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Squash the Surprise

A Glimpse of Forecasting your Year-End Financials


As we approach the Autumn season, it’s a great time to predict how we will close out the calendar year by Forecasting your Financial Position. Will your December 31st Financials present a good surprise or a bad surprise? This is the question we hope to answer through our forecasting.


In an effort to keep things simple, we’ll focus on our Top 5 Revenue and Expense Categories through this October Challenge.


The first step is to make sure your financial records are updated and reconciled from January to September. Once you’re confident in your financial tracking, then export a Statement of Activity Report (aka Profit/Loss) to an Excel spreadsheet. You should have four columns on your spreadsheet:


1) Financial Accounts (recommended categories below)

2) Actuals (Jan - Sep)

3) 4th Quarter Estimate

4) Dec 31 Forecast


I invite you to concentrate on your top 5 financial accounts listed below (exclude categories that don’t apply to your organization such as grants, earned income, travel, etc.):


TOP 5 REVENUE ACCOUNTS

Direct Contributions

Non-Government Grants

Governmental Grants/Funding

Special Event Revenue

Earned Income


TOP 5 EXPENSE ACCOUNTS

Direct Program Expenditures

Personnel

Contract Services/Consulting

General Management Expenses

Travel Expenses


Once you have your numbers for these accounts, let’s put on our forecasting hat and predict your 4th Quarter revenue and expenses. I typically approach this part by including estimated revenue plus the fixed expenses that are standard each month. After that, I refer to the budget and any relevant information from the prior year financials to fill in any gaps of financial activity.


Now, it’s time for the fun part! We’re going to use the fourth column to add your actuals plus your 4th quarter estimate (column 2 and 3.) Voila! You have a forecast of your December 31st financial position!


Are you excited about your numbers? Or Do you need to make some adjustments over the next few weeks? Now it’s time to “Plan your Work and Work your Plan” .


Remember, your financial forecast is another essential accounting practice so you can end the year with Success!



Cheers to Financial Forecasting :)

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