Cashflow Forecasting as a Compass
Are you running a non-profit organization and feel like you’re sailing without a map? The economic outlook for the future may look dim but there are many tools available to help non-profit organizations adjust and thrive in a downturn. One of the best ways non-profit organizations can become more downturn-proof is by adopting FP&A software that enables cash flow forecasting. We’ve previously discussed the benefits of cash flow forecasting for finance teams but the non-profit space operates by entirely different rules. While for profit-organizations can do what they wish with their profits, non-profits are statutorily limited in the ways that they can use their potential surplus capital. So, knowing what the cash flow situation will look like in the future is vital to the mission performance of non-profit organizations.
Cash Flow Forecasting in Excel
Cash flow is the lifeblood of any non-profit organization and determining when there will be surpluses and deficits in the cash flow can help non-profit organizations better adapt to changing circumstances. Many finance teams in the non-profit space, however, find it difficult to forecast in Excel because of:
- Disjointed processes
- The risk of human errors
- Poor communication between departments (treasury, accounting, FP&A, management, etc.)
- Delayed visibility of Cash Flows
- Time-consuming preparation processes, making Cash Flow forecasts irrelevant by the time they are completed
- Reports not aligning with the GL
- A lack of historical data
Because of this cash flow forecasts for non-profits are either not performed effectively or at all which leads to lost savings and insights as well as missed opportunities and precautions. Imagine being able to predict a slowdown or a massive uptick in donations before it happens and plan your resources accordingly. Cash flow forecasting is an integral part of the agility that can help a non-profit adjust when the cash flow dries up.
The 6 Benefits of Cash Flow Forecasting with Modern Software
Additionally, Cloud FP&A can help in the adoption of this agile method by solving the technical and data issues associated with cash flow forecasting and unlocking the benefits which can help nonprofit organizations:
- Unify processes and create a single source of truth for all departments
- Automate to avoid human error and deliver results more quickly
- Gain real-time visibility in cash flows
- Track performance: See how your programs are performing on a granular level
- Spotting opportunities & challenges: cash flow forecasts make it easier to plan the use of working capital around emerging opportunities and anticipated problems
- Respond to change: forecast changes in cash flow so volatility doesn’t negatively affect your bottom line as much as before
The most important benefit of cash flow forecasting is that it can help your non-profit organization become more stable and agile when dealing with upheaval. While technological shortcomings may have held you back in the past, Cloud FP&A enables non-profit finance teams to perform cash flow forecasting and more with ease.