Financial Management and Budgeting SHOW ME THE MONEY! What

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Financial Management and Budgeting

• SHOW ME THE MONEY!

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What is a budget?

• A budget can be a helpful method of keeping track
  of group funds.
• It is a tool for planning and controlling
  organizational funds.
• It is a formal written guideline describing your
  organizations future goals expressed in
  financial terms within a set period of time.
• A detailed statement of estimated income and
  expenses.
• A historical record of the organizations
  activities during a given period.

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What can a budget accomplish?

• It can help refine goals based on realistic
  resources.
• It can compel members of the organizations to use
  funds efficiently.
• It can provide accurate information to adjust,
  analyze, and evaluate programs and activities.
• It can provide a historical reference to be used
  for future planning.
• It can be an aid in decision making.

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Steps to Develop a budget

• Step 1 Begin preparations a month or more prior
  to the close of the current year (end of spring
  semester).
• This will allow for the new administration to
  easily transition without worrying about
  approving their budget for the next year.

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Steps to Develop a budget, contd

• Step 2 Prepare an outline of the organizations
  planned activities for the upcoming year.
• This allows your organization to determine what
  plans you wish to do for the upcoming year (take
  a trip, have a dinner, publish a newsletter, show
  movies, etc.)
• Many times committee chairs, executive officers,
  and sometimes group members will make proposals
  for the activities might be considered during the
  organizations fiscal year.
• These proposals are presented to the budget
  committee, which might be a separate group
  chaired by the treasurer or other organization
  member in the case of a larger group, or the
  executive committee in the case of a smaller
  group.
• This step is very important since programs
  require money, and to a great extent they drive
  the budget.

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Steps to Develop a budget, contd

• Step 3 Determine available funds (carry over
  balance from previous years, cash on hand and
  funds in the bank, interest, etc.)
• Step 4 Do careful studies of funding sources,
  costs, estimated and probable fundraisers.
• Step 5 Estimate expected income and when it is
  expected to be available (dues, t-shirts, sales,
  etc.)
• Step 6 Define needed expenses (advertising/printi
  ng, supplies, etc.)
• Step 7 Get price quotations on certain
  expenditures, delegate certain responsibilities
  to members.

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Steps to Develop a budget, contd

• Step 8 Rank the order of expenditures by their
  importance.
• When doing this step the organization needs to
  consider which activities are the wisest
  expenditure of funds.
• Step 9 Negotiate, as necessary, eliminate less
  essential expenditures or limit expenditures.
• Step 10 Revise, review, coordinate,
  cross-reference, and then assemble into a final
  budget the budget must be flexible to anticipate
  conditions which might have been overlooked
  during the planning process.
• This allows the organization to project their
  revenues and expenditures for the next fiscal
  year.
• Many times once the revenues and expenditures are
  projected they are presented to the executive
  group for initial review.
• Changes to the budget can be made based on
  recommendations of the officers.
• Assuming that the revised budget is approved, it
  is then presented to the organizations members
  for adoption.

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Keys to managing a budget

• Once approved, adopted and prepared, it should be
  closely managed.
• The budget is the organizations financial road
  map for the year.
• It can be changed if circumstances dictate, but
  it would require a vote according to the process
  prescribed in the organizations constitution or
  by-laws.
• Set and maintain a minimum cash balance.
• Formulate general policies and procedures needed
  to achieve objectives.

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Keys to managing a budget, contd

• Keep an accurate log of financial transactions
  (income and expenses) maintain your organization
  record book (check and balance records
  periodically).
• Contemplate on having the treasurer preparing
  periodic reports related to the budget and
  presents them to the executive officers and
  members.

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Keys to managing a budget, contd

• The treasurer should produce monthly operating
  statements.
• In the report all transactions that have occurred
  since the previous statement should be included.
• At the end of each statement a balance should be
  reported by the treasurer.
• The monthly statement should be reconciled with
  the year-to-date activity of the organization so
  that a clear picture of the organizations
  financial position can be established.
• A review of the statement will provide the income
  of the organization, its expenses, and the
  organizations cash balance.

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Keys to managing a budget, contd

• Control cost allow only approved expenditures.
• Assess budget at any given point of time during
  the budgeted period.
• After the budget period has elapsed, determine
  the outcome of each expense and revenue.
• Judge and review actual cost in order to
  establish priorities for the next budget period.

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Were In the Money

• Managing the budget and being successful in
  balancing the spending will allow your
  organization to transition easily.
• Having a correct budget and knowing how much
  monies your organization is able to work with
  will allow for your organization to have less
  stress and more fun.

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Example Budget Previous Year Current
Year Revenue Dues and activity
fees ____________ ____________ Student
government allocation ____________ ___________
_ Services rendered ____________ ________
____ Commissions from machines ___________
_ ____________ Sales ____________ _________
___ Fundraisers ____________ ____________ P
rogram receipts ____________ ____________ Oth
er receipts ____________ ____________ Prior
year carried forward ____________ ____________
TOTAL REVENUE ____________ ____________ Expe
nses Personnel services ____________ ____
________ Salaries ____________ ____________
Hourly wages ____________ ____________ Frin
ge benefits ____________ ____________
Workers compensation ____________ ____________
Social Security ____________ _________
___ Insurance ____________ ___________
_ Operating expenses ____________ _______
_____ Telephone line charge ____________ ____
________ Long distance ____________ ________
____ Other communications ____________ ______
______ Office supplies ____________ _____
_______ Printing ____________ __________
__ Postage ____________ ____________
Equipment rental ____________ ____________
Equipment repair ____________ ____________
Program expenses (Develop budget for each
program) Newsletter ____________ ___________
_ Speakers ____________ ____________
Travel ____________ ____________
Outstanding debt ____________ ____________
Miscellaneous expenses ____________ _______
_____ Capital List by item ____________
____________ Contingency ____________ _______
_____ TOTAL EXPENSES ____________ ___________
_ BALANCE ____________ ____________
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Sample Balance Sheet Date ___________________
Amount Assets Cash on
hand ____________ Accounts
receivable ____________ Savings accounts (by
number) ________ ____________ ________ __
__________ Equipment (fair market
value) ____________
_______________________________ ____________
_______________________________ ___________
_ Other property ____________
_______________________________ ____________
_______________________________ ___________
_ TOTAL ASSETS Liabilities Accounts
Payable ____________ Long-term
debts ____________ __________________________
_______ ____________ _________________________
________ ____________ TOTAL
LIABILITIES ____________ NET Value of
Organization ____________