Ideas to maximise your cash planning

Let’s review 12 ways to make your cash flow planning. Review all 12 and then select those that are most relevant to you and that you would like to apply in your organisation. Input your action steps in the spaces provided.

Identify all sources of income, including donations, grants, membership fees, program fees, fundraising events, and any other revenue streams.
Be sure to have clarity on the timing of receipts of all your sources of income.
Build strong relationships with donors so that they can support you in the timing of their giving as much as possible.
Have an understanding of general donor timing cycles. For example, many donors do all their granting by November each year and don’t do any granting in December.

Develop a detailed cash flow projection for at least the next 12 months. This projection should include both inflows (revenue) and outflows (expenses).
Use historical financial data as a starting point and consider any seasonal fluctuations in income or expenses.
Be realistic in your revenue projections, and take into account factors that could affect your income, such as economic conditions or changes in donor behaviour.
Use your budget for the balance of the year to guide your projections for the remainder of the year.

Create and maintain a cash reserve or contingency fund. Aim for this fund to cover 3-6 months’ worth of operating expenses and act as a buffer for unexpected cash shortages.
Start by saving an amount each month so you can build up you reserve over time.
If possible, put the cash reserve funds into a high interest account that has a fixed deposit period.

Continuously monitor your actual cash flow against your projection. Aim to do this on a weekly or monthly basis. This will help you identify possible shortages early and make necessary adjustments.
Periodically review your cash flow projection and budget, adjusting them as needed based on actual performance and changing circumstances.
Create a forecast of cash on hand compared with cash required for the remainder of the month.

Consider using financial software or cash flow management tools to automate tracking and forecasting. These tools can provide real-time insights into your organisation’s financial health.
If you are preparing your financial reports using spreadsheets, consider using affordable online accounting software, such as Xero or Quickbooks.
If you are using a spreadsheet, consider how you can use built in cashflow management functions to automate some of the work you do.

Promptly collect payments from donors or clients, and be diligent about invoicing and follow-ups. Track outstanding amounts and do what you can to get them in.
Negotiate favourable payment terms with suppliers and vendors to optimise your cash flow.
If you are going to run into cashflow difficulties, be in touch with your suppliers early and get their support.

If your organisation experiences seasonal variations in income or expenses, plan accordingly by adjusting your cash flow projection to accommodate these fluctuations.
Layout your income and expenses month by month. Analyse your results over the past few years and see if there are any trends or patterns. TIP: Putting them into a graph format makes it easier to see trends.
Ask regular donors to give you their payment commitments a year in advance so you can plan your income.

Develop contingency plans for various financial scenarios, such as a sudden drop in donations, unforeseen events or unexpected expenses. Knowing how to respond in advance can prevent panic and ensure quick decision-making.
Have a crisis plan for how you will manage your expenses. Keep this as an up to date crisis budget so that you know what to do when a crisis hits.
Ensure you have a strong team communication plan should a crisis hit. The sooner they are able to adjust the better.

Keep your board of directors informed about your organisation’s cash flow status. Involve them in discussions about financial strategies and decision-making.
When a significant event or crisis happens, be sure to update your Board on the circumstance and its effect on your cash flow.
Include a cash flow projection in your Board reports so that they are aware of possible funding deficits that are likely to arise.

If needed, consider consulting with financial experts or accountants who specialise in non-profit organisations. They can provide valuable insights and guidance on cash flow management.
Run training with experts so that you and your team are equipped with the skills needed to manage your finances well.
Review gaps and seek help and advice on specific areas where you need guidance.

Periodically review your cash flow projection and budget, adjusting them as needed based on actual performance and changing circumstances.
Be mindful of the effect of changing circumstances on your cashflow. For example, if a donor pulls out of funding your organisation, quickly review the effect on your cashflow.
If your strategic goals change during the course of the year, re-forecast your income and expenses for the rest of the year. Use the re-forecast numbers to calculate your cashflow projections.

Have a cash balance dashboard that you can access on a weekly basis so that you remain on top of your cash available.
Ensure you are reconciling your bank accounts on a weekly or monthly basis so that you know your records are accurate.
Review your cash balances to and, if you can, increase your high interest savings.

What are your next actions steps?

My action steps:

Ideas to maximise your cash planning

1. Understand your income sources

2. Create a cash flow projection

3. Include your cash reserve

4. Track cash flow regularly

5. Implement cash flow management tools

6. Manage receivables and payables

7. Plan for seasonal variations

8. Plan for different scenarios

9. Keep your board involved

10. Seek expert advice

11. Regularly review and adjust your projections

12. Keep close track of your bank and cash balances