Financial Literacy for Associations


Nov 9, 2013 (4 years and 6 months ago)


Financial Literacy for

Saturday, December 1, 2012

State Leadership Workshop

Presenter: LeAnn Wilson, Chief Financial and
Operations Officer, ACTE

Financial Planning

The Budget

he purpose of budgeting is to:

Provide a forecast of revenues and expenditures,
that is, construct a model of how our association
might perform financially if certain strategies,
events and plans are carried out.

plans to association

Evaluate performance

Enable the actual financial operation of the association
to be measured against the forecast.

Financial Planning

The Budget

The purpose of budgeting is to:

Control resources

Establish the cost constraint for a project, program, or

Motivate leadership to strive to achieve budget

Provide visibility into the association's

Financial Fundamentals

Balance Sheet
: Total Assets = Total Liabilities and
Net Assets

Statement of Revenue and Expenses
: Total Net
Assets on this report = Total Net Assets on the
Balance Sheet

Cash Flow Statements
: Actual cash received
accounts payable per month

Assets Vs. Liabilities


represent value of ownership that can be
converted into cash (examples: cash and accounts


is defined as an

of an entity
arising from

transactions or events, the
settlement of which may result in the transfer or use
of assets, provision of services or other yielding of
economic benefits in the
. (examples:
accounts payable, deferred revenue)

Accrual vs. Cash

Accrual accounting
: Revenue is recorded when it is
earned and realized, regardless of when actual
payment is received. Similarly, expenses are
“matched” to revenue regardless of when they are
actually paid.

Cash accounting
: Revenue is recognized when cash
is received and expense is recognized when cash is

Effective Cash Management

Another aspect of
cash management
is knowing a
company's optimal cash balance. This is the precise
amount needed to minimize costs yet provide
adequate liquidity to ensure bills are paid on time
(hopefully with something left over for emergency


is the amount of money on hand to meet
current obligations.

Effective Cash Management

Understanding your association’s cash cycles

Poor cash flow is one of the leading causes of
association failures, while optimizing cash flow is
one the most important things you can do to help
achieve your association goals.

Most associations do not have a consistent
amount of incoming cash every month requiring
management of fluctuations

Most associations cash flow is impacted largely by
timing of dues payments and payments of conference

Financial Roles of Association Leaders

Understand the association's underlying finances

An association leader must have a comprehensive,
detailed understanding of the organization’s finances at all

Volunteer leaders need to make sure that they are getting
enough details in the financial reports to make well
informed decisions

Communication is key

Volunteer leaders and staff need to make sure they
completely understand one another when discussing
financial matters

Financial Roles of Association Leaders

Stay involved in the accounting process on
an ongoing basis

At minimum, obtain financial reports monthly

Review actual operational results against

Obtain explanations for significant, unusual or
unexpected variances

Financial Roles of Association Leaders

Open and review all monthly bank statement
and/or conduct spontaneous reviews online

The preparer of the bank reconciliation(s) should
be independent of the cash receipts/disbursement

up computer files at least daily

Store tapes off premises and in fire
proof safes