How can cashflow forecasting help your charity?

Cashflow forecasting is estimating when income is going to be received and expenditure is due to be paid out.

Management teams often use budgets to plan and track income and expenditure based on agreements and plans, cashflow forecasting converts the budget into actual cash movements.

Cashflow forecasting improves oversight for the management team and trustees.

It can aid in making better strategic decisions both short and long term; when to pay suppliers or when to undertake different projects considering the impact of these events in conjunction with others going on within the charity.

They can identify when there may be a cash surplus or deficit so that trustees can plan appropriately for these situations, be this charity activities or investment planning.

Management accounts include balance sheet and an income statement which are based on accounting principles they do not reflect cash movement.

These reports are looking at historical events and will show cash in hand balances at a point in time, but they will not show the future commitments of the charity and whether the cash balances are enough to support the ongoing activities.

Next steps

Our VFO team provide outsourced management accounts along with support for forecasting. Want to know more? Then please get in touch with the VFO team today to schedule a discovery call.