An Executive Director's point of view
January 18, 2017: Pay the rent
October 05, 2016: Deferred revenue
Only one-twelfth of a dues payment is income in the month it is received. The remainder is a pre-payment for services to be delivered in the future.
Record the remaining eleven-twelfths as deferred revenue and show it as a liability on your balance sheet. It is a liability because you owe services that have already been paid for.
Each month, draw another one-twelfth as income and leave the remainder as deferred revenue.
June 10, 2016: "Overhead" is essential
"Overhead" includes many items that enable us to more successfully work toward our missions. Reducing "overhead" reduces our ability to do our work properly.
So the next time you are seized by the urge (or the need) to budget cut, don't freeze salaries, or limit travel, or purchase cheaper (and lower quality) office supplies.
Revisit your mission and trim programs, instead.
Then ensure that each remaining program can benefit from all the resources it needs and will not have to limp along and try to survive with only limited support.
April 20, 2016: Inflating volunteer resources
But don't list that as income or expense on your financial reports.
It will falsely inflate your perceived worth and give the impression your organization has financial resources that it doesn't really have.
Omitting this from your reports does not minimize the importance of volunteers.
It merely recognizes that volunteer time is not a substitute for money.
April 11, 2016: Budget the extras
Those are items the organization is obligated to pay, so they should be identified and provided for ahead of time, and not be treated as unexpected expenses when they come due.
February 07, 2016: Fiscal year
You'll know your financial situation at an early date and will be able to make adjustments, if necessary, during the rest of the year.
You won't have to wait for your trade show, conference, membership renewal, or whatever else may happen later. You'll be able to plan with real numbers, not expectations.
A fiscal year can start in any month. It does not have to be a calendar year or any other commonly used time period.
So, unless you feel a need for your fiscal year to coincide with that of another entity, start it when it gives you the greatest planning advantage.
July 29, 2015: Online financial needs
Here's how you can deal with this issue:
1. Designate one person (usually the CEO) to apply for and receive a credit card that will be used for association business. Keep in mind that the credit worthiness of the individual, not of the association, will determine whether the card is issued, even if it is called a "company card," the association's name appears on it, and other employees are authorized to use it. Also, the individual's credit record will be affected by late payments or non-payment.
Use that account with vendors who require a valid credit card number be kept on file.
While it is legal to use a "company card" for personal business (since the card actually belongs to the individual, not to the association), it's best to use it only for association business, so time won't have to be spent examining purchases and determining whether an expense was for business or personal use.
If you do not have direct control over expense reimbursements, you may not want to use a credit card in your name for association expenses. You may prefer a card issued to the CEO or whomever authorizes reimbursements, so you won't have to wait for late payments or get stuck with charges you shouldn't have to pay for.
When you are no longer employed by the association, cancel the credit card immediately, so you will no longer be liable for association purchases. Don't wait for your successor to acquire a new card.
2. Or, designate one Board member to apply for and receive a credit card that will be used for association business, just as you would designate signators on a bank account. That person is likely to want to cancel the card at the end of a Board term, so be prepared to apply for a new card each time a new Board is elected.
3. Some vendors require credit card payment for the first charge but will accept checks, wire transfers, or PayPal payments for subsequent charges. When that occurs, you may have the option of removing your credit card number from the vendor's record after payment is made. That will help prevent you from being automatically charged for later purchases.
May 29, 2014: You can't budget hope
Well, you can't budget hope. And you shouldn't budget income that has to be hoped for.
When preparing a budget, start with the approved plan for the year. Determine what it will cost to engage in those activities. Then project the amount of income that can REALISTICALLY be expected from various sources.
If projected income is less than expenses, you need to cut some activities. If you decide, instead, to increase budgeted income, how much more will you need to spend to achieve that increase?
Don't say you'll work harder or smarter or better. What will it cost to do that?
Budget what can really be done, not what you "hope" really will be done.
December 15, 2013: Financial article posted
December 09, 2013: It's not just expenses
He believes the ability to identify new revenue sources is the most important attribute of an association finance officer.
Find out more about how associations can benefit from the financial expertise of staff and contractors in Forum.