Cashflow

A charity’s cashflow is the analysis of money coming into and out of the charity over a period of time. 

Estimating and monitoring cashflow is important to help trustees ensure the charity always has sufficient funds to continue operating. For example, an annual budget may give a healthy impression but if large expenses are incurred before income is received the charity may run into difficulty.

Trustees may need to make decisions on the basis of a cashflow forecast. Will reserves need to be used to cover large bills? Will a temporary overdraft be required at the bank? Could the charity negotiate to retime bill payments or grant payments?
Performance against predicted cash flow need to be regularly reviewed by the board.