Your association’s budget is a major indicator of the organization’s management effectiveness. Monitoring it carefully keeps the balance between revenue and expenditure and enables it to be adjusted in a timely way if there is any discrepancy, for both current and projected activities. What are the advantages of good management of your association’s budget? How can you manage this it effectively? What budget planning and management tools are available on the market? The article will present the benefits of a controlled budget, as well as simple tools that will help you keep it in check.
Managing a budget as real-time expenditures and revenue are booked has short- and long-term advantages. Here are four:
1. Anticipation: Depending on the expenditure, the actual budget consumption at any given time indicates whether an effort should be made to either increase revenue or rein in expenses.
2. Managing the activity: The difference between the actual situation and the forecast can be assessed in real time. In response, adjustments can be made at any time. The level consumed in the budget is an indicator of the manager’s skill
3. Transparency: Members of an association all contribute to the budgeted revenue. When the association shares its budget with its membership, their common contribution engages all the stakeholders and promotes member engagement with future projects.
4. Funding requests: A convincing budget estimate and good track record managing to a budget will give the organization credibility when applying for funding or grants from public or private organizations.
There are two ways to build your budget:
– Based on planned spending. Simply calculate the revenues that must be collected so that they balance the debits. Revenues may come from sales of the association’s products or services, memberships, grants, or donations.
– Based on expected revenues. The expenses that these revenues will fund can then be detailed. They will include, for example, variable costs for travel or equipment purchases, as well as fixed costs such as rent or utilities.
To reduce the risk of significant gaps over the course of the year, it is essential to identify and control expenses, as they will have the greatest impact on whether the budget is met.
Using a shared table offers many advantages in managing an estimated budget. It allows you to collectively manage the activities of the association in real time. Both the revenues and the three types of expenses (fixed, variable, and unforeseen) are included and can be viewed immediately. If your association manages several activities, you might create a table for each activity and link them to a master sheet.
Optimal management of your association’s budget supports decision making at any moment. Using simple collaborative tools with different levels of permissions, you can control who has easy access to the association’s financial data. You can set them up so that you will be alerted when discrepancies from budgeted expenses—or revenues—exceed a specified threshold.