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How to Manage Unpredictable Cash Flow

by Jac La Tour

cash flow fluctuations

July 2, 2015

Compare your ministry’s summer income to year-end. Quite a contrast, hey? No organization, profit or nonprofit, receives revenue at a predictable pace. Inability to manage this natural cash flow fluctuation can hobble your organization. Consider this from Inc. magazine: “Academic studies over the years have found that cash flow problems can be one of the leading causes of failure for businesses.”

The same is true for nonprofit organizations. So what are the essential basics of cash flow? Inc. business writer Philip Campbell offers 10 rules, one of which he says will transform the way you manage your organization.

What do you expect your cash balance to be six months from now? Campbell says it’s this question, which is at the heart of his seventh rule, that will transform the way you run your organization. Why? Because it reveals whether you’re managing your organization or the other way around.

Most of Campbell’s rules are non-negotiable, like the first one (Never run out of cash) and the ninth (You absolutely, positively must have cash flow projections.) It is these projections, he says, that let you answer the all-important question from Rule #7.

John Campbell

ECCU’s cash management experts view cash flow from a ministry versus a business perspective. One who happens to share this Inc. writer’s last name, John Campbell, is the credit union’s corporate product manager.

John says, “Some financial products and services can help ministries manage cash flow. Many donors are used to sending funds electronically, whether it is to pay your utility bill or a mortgage payment it is becoming the industry standard. Implementing something like Automatic Funds Transfers or ACH, allows ministries to budget based on specific dollar amounts and days of the month. It encourages the spiritual act of giving and means donations come in despite good or bad weather or Johnny’s baseball tournament.”

“Online giving can also help, John says, “Because it allows supporters to give immediately and the monies transfer automatically without needing a physical trip to the bank.”

What I appreciate most about the Inc. list is its candor. There’s clearly no waffling on these rules. Especially the last one, which says the whole point of managing cash flow well is to be able to focus your energies on what’s most important—the people you serve.

Category: Ministry Matters