The Charity Commission guidance on Covid-19 highlights the needs for UK charities to be monitoring cash flow. 

First, it’s important to have as accurate a picture as possible of how your charity is performing as it stands. That way you’ll be able to put together a more comprehensive and accurate plan as to how to move forward. If you’re unsure of how your charity is performing financially, speak to our charities team

When you have accurate data, you can budget for:

  • Any income you expect to receive during the coming months, based on your best estimate
  • Any outgoing expenses you will have to pay over the coming months

Having a detailed oversight of your income and expenditure will give you a better picture of the cash available to you. You can assess whether or not you’re at risk of running out of cash, and also means you can get maximum impact from any funding you acquire during these tough times. 

Consider funding options, and think long-term

The struggle is the same for many charities at the moment. Income has stopped during Covid, meaning it may be necessary to look at options for funding. Here is a list of funding opportunities you may not be aware of. 

We urge you to think long-term too. Even if you’re surviving currently, or seeing an unprecedented influx of donations because you’re an NHS or Covid related charity, it’s important to be prepared for what comes after Covid. You may find you’re in the same position as many charities are now. 

Remind your trustees to monitor cash flow and dig deeper

Are your trustee meetings adequately covering management accounts, budgets and cash flow forecasts? It’s vitally important for trustees to dig deeper and create cash flow forecasts to pick up issues ahead of time. 

How to forecast your cash

There are two ways to create a cash flow forecast, the direct and the indirect method. The direct method tallies all bills and invoices to give you an operational forecast that is accurate in the short to mid term. The second is the indirect method which derives a cash flow forecast from your profit and loss and your balance sheet, to give you a forecast that is accurate in the long term but cannot provide insight into the short to mid term.

Here’s a really helpful blog all about maintaining a cash flow forecast.

If you have designated funds, it may be beneficial for your trustees to review these allocations to ensure the charity has sufficient free reserves at present. You can choose to designate these funds to specific needs, like new equipment or repairs – but now would be a good time to look at whether or not funds are being allocated to the most appropriate means. If cash is an issue at the moment, you may want to look at reallocating designated funds. 

Warning, reserves do not equal Cash. 

Minimise costs where possible

If you’re able to continue with operations, look at all your outgoings and see where you can make cuts to your expenses. 

  • Look at all your non-essential outgoings. Can you put a stop or hold on any expenses you don’t need while the country is going through Covid?
  • Look at your operating expenses and bills. You may find there are cheaper suppliers you could use or alternative methods you could employ during these times. Technology is a great example. 
  • Might you be able to share any resources with similar charities? See where you can form a partnership in order to lower individual charity costs. Do note, there can be VAT implications if this involves payments between charities, so ask us for advice before jumping into a deal. 
  • Remember, the using the government’s job retention scheme is still available and may cover some of the cost of the salaries of staff who aren’t needed to deliver services. 

We have a dedicated team to help where you need it 

At all times, we help charities deliver the most they can to reach their charitable objectives. Though the world looks a little different right now, our support hasn’t changed. Together we can help you understand your position and manage your finances. Please do reach out if you’re struggling, our charities team is here for you.

If you know anyone who may benefit from our newsletters and updates, please feel free to forward this email or ask them  to opt in to our mailing list.