Plan Now for Increased Year-end Cashflow
Many ministry organizations budget for a boost in giving at year-end. If yours is one of them, you should be planning now for how to manage that extra money. A big key to doing it wisely is to view the increase in the context of your overall cash flow. But how do you do that?
In The 10 Absolutely Must-Follow Cash Flow Rules, Philip Campbell states rule number nine emphatically: You Absolutely, Positively Must Have Cash Flow Projections. Common sense says you should base those projections on historical patterns, right? Yes, it is important to do a historical review of your monthly income. Over the past three years is ideal. But to get a more accurate projection, you also need to factor in a couple other things.
One is your current cash balance. If you don’t know it, Campbell says you’re flirting with danger:
Even the most intelligent and experienced person will fail if they are making business decisions using inaccurate or incomplete cash balances. That's the reason why business failures are not limited to amateurs or people new to the business world.
If you don’t know your cash balance, you could be in danger of running out of money without even knowing it. “It's important to recognize that cash is what keeps your business alive,” Campbell says. “Manage it with the care and attention it deserves. It's very unforgiving if you don't.”
Another factor to consider is current realities. What’s in your budget this year that wasn’t there a year or two ago? Are there major new staffing, program or missional initiatives, all of which would translate into additional expenses? Have you made changes, perhaps in a senior leader, that could cause a revenue reduction? For churches, has your attendance been trending unexpectedly higher or lower? You have to take variables like these into account when projecting cash flow.
Year-end giving is a stewardship issue for ministry organizations and for the people who financially support them. In the next blog of this series we’ll look at how and how often to talk with your congregants or donors about giving at year-end.