Leadership and ledgers A future leaders guide to financial - - PowerPoint PPT Presentation
Leadership and ledgers A future leaders guide to financial management 14 th November 2013 Melbourne MATRIX ASSOCIATIONS FORUM: FUTURE LEADERS CONFERENCE 2013 on BOARD 1 Morri Young Matrix on Board Since 1997 ... now across Australia
MATRIX
ASSOCIATIONS FORUM: FUTURE LEADERS CONFERENCE 2013
14th November 2013 Melbourne
A future leader’s guide to financial management
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ASSOCIATIONS FORUM: FUTURE LEADERS CONFERENCE 2013
Matrix on Board Since 1997 ... now across Australia Mission: Financial Intelligence to Nonprofit Decision-makers We produce beautiful financial reports to
how to read them
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Financial Confidence Meter
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ASSOCIATIONS FORUM: FUTURE LEADERS CONFERENCE 2013
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ASSOCIATIONS FORUM: FUTURE LEADERS CONFERENCE 2013
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No idea Awesome Getting By Faking it
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ASSOCIATIONS FORUM: FUTURE LEADERS CONFERENCE 2013
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No idea Awesome Getting By Faking it
Financial Confidence Meter
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No idea Awesome Getting By Faking it
Financial Confidence Meter
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ASSOCIATIONS FORUM: FUTURE LEADERS CONFERENCE 2013
Financial Confidence Meter
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No idea Awesome Getting By Faking it
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88% of Nonprofit CEOs and Board Members have no financial management training Changes over the past 20 years Sector growth technology ‘corporatisation’ Legal obligations
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ASSOCIATIONS FORUM: FUTURE LEADERS CONFERENCE 2013
The word derives from the Greek verb κυβερνάω [kubernáo] which means to steer. The responsibility of the Board is to look over the horizon and plan a path for an
The responsibility of management and staff is to operationalise the plan.
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Not allow trading, if insolvent Confidentiality Fiduciary duty Abide by the Constitution Ask questions and know what’s going on Disclose any conflict of interest Not use position or information for a dishonest purpose.
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Mission Strategy? Cost to implement? How to fund? Review performance?
Members, Community, Shareholders, The Plan The Budget Fundraising Financial Reports
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There is a BIG difference between data and information As you become more responsible for strategy and management, you need to gain more about financial intelligence and less about financial processing... Bookkeepers deal with processing; Boards and CEOs deal with decision-making
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Luca Bartolomeo de Pacioli wrote the textbook in 1494 He described the use of journals and ledgers He warned that a person should not go to sleep at night until the debits equalled the credits! His ledger had accounts for assets (including receivables and inventories), liabilities, capital, income, and expenses ...
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Solvency Fraud Strategy
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the most stringent duties on directors.
company trading while it is insolvent or becoming insolvent.
further debts when the company is insolvent.
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INCENTIVE RATIONALISE OPPORTUNITY
The key factors organisations say* that they rely on strong internal controls and an ethical organisational culture to reduce the risk of fraud.
*BDO Fraud Survey for 2011
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Prevention Detection Response
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The Board sets the plan, and asks the question: Where do we want to go, how much will it cost, and where will the money come from? Maximising income Manage the risk Measuring performance over time Managing the Members’ assets
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ASSOCIATIONS FORUM: FUTURE LEADERS CONFERENCE 2013
Mission Strategy? Cost to implement? How to fund? Review performance?
Members, Community, Shareholders, The Plan The Budget Fundraising Financial Reports Financial Reports
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ASSOCIATIONS FORUM: FUTURE LEADERS CONFERENCE 2013
Where do we want to go? How much will it cost? How much will we need? Do we have enough resources? Are we on track?
The Strategic Plan
If we don’t what will we do?
The Budget Funding Plan Profit & Loss to Budget Board Discussion Balance Sheet & Cashflow
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A classification system for the accounts Relevant to the industry and the organisation Account names mean something to the
Avoid “Miscellaneous” and “Sundries” Not too many, not too few Simple to code “Input is Coding, Output is Reporting”
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We Spend We Earn Value We Owe We Own
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ASSOCIATIONS FORUM: FUTURE LEADERS CONFERENCE 2013
Assets 1-1000 Cheque Account 1-2000 Petty Cash 1-3000 Computers 1-4000 Motor Vehicles 1-5000 Debtors Liabilities 2-1040 Credit Cards 2-2000 Creditors 2-3000 Grants in Advance 2-4300 Payroll Accruals 2-6500 Loans Income 4-2100 Grants 4-3000 Donations 4-4000 Membership Fees 4-5000 Bank Interest 4-6000 Client Fees Expenditure 6-1000 Bank Fees 6-1200 Postage 6-2000 Telephones 6-3010 Stationery 6-5000 Salaries Equity 3-1000 Retained Earnings 3-1200 Current Earning
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Movement over time For a period of time in the life of the organisation Value of what the
spends
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ASSOCIATIONS FORUM: FUTURE LEADERS CONFERENCE 2013 Income ¡and ¡Expenditure ¡Repo Report ¡for ¡Far ¡Away Away ¡Inc For ¡the ¡month ¡of ¡March ¡2013 013 Income
March
Government ¡Grants $25,000 Dona2ons $3,202 Interest $432 Total ¡Income $28,634 Expenditure Wages $28,329 Rent $1,800 Telephone $1,201 Deprecia2on $91 Mee2ng ¡Expenses $901 Total ¡Expenditure $32,322 Surplus/Deficit ($3,688)
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ASSOCIATIONS FORUM: FUTURE LEADERS CONFERENCE 2013 Income ¡and ¡Expenditure ¡Repo Report ¡for ¡Far ¡Away Away ¡Inc For ¡the ¡month ¡of ¡March ¡2013 013 Income
March Year ¡to ¡Date ¡YTD
Government ¡Grants $25,000 $225,000 Dona2ons $3,202 $43,921 Interest $432 $3,431 Total ¡Income $28,634 $272,352 Expenditure Wages $28,329 $189,202 Rent $1,800 $16,200 Telephone $1,201 $10,232 Deprecia2on $91 $820 Mee2ng ¡Expenses $901 $1,010 Total ¡Expenditure $32,322 $217,464 Surplus/Deficit ($3,688) $54,888
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ASSOCIATIONS FORUM: FUTURE LEADERS CONFERENCE 2013 Income ¡and ¡Expenditu diture ¡Report ¡t
t ¡for ¡Far ¡Away ¡In ay ¡Inc For ¡the ¡month ¡of ¡Mar March ¡2013 Income
Actual Budget Varia5on Year ¡to ¡Date ¡YTD YTD ¡Budget Varia5on % ¡Variance
Grants $25,000 $25,000 $0 $225,000 $225,000 $0 $0 Dona2ons $3,202 $4,500 ($1,298) $43,921 $52,100 ($8,179) (16%) Interest $432 $503 ($71) $3,431 $4,532 ($1,101) (24%) Total ¡Income $28,634 $30,003 ($1,369) $272,352 $281,632 ($9,280) (3%) Expenditure Wages $28,329 $26,530 ($1,799) $189,202 $168,222 ($20,980) (12%) Rent $1,800 $1,800 $0 $16,200 $16,200 $0 0% Telephone $1,201 $1,050 ($151) $8,543 $9,211 $668 7% Deprecia2on $91 $91 $0 $820 $820 $0 0% Mee2ng ¡Expenses $901 $50 ($851) $1,010 $450 ($560) (124%) Total ¡Expenditure $32,322 $29,521 ($2,801) $215,775 $194,903 ($20,872) (11%) Surplus/Deficit ($3,688) $482 ($4,170) $56,577 $86,729 ($30,152) (35%)
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ASSOCIATIONS FORUM: FUTURE LEADERS CONFERENCE 2013
Can we pay our debts as and when they fall due? Keep your debtors close and creditors distant Its all about timing of receiving and spending cash
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ASSOCIATIONS FORUM: FUTURE LEADERS CONFERENCE 2013 Cashflow ¡Forecast As ¡at ¡July ¡1, ¡2013
July August September October November December
Opening ¡Bank ¡Balance $25,011 $18,551 $12,951 $3,001 ($3,269) ($9,539) Incoming ¡Cash Grants $10,000 $10,000 Dona2ons $500 $500 $500 $500 $500 $1,100 Interest $540 $540 Spending Payroll $6,500 $5,400 $7,650 $6,500 $5,910 $4,100 Insurance $12,000 Rent $600 $600 $600 $660 $660 $660 Telephone $100 $100 $100 $100 $100 $100 Mee2ngs $300 $0 $100 $50 $100 $1,000 Closing ¡Bank ¡Balance $18,551 $12,951 $3,001 ($3,269) ($9,539) ($4,299)
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ASSOCIATIONS FORUM: FUTURE LEADERS CONFERENCE 2013 Cashflow ¡Forecast As ¡at ¡July ¡1, ¡2013
July August September October November December
Opening ¡Bank ¡Balance $25,011 $18,551 $12,951 $13,901 $6,531 ($839) Incoming ¡Cash Grants $10,000 $10,000 Dona2ons $500 $500 $500 $500 $500 $1,100 Interest $540 $540 Spending Payroll $6,500 $5,400 $7,650 $6,500 $5,910 $4,100 Insurance $1,100 $1,100 $1,100 $1,100 Rent $600 $600 $600 $660 $660 $660 Telephone $100 $100 $100 $100 $100 $100 Mee2ngs $300 $0 $100 $50 $100 $1,000 Closing ¡Bank ¡Balance $18,551 $12,951 $13,901 $6,531 ($839) $3,301
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Snapshot of the financial position at a single point in time For the whole life of the
Value of what the
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ASSOCIATIONS FORUM: FUTURE LEADERS CONFERENCE 2013 Balance ¡Sheet ¡for ¡Far ¡Away ¡Inc at ¡the ¡31 ¡March ¡2013 Current ¡Assets Cash ¡at ¡Bank $45,021 Debtors $32,911 PeUy ¡Cash $500 $78,432 Fixed ¡Assets Computers ¡(less ¡Acc ¡Dep) $65,032 Furniture ¡& ¡FIYngs ¡(less ¡Acc ¡Dep) $49,382 $114,414 Total ¡Assets $192,846 LiabiliPes Credit ¡Cards $12,911 Payables $28,329 PAYG ¡and ¡Super $12,101 GST $3,922 Grants ¡in ¡Advance $45,000 Total ¡LiabiliPes $102,263 Net ¡Assets $90,583 Equity Retained ¡Earnings $35,695 Current ¡Earnings $54,888 Total ¡Equity/Reserves $90,583
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Imagine its 1979 There are no internet no mobile phones, no fax machines Malcolm Fraser is the PM Nº1hit is My Sharona …and Morri starts work
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$850,000!
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Financial Confidence Meter
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ASSOCIATIONS FORUM: FUTURE LEADERS CONFERENCE 2013
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ASSOCIATIONS FORUM: FUTURE LEADERS CONFERENCE 2013
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No idea Awesome Getting By Faking it
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