Agency Cash Flow: calculated choices to improve it

July 14, 2010 |
Valor

For the last 7 years, my children have involved me in a forced family tradition – school clothes shopping.  In mid July my children approach me and say “Dad, school starts in August.  We need new clothing because last year’s clothing is too small, too old and too worn out.”  I go to my desk and assess what bills have not been paid, what checks have cleared, what checks are outstanding and what my checking account balance is.  I immediately realize, I HAVE A CASH FLOW PROBLEM.  While the latter disclosure is a bit humorous, many rape crisis centers experience cash flow issues throughout the year.  Some agencies experience it around the time when the state of California has not adopted a new fiscal budget.  What is not so humorous is the devastating consequences when a rape crisis center (rcc) has no cash on hand and cannot afford to pay its creditors or payroll.  An rcc may be able to alleviate some occurrences of limited cash flow by strategic planning and changing some internal agency practices.

In 2009 I wrote a blog post “Financial Couch Potato or Financial Fitness Routine” that discussed how to assess the financial fitness of your agency.  In the blog post I highlight several things:

  • Generate a document that shows monthly expenses, year to date expenditures and identifies how the grants 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 may need to control or decrease spending.
  • Set aside a specific time every month to dedicate to billing funders for reimbursements.

Also be thoughtful when planning agency events or purchasing program supplies and equipment.  Too many purchases or scheduled agency events during the last quarter of a grant year and a possible state budget delay may cause a significant delay in your grant billing reimbursements being processed.
We all know the financial dilemma that the state of California is in.  More than ever rcc’s need to implement practices that will ensure their agency is financially viable to serve the community and survivors of sexual assault.  With strategic planning, maximizing your collaborative partnerships, accessing the resources of CALCASA, and involving your stakeholders; I honestly believe that rcc’s that are experiencing ongoing cash flow problems can move from struggling to remain financially viable an move to financially stable in this current economy.
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