Forecasting Cash

Your committee or board will need to budget ahead and estimate (as accurately as possible) how much it will cost to carry out the group’s planned activities for the forthcoming financial year.  This is part of their responsibility for managing and developing the group on behalf of the members.

Preparing a cash flow forecast is the first stage in producing a budget.  A cash flow forecast looks at your group’s ability to pay the bills. Thinking about when you are going to have money coming in and when you will need to pay certain bills will highlight the times when you might need to fundraise or work harder to generate additional income.

As part of your budget, your committee or board should show cash flow forecasts for each month over a one year period. You can also measure cash flow over a specific period of time (that is weekly, monthly or some other specific period) and can cover the whole organisation or specific activities or projects.

Managing Cash Flow

A month-by-month cash flow document will comprise two columns - one for your forecasted income and expenditure and one to record your actual income and expenditure. 

Both columns should include details of:

  • income for the specific month you are dealing with

  • expenditure payable during the specific month you are dealing with

  • balance carried forward (the income for the month added to the balance carried from previous month less the month’s expenditure)

Your cash flow is the change in cash balance from the start of the month to the end of the month. You should review this document each month. If your actual income and expenditure are the same as your forecasted figures, or if you are showing a surplus, then your group or project is financially on track.

If your cash flow shows a deficit then you need to resolve this by reviewing your business plan, budget and fundraising strategy.