Tips & Tools for Great Financial Management

Diana L. Sullivan, CPA, CGMA

By PresenterMedia.com

Policies, Procedures & Problem Busters

Agenda…and plan of attack!

AssessIdentify & prioritize needed improvements

People & Critical Resources

Routines that Work - Finance CalendarTime Management Toolkit

Effective Budgeting

Powerful Reporting

1

2

3

4

5

6

Rank critical areas to improve.

Reassess after going through the presentation.

Ask stakeholders to assess. Foster an atmosphere of transparency and willingness to hear honest feedback.

AssessIdentify & Prioritize Needed Improvements

Accounting FunctionBest Practices?

Oversight?Internal Control?

Financial PositionWhat’s our improvement focus?

PlanningEffective budgeting

Contingencies covered

LeadershipBoard consensusGreat reportingFocus on plan

• Accounting & finance staff

• Integrity• Training• Skills• Judgment• Diligence

• Leadership for fiscal stewardship

• Board commitment

• Reporting / responding

• Focus on mission• Transparency

• Outside Relationships

• Auditor• Banker• Payroll processor• Insurance broker• Others

People & Critical ResourcesEssentials for Financial Success

• Critical Policies• All NPTs need these key policies• Annual adoption & follow seriously

• Critical Procedures• Key tasks kept up every single month

• Problem Busters• Use internal Controls to avoid big trouble• Make month-end checklists• Outsource payroll processing, if needed

Policies, Procedures & Problem Busters

Internal Controls

Conflict of Interest

Peer Groups

Whistleblower

Document Retention

Financial Cycle

Plan and Budget

Record, Report, Correct

Audit, 990, Annual Reports

The Budget is an earning and spending plan to implement your strategic plan.

Great reports help management make decisions. Just like a detective follows the evidence, managers follow the financial evidence.

You are responsible to report to outside parties. Your audited financial statements, annual reports, and form 990 are available to the community, and stakeholders “follow the money” and make judgments about your nonprofit’s effectiveness.

The Financial OrbitA Feedback Loop

Finance CalendarWhen Critical Tasks

Weekly Payment of obligationsInspection of payroll, payables

Monthly Month-end closeBank reconciliationsAccount reconciliationsVariance analysisMonitor Receivables

Board Meetings (Monthly)

Board reports, variance reports

Mid-Year Begin budget buildingEngage Auditor

Fall Finalize & adopt budgetAdopt policies & procedures as needed

Year-End Year-end close, audit prep, tax returns, annual reports

Annually Strategic planning

Honest discussion management & employees

Arrange quiet timesMusicClosed doorWork from homeSign“Do Not Disturb” on phoneStay out of email, voice mail for periods of time

Time Management ToolkitDeal with the Enemy: Interruptions

Everything every day vs. batchesSome items have to be dailySome items to batch

PayrollPayablesJournal EntriesPhone CallsFolders for Colleague Meetings

Difference between “batched” and “behind!”

Time Management ToolsBATCH the work

Work with people’s strengthsUse non-accounting staff for some items – might even improve controls!

Find error-killer proofreaders

Time Management ToolsDelegate – Learn to Train and Trust

Month-end close checklistsManager’s “audit workpapers”Templates for often-used jobs

Journal entries with account names & codes but amounts blank

Budget templatesAlways look for “self-checking” mechanisms

What We Did Last Year

Time Management ToolsChecklists, Notes, and Cheat Sheets

Be deliberate about your time“Materiality” - good enough, not perfect

How to escape a phone callHow to escape a meetingFight reverse delegationLook for great outsourcing opportunities

Learn to Say NOEverything in life has an opportunity cost!

Recurring journal entriesAutomatic journal reversalsSaving report templatesImport and ExportReport Groups

Time Management ToolkitTime-Saving Features In GL Software

Clear emails dailyUse two monitorsBit Literate “To Do” listOutlook toolsSolve PuzzlesExplain problem to someone elseRevisit dailyLet subconscious work

Time Management ToolkitBecome “Bit Literate”

Builds consensus Reconciles conflicting priorities

Big picture activityMeasures performance objectively

Creates structure for a rational feedback system

Why is Budgeting so Powerful?Financial Success is Tied to Effective Budgeting

Strategic Plan

Build Budget

with Team

Measure Actual vs.

Budget

Think of budgeting as part of the planning process, just like the strategic plan. Tying budget to strategic plan also helps “sell” it to your stakeholders.

Involve all necessary individuals in creating the budget (also helps you “sell” budget discipline).

Measure actual results against budget every month.

Revise the budget if necessary.

Hold people accountable for their budgetary performance.

Effective BudgetingA Power Tool

• 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

Create Key MeasuresStart by Making a Wish

• Monthly Financial Reports• Statement of Operations, Financial Position, Changes in Net Assets and Cash Flows

• Key Measurements1. * Your nonprofit’s most important

financial priorities2. * Measures of non-financial

effectiveness

Internal ReportingLeaders Decide Based on Financial Facts

• Accountability• Report to each manager • about his responsibility centers

FINANCIAL STATEMENTS

• Statement of Operations• Statement of Financial

Position• Statement of Changes in

Net Assets• Statement of Cash Flows

• Key measures are different for each non-profit.

• What critical areas do you need to improve?

KEY MEASURES

Internal Reporting Leaders decide based on financial facts.

TIP: Post financial statements so managers can see their resultsmonthly.

58%

23%

10%9%

RevenuesFundraising GrantsSupply Sales Miscellaneous

Charts and graphs are powerful reporting tools.

Use charts and graphs for your Key Measures – make sure every piece of your board presentation adds meaning.

ReportingReports for Management and the Board

Focus on Cash Position

Cash $ 16,564

Short Term Investments 35,206

Total Cash & Cash Equivalents $ 51,770

Less 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 VariancesHow are we doing compared to budget?

$10,2

13

$2,2

12

$8,4

10

$1,6

80

$10,5

00

$2,1

50

$8,7

00

$1,4

50

Expenses

Actual Budget

PROJECT BUDGET ACTUAL VARIANCE

BRIDGE REPAIRS $ 13,000 $ 12,839 $ 161

FENCING 8,150 9,127 -977

PARKING LOT 3,530 5,350 -1820

SOD/IRRIGATION 2,750 1,912 838

LIGHTING 3,200 1,565 1,635

TOTAL 30,630 30,793 -163

Focus on Capital Expenditures

Where to Get Help

GreenlightsAustin Chapter, Texas Society of CPAs

Austin Nonprofit Financial Leaders Group

SCORETexas Workforce Commission