Cashflow Planning Insights
Why cash matters:
- “Cash is king” — profit on paper doesn’t help if you can’t pay expenses like salaries.
- Running out of cash puts the organisation at serious risk.
- Leaders often face stress from insufficient cash availability.
Key practices for healthy cash planning:
- Daily monitoring of cash (especially in cash-heavy organisations).
- Separate cashflow forecast from the budget:
- A rolling 12-month forecast gives forward visibility.
- Helps ensure bills can be met while optimising available cash.
Restricted vs unrestricted funds:
- Keep these segregated.
- Avoid using restricted funds for general expenses.
Managing surplus cash wisely:
- Don’t leave excess cash idle in current accounts earning no interest.
- Use short-term and long-term interest-bearing accounts.
- Invest surplus responsibly for greater impact until needed.
Case study (Christian charity leader):
- Shifted focus from profit & loss to cash flow forecasting.
- The forecast revealed a cash shortage halfway through the year (which the budget had hidden due to non-cash items like depreciation).
- Practical fixes: align staff salary payment dates with supporter donation collection dates → reduced cash crunch.