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Are You Prepared to Manage Increased Year-end Cash Flow?

by Jac La Tour

year end cash flow graph

November 17, 2016

If your ministry is one of the many that sees a giving spike at year-end, this is a question you must be able to answer in the affirmative. A big key to being prepared is recognizing that year-end giving can’t be viewed in a vacuum. It’s part of your annual cash flow picture. Here are three ways to be sure you’re managing cash flow with that big-picture perspective.

  1. Look back. This sounds basic, but maybe it’s not yet part of your annual budgeting process. Step one in building a budget is establishing a revenue target. Part of the process for calculating that number involves a historical review of monthly income, ideally over the past three years. This review drives home the point that year-end income, while significant, is part of a much bigger picture.
  2. Look ahead. In his excellent Inc. article “The 10 Absolutely Must Follow-Cash Flow Rules,” Philip Campbell says that one question will transform the way you manage your organization. Here it is: What do you expect your cash balance to be six months from now? This question highlights the importance of putting year-end giving in context. It’s part of an annual picture.
  3. Look around. Campbell’s eighth rule is that cash flow problems don’t just happen. They’re preceded by a host of factors that should have been anticipated. For you, this includes local and national factors like rising or falling population growth or employment, facilities factors like the cost of deferred maintenance, and staffing factors like potential new hires or rising health insurance costs.

Another way to wisely manage year-end cash flow is to make full use of the accounts and services available at your financial institution. Are you getting the best rates for funds on deposit? Paying the minimum in fees because your accounts are structured well? Tapping into available technologies like ACH to assure the quickest access to funds?

If you’re not sure about any of these, it’s probably time to have a conversation with your banker.

Category: Ministry Matters