Cash flow and budgeting. Date

Transcription

1 Cash flow and budgeting Date

2 Welcome and introductions

3 Overview of content This seminar will cover: 1. A brief overview of Club Leaders 2. What we mean by cash flow 3. Budgets - why they are important, how to develop a meaningful budget and get the right people involved 4. How to monitor budgets and what happens when it changes 5. Recap and further support 3

4 Brief overview of Club Leaders 4

5 Introduction to Club Leaders Club Leaders background Part of the Places People Play Olympic legacy programme Uniquely focused on helping club leaders on business aspects of club Tailored for sports clubs Delivered by PwC working with Sport England Available to all clubs and it s all free! What s going on Where to find us Available to fewer clubs Mentoring Seminars Leaders Online Resources Available to all clubs 5

6 Cash flow 6

7 What is cash flow? In Out Cash inflows payments into a club from members or other sources Cash outflows payments made by a club Net cash flow = cash inflow less cash outflow 7

8 Timing is everything 1,500 in the club account 200 deposit paid to caterers 800 paid for kit 2,000 paid out Retirement dinner 5,000 Jan Feb Mar Apr May June 1,000 bar stock ordered on credit 1,000 paid for bar stock 8

9 What the cash flow looks like Bank balance at start (b/f) Jan Feb Mar Apr May June 1,500 1,500 1, (500) (500) Cash in ,000 Cash out (0) (200) (800) (1,000) (0) (0) Bank balance at end (c/f) 1,500 1, (500) (500) 4,500 If you were starting this year again what would you do differently? 9

10 How can you improve your cash flow? Membership Suppliers Events Costs Bank 10

11 Budgeting 11

12 What is budgeting? Projects future cash inflow and outflow Helps to plan and make decisions Unlikely to be 100% accurate 12

13 Why does budgeting matter? Timely information to help you make the right financial decisions Identify when there might be a problem in advance. Gives you time to take action Can help manage relationships with suppliers (creditors) Identify times when there is surplus and identify how best to use this To help to secure funding It can be motivational No surprises - proactive, not reactive! 13

14 Case Study The management committee of a football club, called a special general meeting at which they pleaded for assistance to help save the club. Start of year: 70,000 in bank End of year: 30k in overdraft 6 months later: 120k debt including unpaid taxes What went wrong? 1) Financial reports were too complicated and the treasurer was not trained in finance 2) There was no budget and yet major financial decisions were made to: employ of a Coaching Director, commence a building project to improve the clubhouse (substantially funded by government, but with a club share) 14

15 Who should be involved? Not just for the treasurer: Coaches and trainers Committee members Facilities manager Bar manager Kit Secretary Social Secretary Communications Officer Suppliers Grounds man Cleaner etc The budget will be more accurate if the right people are involved People understand and can discuss the budget People are more likely to stick within their budget 15

16 Creating a budget for your club Decide whether your budget is going to be monthly, quarterly or annually and work out what your current income and expenditure is for each period Top tips: Clear, concise and consistent headings Factor in any budgeting goals Be realistic and conservative Give details of assumptions Remember VAT! 16

17 Exercise: Creating a budget for ABC club You have 500 members pay an annual membership of 100 each due by March. Not everyone pays on time but all pay eventually You pay insurance annually at a cost of 2,000 in May You employ four members of staff: Club Secretary ( 7,000 p/q), Coach 1 ( 2,000 p/m), Coach 2 ( 4,000 p/q) and a part time Caretaker ( 1,000 p/m) The coach says you will remain in the same league and travel costs are going to remain the same ( 625 p/q in previous year) but the team are going on tour before Christmas and it s likely to cost 6,000 Your air conditioning is due for repairs in July costing 2,500. You have a major fundraising event in August predicted to raise 5,000 and two other events, a Valentine s Day ball in February and a Christmas event in December which raise 15,000 each Sporting events throughout the year are expected to raise net 4,000 Bar sales & kit costs are generally consistent throughout the year at 3,000 & 1,500 per quarter respectively with joint costs of 3,000 per quarter 17

18 Monitoring your budget 18

19 How to monitor your budget Income Budget ( ) Actual ( ) Q1 Absolute variance ( ) % variance... Membership fees 25,000 22,500-2,500-10%... Expenditure... Travel %... Surplus/(deficit) Budgets should be monitored on a regular basis... 19

20 Exercise: Monitoring ABC s budget From the handout: 1. What questions would you ask? 2. What action would you take? 20

21 Recap and further support 21

22 Recap What we have covered: 1. A brief overview of Club Leaders 2. What we mean by cash flow 3. Budgets - why they are important, how to develop a meaningful budget and get the right people involved 4. How to monitor budgets and what happens when it changes 22

23 Top tips on cash flow & budgeting Know where your cash comes in and goes out Get input from people in your club Have clear, concise and consistent headings Be realistic and conservative Add assumptions Remember VAT! Keep people informed (suppliers, bank etc.) Monitor it regularly Ask questions when there are differences Update your budget when it changes Think about succession planning 23

24 Further support Online modules Budgeting: get on track, stay on track Get your cash flowing Toolkits Cash flowing: Top tips Get your cash flowing: overview Debtors, Creditors, Stock Cash Flow: Project model Cash Flow: Project template Profit vs Cash Budgeting: overview Budgeting examples Monthly, quarterly, termly budget templates 24

25 Any questions?

26 Thank you This seminar has been prepared to give general guidance for sports clubs as part of the Sport England Club Leaders programme. It does not constitute professional advice and you should not act upon the information contained in these slides without obtaining specific professional guidance. These slides are not to be used outside of the Club Leaders programme unless delivered in conjunction with Club Leaders or with the written agreement of Sport England. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, Sport England, its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it. The English Sports Council - Sport England 26