Tips & Tools for Great Financial Management Diana L. Sullivan, CPA, CGMA By PresenterMedia.com
Agenda…and plan of attack!1 Assess Identify & prioritize needed improvements2 People & Critical Resources3 Policies, Procedures & Problem Busters4 Routines that Work - Finance Calendar Time Management Toolkit5 Effective Budgeting6 Powerful Reporting
Assess Identify & Prioritize Needed ImprovementsRank critical areas to improve.Reassess after going throughthe presentation. Accounting Function Financial PositionAsk stakeholders to assess. Best Practices? What’s our improvementFoster an atmosphere of Oversight? focus?transparency and willingness Internal Control?to hear honest feedback. Leadership Planning Board consensus Effective budgeting Great reporting Contingencies covered Focus on plan
Policies, Procedures & Problem Busters Conflict of Interest• Critical Policies Whistleblower • All NPTs need these key policies • Annual adoption & follow seriously Peer Groups• Critical Procedures Internal Controls • Key tasks kept up every single month Document Retention• Problem Busters • Use internal Controls to avoid big trouble • Make month-end checklists • Outsource payroll processing, if needed
The Financial Orbit A Feedback LoopThe Budget is an earning and Plan andspending plan to implement Budgetyour strategic plan.Great reports helpmanagement make decisions.Just like a detective follows theevidence, managers followthe financial evidence. Financial CycleYou are responsible to reportto outside parties. Youraudited financial statements, Audit, 990, Record,annual reports, and form 990 Report, Annualare available to the Reports Correctcommunity, and stakeholders“follow the money” and makejudgments about yournonprofit’s effectiveness.
Finance CalendarWhen Critical TasksWeekly Payment of obligations Inspection of payroll, payablesMonthly Month-end close Bank reconciliations Account reconciliations Variance analysis Monitor ReceivablesBoard Meetings (Monthly) Board reports, variance reportsMid-Year Begin budget building Engage AuditorFall Finalize & adopt budget Adopt policies & procedures as neededYear-End Year-end close, audit prep, tax returns, annual reportsAnnually Strategic planning
Time Management Toolkit Deal with the Enemy: Interruptions Honestdiscussion management & employees Arrange quiet times Music Closed door Work from home Sign “Do Not Disturb” on phone Stay out of email, voice mail for periods of time
Time Management Tools BATCH the work Everything every day vs. batches Some items have to be daily Some items to batch Payroll Payables Journal Entries Phone Calls Folders for Colleague Meetings Difference between “batched” and “behind!”
Time Management Tools Delegate – Learn to Train and Trust Work with people’s strengths Use non-accounting staff for some items – might even improve controls! Find error-killer proofreaders
Time Management Tools Checklists, Notes, and Cheat Sheets Month-end close checklists Manager’s “audit workpapers” Templates for often-used jobs Journalentries with account names & codes but amounts blank Budget templates Alwayslook for “self-checking” mechanisms What We Did Last Year
Learn to Say NO Everything in life has an opportunity cost! Be deliberate about your time “Materiality” - good enough, not perfect How to escape a phone call How to escape a meeting Fight reverse delegation Look for great outsourcing opportunities
Time Management Toolkit Time-Saving Features In GL Software Recurring journal entries Automatic journal reversals Saving report templates Import and Export Report Groups
Time Management Toolkit Become “Bit Literate” Clear emails daily Use two monitors Bit Literate “To Do” list Outlook tools Solve Puzzles Explain problem to someone else Revisit daily Let subconscious work
Why is Budgeting so Powerful? Financial Success is Tied to Effective Budgeting Builds consensus Reconciles conflicting priorities Big picture activity Measures performance objectively Creates structure for a rational feedback system
Effective Budgeting A Power ToolThink of budgeting as part ofthe planning process, just likethe strategic plan. Tyingbudget to strategic plan alsohelps “sell” it to yourstakeholders.Involve all necessary Build Measureindividuals in creating the Strategic Budget Actualbudget (also helps you “sell” Plan with vs.budget discipline). Team BudgetMeasure actual results againstbudget every month.Revise the budget if necessary.Hold people accountable fortheir budgetary performance.
Create Key Measures Start by Making a Wish• If you could improve your nonprofit financially, what are the big three items you’d change? • * Cash Position • * Collection of pledges • * Fund Balance • * Inventory Turn • * Membership • * Service volume
Internal Reporting Leaders Decide Based on Financial Facts • Monthly Financial Reports • Statement of Operations, Financial Position, Changes in Net Assets and Cash Flows• Accountability • Reportto each manager • about his responsibility centers •Key Measurements 1. * Your nonprofit’s most important financial priorities 2. * Measures of non-financial effectiveness
Internal ReportingLeaders decide based on financial facts.FINANCIAL STATEMENTS KEY MEASURES• Statement of Operations • Key measures are different for• Statement of Financial each non-profit. Position • What critical areas do you• Statement of Changes in Net need to improve? Assets• Statement of Cash Flows TIP: Post financial statements so managers can see their results monthly.
Reporting Reports for Management and the Board RevenuesCharts and graphs arepowerful reporting tools. Fundraising Grants Supply Sales MiscellaneousUse charts and graphs for yourKey Measures – make sureevery piece of your boardpresentation adds meaning. 58% 23% 9% 10%
Focus on Cash PositionCash $ 16,564Short Term Investments 35,206Total Cash & Cash Equivalents $ 51,770Less Accounts & Notes Payable (25,799)Less Payroll Taxes Withheld (1,040)Less Credit Accessed (16,603)Actual Net Cash Position $ 8,327
Bar Chart to Show Variances How are we doing compared to budget? Expenses Actual Budget $10,213 $10,500 $2,212 $2,150 $8,410 $8,700 $1,680 $1,450
Focus on Capital Expenditures PROJECT BUDGET ACTUAL VARIANCEBRIDGE REPAIRS $ 13,000 $ 12,839 $ 161FENCING 8,150 9,127 -977PARKING LOT 3,530 5,350 -1820SOD/IRRIGATION 2,750 1,912 838LIGHTING 3,200 1,565 1,635TOTAL 30,630 30,793 -163
Where to Get HelpGreenlightsAustin Chapter, Texas Society of CPAsAustin Nonprofit Financial Leaders GroupSCORETexas Workforce Commission