For many the topic of ‘financial management’ may sound daunting. And if you are one of those people, then don’t worry, we are here to help. We crunch the numbers and track our progress so that we are always and improving. We know what works.
Our aim is after reading this section, you will feel comfortable and in control of your finances.
1. Stay Ahead of the Game – Produce Numbers Quarterly
First things first, make sure you have your financial reporting schedule in place. Producing numbers quarterly, allows you to track your development. Monitoring income, expenditure and performance against budget can check your finances effectiveness. Keeping a clear financial vision allows you to catch bumps in the road before they can become a problem.
2. Always have a budget
Like everything in life, we cannot get far without understanding the value of our budget. Especially within today’s uncertain economic climate, it means that income streams are unpredictable. Making it essential to crunch the numbers and project to the future. Financial forecasting is an understanding of your base line income and expenses.
Learn from the information you have and gather data to give yourself a 12-month view. This doesn’t need to be in the form of sophisticated accounting software, a well-documented spreadsheet will work.
3. Compare your Actuals and your Budget
Now you have monitored your actual results and understood your budget, remember to compare the two on a quarterly basis. It’s one thing to have the information, but it is how you learn from and adapt this information. This difference is key to understanding how things are evolving and maintaining stability.
4. Split Restricted and Unrestricted Funding
Restricted and unrestricted incomes are critical in the prediction of your charity’s success. Always keep one eye on your restricted and unrestricted income. To know how much is allocated to the delivery of specific projects and how much can go towards your overhead and running costs. Without this knowledge, you may end up spending more than you can afford. Stay ahead of your finances and make sure your funds don’t run dry.
Reserves are there to support your charity through those rainy days. We recommend that you have a reserves policy designed around the specific risks faced by your organisation. After a bit of number crunching a fit for purpose reserves policy can often result in the number of a month’s operating costs.
For more information, read OSCR’s fact sheet on reserve policy.
6. Tackle those tricky issues
As a leader of a charity or organisation you can expect to face challenges. Arming yourself with accurate financial data can dissolve some of those tricky issues. Financial reporting is the lifeblood of a growing organisation. It’s the data from this report that will inform the financial decisions you make. Monitoring areas of growth and loss is how an organisation improves the running of their finances.
Sharing this financial data across your team, encourages a mindset of growth. And enables sound strategic decisions based on current trading and your strategic aims.
For further Information on Finance please click on these links below and don’t hesitate to contact Inspiring Scotland direct
https://knowhow.ncvo.org.uk/organisation/financial-management/planning-and-budgeting/budgeting
Inspiring Scotland’s guide to Third Sector jargon for charity leaders.
Read MoreFinances as solid as a rock For many the topic of ‘financial management’ may sound daunting. And if you are one of those people, then don’t worry, we are here to help. We crunch the numbers and track our progress so that we are always and improving. We know what works. Our aim is after
Read MoreFactsheet aimed at charity trustees of small to medium sized charities looking to produce for update a reserves policy. Reproduced courtesy of OSCR Scottish Charity Regulator.
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