Seven financial New Year's resolutions

The new financial year is under way - so it's time to balance your budget and get your house in order

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With the new financial year under way, there’s no better time to establish some good habits that’ll see your charity through the coming year.

"Charity finance professionals certainly have a lot on their plate in 2017," says Anjelica Finnegan, policy and research manager at the Charity Finance Group. "Along with getting ready for the new EU data protection rules introduced in May 2018, regardless of what our relationship is with the EU, charities should resolve to bring risk management to life, reassess their reserves policy and re-engage trustees with finance."

If you want to balance your budget and get your house in order, you should consider the following…

1) Plan a budget for the year

Budget forecasting is key to understanding what you can achieve over the next 12 months then allocating resources appropriately. First, work out goals and risks. Don’t make the mistake of only forecasting when something goes wrong, it’s important to plan when things are going well too.

2) Do a cash flow projection

Getting an accurate view of income streams and costs is vital – talk to relevant teams to ensure they have the right skills to make a reliable financial assessment. If you have several fixed costs, what happens if an income source drops? And plan for legislative changes, such as a spending review, that are likely to affect income.

3) Build your reserves and contingency fund

Getting the right level of reserves is crucial: too high and it can limit the amount of spend on activities; too low and you risk insolvency if you encounter financial difficulties. Explain to lenders how and when reserves are spent, to show you’re protected if there’s a threat to income levels. Building reserves also helps inform the budget and risk-management process.

4) Update your systems, payroll and accounting software

Keep accounting software and all basic records up to date to track expenses. Replace inefficient paper-based processes with automated systems; spend analysis should show who is spending what and when. And don’t leave it to one person to manage, all processes and controls need to be understood company-wide. Consider outsourcing your payroll, many charities are turning to outsourcing companies for a low risk, cost effective service.

5) Review your financials and trim your expenses

Reviewing costs should apply to the services you pay for as well as those you provide. Ask suppliers if they have any cost-saving strategies and don’t wait for contracts to end before reviewing. Buying in bulk and having an effective IT system are simple ways to save money. Make sure you aren’t spending too much on property assets and ask finance staff to obtain multiple quotes before buying. Share information with other organisations to find out what people are paying for equivalent services, it’s also worth exploring the possibility of forming buying consortiums.

6) Explore how to use your resources more efficiently

Make sure there are controls in place to stretch your resources as far as possible. This can range from simple measures such as printing in black and white rather than colour, to monitoring marketing campaigns and events to see which deliver best results. There’s business management software built specifically for not-for-profit organisations that gives insight into any overspending, budget shortfalls and inefficiencies. It can also produce performance data and analytics that helps in the planning and measurement of fundraising campaigns.

7) Allocate funds to your core activities and prioritise others

Plan to spend a fair share of overhead costs on different activities. You can prioritise activity spend by considering how headcount, time and expenditure affect costs – the number of people working on a project determines how much funding you need. Finally, remember cash flow projection is essential to allocating funds.

Markel is the sector's premier insurance company working with charities, community groups, trustees, social enterprises and care providers. To find out more please visit

Photo by William Warby licensed under CC BY 2.0

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