Saturday, June 30, 2007

Cash = Oxygen

The title of this post is very, very familiar to pretty much anyone who has heard me speak on my book titles, Mission-Based Management, Financial Empowerment or Nonprofit Stewardship. Cash is really, really important.

So much so that the July issue of the Mission-Based Management Newsletter is on the subject of Better Cash Planning. Here's an excerpt from the Management Tip....

"Many nonprofit board and staff describe themselves as "non-financial" managers. In other words, they come to the issue of managing their organization's finances second, after coming first to the mission. For staff, they may be trained as social workers, teachers, nurses, or environmental engineers. They worked for their organization and a mission they loved, and then got promoted and were forced to deal with budgets. First they learned about income and expense sheets, the core of a budget. Then, as they moved up the food chain, they had to deal with balance sheets, and the mysteries of accrual accounting. They learned how to read their auditor's reports and understand financial ratios. All well and good.

But in a surprising number of cases, no one ever emphasized the importance of cash. And cash, (people who have heard me speak know what's coming:) cash = oxygen. Without it your organization dies, and very, very quickly. While income and expense statements are important, and balance sheets offer crucial information, without cash, all else is for naught."

Check it out.


Kate Barr said...

I agree that cash = oxygen, and for most smaller nonprofits cash flow tracking is more important on a day to day basis that regular financial reports. Because of this, Nonprofits Assistance Fund offers a practical and free cash flow planning template spreadsheet on our web site. Here’s the direct link:

Peter Brinckerhoff said...

Thanks, Kate. I'm adding the link to the newsletter right now. I appreciate the post!

Anonymous said...

Before our Boards and Staff try to understand the intricate details of fund accounting, they need to understand that CASH is KING!