How do you decide if your organization is ready to expand? Can you afford that new equipment purchase or that additional employee? What about adding a new service or product line?
Answering these questions takes reliable financial information. If the necessary information isn’t there, how good will those answers be? You could gather your team and do some guessing. But should your financial decisions be based on a guess? Probably not, if you want to stay in business or sustain your nonprofit.
Three actions will start you on the path to get reliable financial information when you need it:
- Build a Budget – Identify income sources, such as executed contracts and purchase orders. Estimate potential income from prospects and referrals, or based on historical data — if you have it. Determine all fixed expenses, such as rent and payroll. Estimate other expenses, such as supplies and inventory. Include occasional payments, like insurance.
- Track Cash Flow – Your budget reflects what you expect to happen. Tracking actual income and expenses in a cash flow format provides an instant view of your organization’s financial position. A clear and immediate financial view allows for informed financial decision making.
- Automate Where Possible – Automation increases accuracy and reduces the time needed to get financial information. It doesn’t have to be expensive or complex. Making it work depends on keeping the information up-to-date. Set-up at the beginning takes time, but it’s a worthwhile investment.
Stop guessing! Investing time and effort to budget, track and automate your financial information really pays off in the long run. Having reliable financial information at your fingertips goes a long way toward making the necessary financial decisions to sustain and grow your organization.