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Tips & Tools for Great Financial ManagementDiana L. Sullivan, CPA, CGMA

By PresenterMedia.com

Policies Procedures & Problem Busters

Agenda…and plan of attack!

AssessIdentify & prioritize needed improvements

People & Critical Resources

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2

3 Policies, Procedures & Problem Busters

Routines that Work - Finance CalendarTime Management Toolkit

Effective Budgeting

Powerful Reporting

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4

5

6

Rank critical areas to improve.

Reassess after going through the presentation.

Ask stakeholders to assess. Foster an atmosphere of t d illi

AssessIdentify & Prioritize Needed Improvements

Accounting Function

Best Practices?Oversight?

Financial PositionWhat’s our improvement

focus?transparency and willingness to hear honest feedback.

gInternal Control?

PlanningEffective budgeting

Contingencies covered

LeadershipBoard consensusGreat reportingFocus on plan

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People & Critical ResourcesEssentials for Financial Success

• Accounting & finance staff

• Integrity• Training• Skills• Judgment• Diligence

• Leadership for fiscal stewardship

• Board commitment• Reporting /

responding• Focus on mission• Transparency

• Outside Relationships

• Auditor• Banker• Payroll processor• Insurance broker• Others

• Critical Policies

• All NPTs need these key policies

• Annual adoption & follow seriously

Policies, Procedures & Problem Busters

Conflict of Interest

Peer Groups

Whistleblower

• Critical Procedures

• Key tasks kept up every single month

• Problem Busters

• Use internal Controls to avoid big trouble

• Make month-end checklists

• Outsource payroll processing, if needed

Internal Controls

Document Retention

Plan and Budget

The Budget is an earning and spending plan to implement your strategic plan.

Great reports help management make decisions. Just like a detective follows the evidence managers follow

The Financial OrbitA Feedback Loop

Financial Cycle

Record, Report, Correct

Audit, 990, Annual Reports

evidence, managers follow the financial evidence.

You are responsible to report to outside parties. Your audited financial statements, annual reports, and form 990 are available to the community, and stakeholders “follow the money” and make judgments about your nonprofit’s effectiveness.

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Finance CalendarWhen Critical Tasks

Weekly Payment of obligationsInspection of payroll, payables

Monthly Month-end closeBank reconciliationsAccount reconciliationsVariance analysisM it R i blMonitor Receivables

Board Meetings (Monthly) Board reports, variance reports

Mid-Year Begin budget buildingEngage Auditor

Fall Finalize & adopt budgetAdopt policies & procedures as needed

Year-End Year-end close, audit prep, tax returns, annual reports

Annually Strategic planning

Honest discussion management & employeesArrange quiet times

Music

Time Management ToolkitDeal with the Enemy: Interruptions

Closed doorWork from homeSign“Do Not Disturb” on phoneStay out of email, voice mail for periods of time

Everything every day vs. batchesSome items have to be dailySome items to batch

Payroll

Time Management ToolsBATCH the work

PayrollPayablesJournal EntriesPhone CallsFolders for Colleague Meetings

Difference between “batched” and “behind!”

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Work with people’s strengthsUse non-accounting staff for some items – might even

Time Management ToolsDelegate – Learn to Train and Trust

gimprove controls!Find error-killer proofreaders

Month-end close checklistsManager’s “audit workpapers”Templates for often-used jobs

J l t i ith t

Time Management ToolsChecklists, Notes, and Cheat Sheets

Journal entries with account names & codes but amounts blankBudget templates

Always look for “self-checking” mechanismsWhat We Did Last Year

Be deliberate about your time“Materiality” - good enough, not perfect

Learn to Say NOEverything in life has an opportunity cost!

How to escape a phone callHow to escape a meetingFight reverse delegationLook for great outsourcing opportunities

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Recurring journal entriesAutomatic journal reversalsSaving report templates

Time Management ToolkitTime-Saving Features In GL Software

Saving report templatesImport and ExportReport Groups

Clear emails dailyUse two monitorsBit Literate “To Do” list

Time Management ToolkitBecome “Bit Literate”

Outlook toolsSolve PuzzlesExplain problem to someone elseRevisit dailyLet subconscious work

Builds consensus Reconciles conflicting prioritiesBig picture activity

Why is Budgeting so Powerful?Financial Success is Tied to Effective Budgeting

Big picture activityMeasures performance objectivelyCreates structure for a rational feedback system

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Build Measure

Think of budgeting as part of the planning process, just like the strategic plan. Tying budget to strategic plan also helps “sell” it to your stakeholders.

Involve all necessary

Effective BudgetingA Power Tool

Strategic Plan

Budget with

Team

Actual vs.

Budget

Involve all necessary individuals in creating the budget (also helps you “sell” budget discipline).

Measure actual results against budget every month.

Revise the budget if necessary.

Hold people accountable for their budgetary performance.

• If you could improve your nonprofit financially, what are the big three items you’d change?

Create Key MeasuresStart by Making a Wish

g• * Cash Position• * Collection of pledges• * Fund Balance• * Inventory Turn• * Membership• * Service volume

• Monthly Financial Reports• Statement of Operations, Financial Position, Changes in Net Assets and Cash Flows

Internal ReportingLeaders Decide Based on Financial Facts

Accountability

• Key Measurements1. * Your nonprofit’s most important

financial priorities2. * Measures of non-financial

effectiveness

• Accountability• Report to each manager • about his responsibility centers

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FINANCIAL STATEMENTS

• Statement of Operations• Statement of Financial

PositionStatement of Changes in Net

• Key measures are different for each non-profit.

• What critical areas do you need to improve?

KEY MEASURES

Internal ReportingLeaders decide based on financial facts.

• Statement of Changes in Net Assets

• Statement of Cash Flows

need to improve?

TIP: Post financial statements so managers can see their resultsmonthly.

58%

RevenuesFundraising Grants Supply Sales Miscellaneous

Charts and graphs are powerful reporting tools.

Use charts and graphs for your Key Measures – make sure every piece of your board presentation adds meaning.

ReportingReports for Management and the Board

58%

23%

10%9%

Focus on Cash Position

Cash $ 16,564

Short Term Investments 35,206

T t l C h & C h E i l t $ 51 770Total Cash & Cash Equivalents $ 51,770

Less Accounts & Notes Payable (25,799)

Less Payroll Taxes Withheld (1,040)

Less Credit Accessed (16,603)

Actual Net Cash Position $ 8,327

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Bar Chart to Show VariancesHow are we doing compared to budget?

Expenses

Actual Budget

$10,213

$2,212

$8,410

$1,680

$10,500

$2,150

$8,700

$1,450 PROJECT BUDGET ACTUAL VARIANCE

BRIDGE REPAIRS $ 13,000 $ 12,839 $ 161

FENCING 8,150 9,127 -977

PARKING LOT 3,530 5,350 -1820

Focus on Capital Expenditures

SOD/IRRIGATION 2,750 1,912 838

LIGHTING 3,200 1,565 1,635

TOTAL 30,630 30,793 -163

Where to Get Help

GreenlightsAustin Chapter, Texas Society of CPAsA ti N fit Fi i l L d Austin Nonprofit Financial Leaders GroupSCORETexas Workforce Commission