the agency and where you many need  to control or decrease spending.
  • Set aside a specific time every month to dedicate to billing funders for reimbursements.

This article is in no way an exhaustive list of suggestions or scenarios for the financial condition of your agency.  Knowing the financial condition of one’s agency should be on the radar for all Executive Directors, accountants, bookkeepers and Board Members of nonprofit organizations.    
When getting physically fit, one needs to establish a fitness routine to help you achieve your desired goals;  why should it be any different when getting your agency financially fit to navigate the constantly changing economic climate.  If you have not established  a “Financial Fitness Routine” for your agency; why not make an concerted effort to start one today. 
For additional resources, please contact Kavin Black, Organizational Service Coordinator at (916)446-2520 ext 305,  kavin@calcasa.org.