Overview
Careful accounting systems need to be set up and all those involved with finance need careful training, and must be efficient, thorough and trustworthy.
Accounts will need to be prepared annually, and, in addition, budgets will need to be prepared well in advance. The preparation of management accounts and cash-flow forecasts will become increasingly important as a project grows. Projects which are otherwise successful can fail through poor accounting and financial control.
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Excerpt from setting up community Health programmes by Ted Lankester
Projects very frequently have a “cash-flow crisis” at some point during the year. The best way to know if funding is sufficient for the coming months is to prepare monthly cashflow forecasts. This involves calculating the amount of money we are likely to spend and to receive each month over the next 6 months. This helps us to know when income may be especially low or expenditure may be higher than usual, so we can make appropriate plans. Each month we can put in the actual figures for the previous month to replace the forecasted amount for that month. This “rolling forecast” is an accurate and time-saving way of anticipating cashflow problems.
Management accounts look backwards to the previous few months: cashflow forecasts look forward to the next few months. Together they help us to keep accurate financial control.
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