Calling BS on "Timing Issues"
I’m calling BS on “timing issues” #nonprofitreporting.
I have been in countless Board meetings for nonprofits who present monthly financials that miss their budgets by a mile -- their response to questions about the over or under performance?
“Oh don’t worry, that’s just a timing issue. We are doing fine and it will settle out or wash out.”
That’s just lazy reporting!
Don’t get me wrong. Timing issues are real, but it’s the job of the CFO, Treasurer and Finance committee to make sure that the reporting takes those issues into account and presents an easy to digest, visual report that correctly relays the health of the organization to the Board of Directors.
If a Board member cannot use your report to tell whether the organization is on track, then that is a big FAIL.
Ways to solve “timing issues” reporting problems
Use an annual time horizon for your forecasting and update it each month so that if expenses or income fall in unexpected months, you can still see the overall annual health has stayed the same.
Don’t just use budget vs actuals; use budget vs (actuals + remaining forecast)
Use footnotes! When something is out of whack, explain it and explain it in a way that accounts for the entire gap.
Show a bridge from actuals to budget. Ex: If your income was $50k lower than expected then show how the Smith Foundation is still going to donate $75k but it got pushed until the next month, but the Porter Foundation surprised you with a $25k gift you weren’t expecting.
Don’t be a lazy Board member and let your organization get away with lazy reporting. This will likely come back to bite you when your organization ends up in trouble and you didn’t see it coming.