![]() The template provides a general framework with built-in calculations. Propel Nonprofits has developed a cash flow projection template, an Excel spreadsheet that can be downloaded at. The most effective way to manage cash flow is to develop and maintain cash flow projections that look forward 12 months. The earlier you anticipate cash flow issues, the easier it is to address them. The frequency will depend on how closely the organization’s cash flow needs to be monitored. Projections should be updated and reviewed regularly. Managing cash flow is not a one-time activity. Experiencing changes in sources and structure of fundingīy understanding cash flow and planning ahead, we can avoid problems and shortages, provide stability to our organizations, and take advantage of opportunities to purchase capital assets and build organizational capacity.Adding or cutting back on programs or staff.Developing and implementing new programs.While cash flow management is always a useful tool, it is particularly important to diligently manage cash flow when your organization is undergoing significant financial changes, such as: Time spent worrying about and trying to resolve cash flow problems after they occur.Lost opportunities for new mission-building activities.Damaged relationships with vendors and contractors. ![]() Late fees, penalties, and finance charges.The cost of these shortages can be very high, including: Operating with a deficit (expenses exceed revenue).Changes in revenue sources or payment schedules.Timing of disbursement, such as advance payments.Common causes of cash flow shortages are: Why Manage Cash FlowĮvery organization experiences ups and downs in cash flow because the timing of when money is received often doesn’t match when payments are due. For this, effective cash flow management is essential. While standard nonprofit financial reports – the budget, income statement, and balance sheet – provide important management information, these statements alone do not tell whether there is enough cash on hand to pay for an unexpected heating repair, to take on a new program opportunity, or even to cover payroll next month. ![]() Additionally, this resource provides management strategies to help your nonprofit prevent cash flow shortages. Effective cash flow management is essential. This resource will help your nonprofit manage your cash flow by explaining why, when, and how. ![]()
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