Melissa Waters: All right, thank you again for joining us today. My name is Melissa waters and I'm the manager of events and programs here at JMT consulting

You're joining us today for cash flow conversations with Kyla, Graham. She's the president of see energy accounting advisory

This webinar is sponsored by JMT consulting. We're an ERP and financial management solutions firm with 30 years of experience and we specialize in nonprofits.

I would like to share a few housekeeping notes with you and then I'll turn it over to Chyla.

First of all, if you have any questions at all. Please make sure you submit those in the Q&A box on your control panel will be sure to answer those at the end of the webinar.

We're also recording today's webinar. And we will send you a copy of the recording and the slides and an email, following the webinar.

Finally, I'd like to introduce Chyla to you. She is a certified public accountant with over 10 years of experience, helping small nonprofit organizations realign and thrive.

She started as an audit manager at a religious organization and it helped her see how important it is to synchronize and organizations spinning and its mission.

Chyla has prepared audits manage budgets across departments as well as provided staff training and financial literacy

She wanted to reach even more organizations and affect change more broadly. So she started her company see an RG accounting advisory to empower more nonprofit organizations.

Today she has secured over 2 million in funding for several organizations and has helped many more streamline to better serve their communities.

Chyla credits flying trapeze for keeping her physically and mentally strong and reminding her that you can seed and life alone. And with that, I will turn it over to Chyla. Thank you.

Chyla Graham: Thank you, Melissa. Good afternoon, everyone. Thank you for joining. I am super excited to have this time with you because cash flow has been top of mind for so many organizations this year and you are joining in on the conversation.

So our objectives today, I want you to leave here with a better understanding of what's the difference between a cash flow statement and a cash flow projection

So if you've ever had a financial statement audit or depending on what kind of accounting system you use, you'll see that there's a place for cash flow statements and so

Why I want you to understand, like, why you can just click that button and get what we're talking about today.

The other thing I want you to have is some tips on how to put together your own cash flow projection.

And finally, we're going to highlight some of the things that you can control what you need other people to buy into or rally support to help you get that cash, either in the door or keep it in the house. If you don't want it to leave quite yet.

So first of all,

What is a cash flow projection versus a cash flow statement a cash flow statement is part of the financial statements.

It is in your reports. It's something that tells you about what happened in the past. So for a

When you look at audited financial statements. The capital talks about what was the cash from financing. What was the cash from investments? What was the cash from operations?

So in financing it's thinking about, Hey, well did we borrow money to lend the money and the investments part it's thinking about, well, what sort of plan access to invest in what actual like

financial investment to be have and then operating would in the work that we do. How did things change accounts payable accounts receivable, those types of things. So it's only thinking about how cash is flowing in and out of the organization. Historically,

Now, today we are talking about a cash flow projection. So we're thinking about the future. What does the future hold for the organization.

And typically, in those cases, we're not that worried about the categories like financing investing and operations were really thinking about, like,

Tommy, what I have to pay. And what do I expect. And so that's what we're doing today we're going to talk through those what's coming in, what's going out.

Why would you want to do a cash flow projection. You want to do that so that you can prepare for what's ahead.

So, or what you think might be ahead. So in doing your cash flow projections, what you have is an ability to see once you anticipate your cash on hand to be

This helps you to prepare for the month when you have high cash value cash balances, maybe that becomes a good opportunity for you to invest

Some funds. Maybe that's the time for you to pay some of the debt off or you can think, Okay, we're going to have high cash balances on those months, but I know instead of investing it. I actually need to just save it.

Because they're going to be some lean months ahead. They're going to be some months where we're not hitting. We know that donations are going to be low or we know that our expenses are high over the summer. And so we want to be able to prepare for that.

The other thing of doing cash flow projections is providing that dose of reality. Oftentimes organizations look at the budget and use that as a guide in terms of what how much cash will we have

That's helpful, but how do we temper that, how do we think about, well I act instead of just abiding by 12

Let's actually think about what we know it's going to happen. How do we adjust for that, without going into the system and changing things completely. So getting that healthy dose of reality is also helpful. So before we get started, I want to provide you some links.

So that's this first link that I'm putting into the chat is for a download of the castle production. I want you to have the, I don't want you to start from scratch.

So what we're going to first start with is this cash flow download. If you don't already have a template that you are currently using.

The other thing you want to have is your budget while I don't think you should just divide by 12 to figure out what your cash flow projections are going to be

You have to start somewhere or. So we're going to start with your budget numbers and then you'll just modify them as you realize okay this is what's truly happening. This is what we should actually be expecting

That's what you're going to do. And then you're also have your calendar.

The reason I say your calendar as well. We're looking at 12 months. So you want to have your calendar in front of you so that you can think about

What are the things that are coming up major fundraising. We're in November year and giving is happening. So you want to think about what your and gifts are probably going to come in.

And when will you actually receive it for the

The organizations here in called I'm in Colorado. What we have is Colorado gives day and it's a great time people donate lots of money and the organizations in terms of timing wise actually get the money deposited into their account or check sent about G late December.

January so it's helpful for them to know, okay, even though Colorado gives day is in December, we won't actually get the cash until late in the month or even early then next month.

That helps them know okay cash wise we won't. We can't count on that quite yet. So that's why I want you to have your calendar.

So let's go.

If you don't yet want to put it up. Open it up here, you should be able to see it on the screen is the sample. This is the template that you have

And what you'll see when you have it is that there are three tabs. I start with three because I like I'm an accountant. I like details.

And I think having that additional background makes it a more useful process for you. So I like to start from the back and work my way forward. So I start with the expected outflows so we start there because I want to think about how much money do we actually need to spend

I want to think about what employees are there what contractors are there all the things that are in personnel expenses and I start at personnel, because that's typically the

Things that we can't adjust. We can't necessarily change the number of employees. We have because of the program. See, Ryan, because of the work we do because of how involved. It is some of these things are fix it.

So I like to start there to know like what is our diehard we can't take away. Maybe you though you could take away some professional development.

For everyone. This year I do recommend keeping some sort of team appreciation because 2020 has been a rough year for a lot of people

And I always think it's helpful to tell your staff, how much you appreciate them. So I like to keep that in here. This is my own way of giving some advice.

On a team building the next section, you'll see on the cash flow projection is going to be about operating expenses. So aside from your personnel, the things that you can't do without.

Fall into this section. So rent. If you have a facility that you use that you know that you continue to you. So if, let's say you're a food bank.

You don't leave just because there's a pandemic. You're more likely you have to stay. You have to continue this works, you're continuing to pay rent. This is something you're going to do.

Is now a good time for repairs. So there are parents are there things that you either need to hold off on. Are there things that you need to accelerate now that the buildings are empty or

More NCR there's less wear and tear is now a good time. So I've actually seen that this year, there's been some organizations who

Have much higher repairs and maintenance because they've been able to with empty your buildings and since at least in Colorado construction and maintenance has been essential work.

They've had those workers be able to come in, do as much as possible so that they can maintain the facilities for when things do come back online in a more full and robust way. And as you're going through this, think about the things that you again can delay. If you're not, if you know that cash flow is going to be tight what months. Do we need to be concerned about where are their risks.

Hi. So if you're having trouble getting the download and hit refresh you should get it fairly soon. So there shouldn't be a delay. If not, if you don't get it, it will be included in them.

It will be included in the materials for today. So refresh your inbox, because you should get them today.

Oh, someone said that they thought it in their junk mail. So yeah, if you're still needing them.

Check your junk mail to see if that's where it went to

And we're going. So then as you go through that and you're thinking about

It's their accounting expenses. Is this something that you don't need quite yet. Is there an audit that the timeline. You can adjust

Office supplies. Some organizations at the beginning of the pandemic. They spent a lot on office supplies to get their teams ready for working at home and then that of course taper off because people were fully stocked. Maybe they didn't need some of the things and but now

If your office has reopened. You might have seen that number jump back up. So think about those types of things that are coming in and what you need to either hold off on or push back on hold back on or run, you know, steam ahead. That's what I'm going for guys. The other thing that I like to think about is advertising and marketing, especially now as things open back up.

Think about if there is going to be a need for you to do increase advertising to remind people that you're

You're still opening, you're still delivering services, letting them know that what precautions. You're taking so that they can feel comfortable coming back to get whatever services, it is that you are providing

And next, the thing that you exist to do you exist to have services. So here. Um, so, so C stands for save our circus, as most I mentioned

That I do some or maybe that was just our pre conversation. I do some flying trapeze. And so, I love, I think of things in terms of staggered. So when I like to give explanations. I'm going to be circus related. And so maybe costumes is a relevant

Program expense for your organization maybe venue rental and those types of things are going to be valid for your organization. So think about the programs that you know you have a need

And what is the timeline for those expenses and that's conversation, it does not happen in a vacuum.

The finance person is not the only person who needs to be looking at when do those bills happen. I like to think of the cash flow conversation is one that you're having with your team.

So that she can sell XM be fully transparent, especially in this time that there's a lot happening right now.

So if you want to go ahead and say, in full transparency, this is what we're facing. And so we need to know from you, what are the things that we have to go ahead and continue to buy and purchase and what things are we going to need

To help. What can we hold off on. So this is sort of the buying that you're going to need to talk to them so that you can get

There's one organization. We know of that had a very honest conversation with their staff to say this is where we stand with

Our funds and we don't want to leave anyone off. We have about three months of cash on hand. And at the end of that.

We, you know, if things don't change, we might need to reassess our staffing having those conversations lets your staff, figure out like

What changes do they need to make. Can they hold off until whenever two because you're hoping to keep everyone staffed. You know, this is pre

Just before PPP was being announced people weren't sure. Like, who should apply. What's going to happen. And that was one of the mentors, they took to decide.

So after you've had those conversations with the team members to say, okay, what can we hold off on what can't we hold off on I think going over to the inflows tab. This is a conversation that you're going to have more with the development team.

To ask them, What should we be expecting in terms of donations what grants are we have we submitted for and what is the estimated timeline.

Earlier in the parent that make I definitely encourage people that if you got approval for a grant and it was restricted reach back out to that funder, and see

Could those funds, the unrestricted because there's so much uncertainty. Now, so having those conversations with anyone who's giving you restricted funding.

I am a big proponent of always asking for restricted funding. And I think that's one of the things that more

Funders might be open to going into the future is you being a friend thing. Hey, could we use this for operating purposes. We want to make sure we're keeping

All the programs. So rather than restricted to a specific program, could we use it as we see fit. Because you trust us you trust the work that we're doing. And we understand how to spend the funds appropriately.

One of the things that came up for a lot of organizations was a sponsorships. So having those conversations with funders to find out how for sponsors to see, hey, should that timing be a little bit different. What needs to happen so that you can

If events have changed, so they can continue to give you the sponsorship funds without you needing to hold them for the next year's events, but then just saying you know what

But I'll put our logo on the website. We'll just keep it moving.

Being sure that you're able to do that program income. What has changed for the organization what programs.

Maybe an urge, we're going to drop off as you go into the year what programs are you going to build up so that you know that

Depending on your organization any sort of in interest income or investments, maybe you want to include that.

For save our circus. This is very important for us for you, maybe not so much but really think about what's going to be a deciding factor.

So those are the things. Those are the first two tabs that I want to make sure you go through because they help you prepare for this last one.

So this last half is the tab that I recommend this is what will go to maybe your finance committee. This is what the board might see so that they can understand where the organization stands from a financial perspective.

So in this tab right here it is collecting the data. It's saying, okay, you said that this was the outflow. But you said this was the inflow.

How does that change things so that feels fairly simple. Then you have some qualifying factors. So yes people gave us money. People said,

We got a letter of commitment we got a grant notification. All of those are great, but did they send you the actual cash.

So you want to be sure that that is the thing that's happening if they're if they did not give you the cash, you want to take that out.

You want to say that was nice. It was a good idea, but we don't actually have those funds in the in hand, so we don't count that.

Maybe from the previous month you had someone who made a payment on their pledge. Let's count that that's new cash. We didn't have that cash. Last month we have this month. We're going to count that.

Then we think about the liabilities. So on the balance sheet. Who is it that you owe money to who is it that you need to notify that this thing is happening that this is a

That we have some cash we still all these people. This isn't a new expense. We already owed them before this month showed up.

So that's how this spreadsheet is formulated and you'll see here you have your beginning cash. So where did you start the year

Start a month with and then what are you going to end the month with now that you take into account that next activity for each of your organization's you're going to need to decide what is the trigger. What is the thresholds, where if you drop below?

You're going to be concerned with how much cash on hand, you have

I'll send me my recommendation is typically okay you need to know at least be aware at least three months in advance. Oh, we're going to be a negative let's

Let's sound the alarm here in may not wait until August that things are precarious that we're nervous that something needs to change.

That's when you can have that conversation with your development team to say, hey, can we talk about the timeline for receiving some of our donations

Is there a donor that we can reach out to because their annual gift typically comes, you know, in December, could we talk to them and see if they're willing to move it up. Are they able to move it up. They give us half of it. Those are the type of conversations you want to have

Please do not let when you notice you're going to be low on cash be the first time you reach out to these funders.

It's definitely an ongoing conversation. These funders are giving you money one because they trust the work that you do and to they expect you to maintain a

Reasonable relationship so reasonable and being that you're telling them what's happening.

They're not just waiting to hear well as need we need cash but you're engaged in them, you are checking in to see how are they doing you're calling just because

So those are the conversations that need to happen before you can call them and say, Hey, would you actually send me half of that money now because I really need it.

The other conversations you need to be happy. Having is with the donors.

I have worked a lot of jobs and one of them being Director of Finance at an organization and we would get bills from one vendor every week.

And I understand from their perspective. They wanted to make sure they were invoicing in a timely manner, but for us.

It was overkill like yes I'm paying bills, weekly, but I don't want to have to send out a bill to you for $500 each week.

It was not a good use of my time in my opinion. So instead, what I did was I reached out to the vendor and I let them know. Hi, we're receiving your invoices, I'd actually like to put all of your invoices together and pay them once a month.

How was that helpful for us, it allowed us to, you know, essentially a line of credit with that vendor, but they also knew that we weren't avoiding making payments, they can you once we expect their payments. They had their own idea of, okay, now they could plan their own cash flow.

So using making sure you're having those conversations in a more timely manner. So not waiting until

Oh, crap. We can't figure out how to pay people but making sure that you come up with your own system to say, okay, whether caches high or low. This is going to be what we're trying to work for that way.

When things occur, you could you could actually reach out to those vendors and say, hey, actually, can we talk about the payment terms.

Because they know they can trust you to make their your payments on time.

They're more willing to have those types of conversations, if you don't pay them on time. They're like, I can't trust. I can't give you any more leeway because I haven't had a good experience.

So this is that is the spreadsheet that is your template to go with. And if you I will, I believe, you're right in the end if case anyone is still having trouble accessing but yeah

So we started with the cash flow. We started with a template.

We worked with, you know, those materials. And now I want to just talk about what you have control of you have control of that money that's going out, you know, the timing of those bills, again, you've had those relationships. So you might be able to work with the vendor and say, hey,

I would really like to talk about these payment terms of figuring this out.

You might also have some control over the money owed to you. So there might be some organizations like yourself some funders, you have really good relationships with already that you can reach out to, to say, could you send that payment, a little earlier.

You might even be able to control security money so there might be a line of credit already at your bank that you can go ahead and

Try to secure their. This is things that you already know you have access to. You just need to go ahead and move forward with like accessing it. Um, but where you might need help is following up on money owed to you. So this might be a place where you reach out to your

Board and say we need you to be on board with us, reaching out to these donors, if your organization has a give or get requirement.

This is the place where you remind them and I kind gentle way that you appreciate their gifts and if they have not made their gift already now is a great time.

To make that gift, so that you can keep things going. You don't want to wait till your end. You don't mind putting them on a schedule, whatever works for them.

But you want to make sure people know hey I would like you to send us this money because you said that you would another place you might need some help, though, is I dad identifying the money.

One of the reasons I do believe and having these conversations with the team. So when we talked about having talking about outflows with the team members and

Finding out what are people spending money, what's going to happen. I recommend. Also, I also talking to them about hey what funds. Do you think we could apply for that we haven't yet considered

For those of us who've been in the nonprofit space a while, we know that take we we move from organization to organization. We have a wide breadth of knowledge. We have a lot of contacts.

And we might be able to remember a funding source that the organization is not yet applying for. I've seen it happen. I remember we were talking about

And this will not in any formal meeting. We were just colleagues sitting together, talking about like what's happening at the organization what funding were applying for, and someone who was on the program team.

Mentioned that they used to get a grant at a different organization. And we realized it was a grant that we had never heard of.

Hence we had never applied and but by just talking out loud about what's happening, what we're planning on doing

Other team members were able to bring their expertise their experience and say, hey, have you considered reaching out there.

Reaching out to this organization, they've given me money for this work that I've done. I'm doing I've done a different organization, maybe they would consider this one.

So that is where you definitely want to make sure that you're having those conversations to make sure you identify some new money.

So before we get into the Q&A sessions.

We want to make sure you understand what that castle statement is telling you remember the cash flow statement is just telling you what has happened in the past it's talking about, okay, this is a thing that did happen.

It. Two years ago, a year ago last quarter and last month. This is how you spend the money the castle projection is more about

How will you spend the money in the future. So I actually have a link for this walkthrough. So, of course,

You may, you may get the recording of course we did. We did the walkthrough at the beginning, but that might be too long. So here is a video.

That will walk you through reviewing that cash flow projection in case you just need a quick watch. I bet.

It's two minutes, so should be short enough for you all to just get to what you need. And of course, if you have questions as you do that, reach out

The other thing I hope that you have is a better understanding of where board members and supporters can need to be included. You need to be include them in those conversations about high

We have cash that has not yet come in. Who do we need to talk to who is the appropriate person to have this conversation with

You want to make sure your supporters are rallying around. Yeah. So we definitely want to give you this money. We'd love to give it to you unrestricted because we value the work that you're doing.

Maybe the people that you need to have that conversation with or the staff members to say, hey, this is definitely

An expense that we won't we were going to need it to come in on this time, we can't delay this expense, because there are other things that rely on having this material. This information.

We can't delay the payments being nice to people. So those are the things that we want to make sure you have as your key takeaways. Any questions.

Melissa Waters: We do have some questions. So first of all, for our organization budgets are planned on an accrual basis.

What's the easiest way to convert to cash basis without doing too much Excel gymnastics. For example, we have events where expenses are prepaid, but our budget shows and all in June and the month of the actual event. Thank you.

Chyla Graham: So what I would think of is if you

If you're doing it on an accrual basis. That means you

Are recording it as they incur so when the people send you the bill.

If depending on your system. It might allow you to run at a cached version of the report so that might be somewhere in your settings that you can check that. The other thing to look at is

Running a report of your

Payments. So if you did a if you ran a report of payments out that could be possible, depending on how you pay bills. So if you use a system like those are calm or view posts. You could do a download and then be able to sort by dates that could help you see some of the outflows

That can be hard.

So let me know if that is that is not address your questions, please send us another one.

Melissa Waters: Alright, next question. Is this similar to budget versus actual reports, but a more streamlined for cash flow.

Chyla Graham: Yes, it is very similar to that.

It is very similar to budget versus actual. However, we're not. We're only thinking about what's coming up, we're not thinking about what has happened when I think of the budget versus actual i would i think of it more as

Forecast more about past look back, we're just looking at, like, where are we right now as opposed to, where will we be

Melissa Waters: All right. Thank you. Next question.

How many months. Should I do the cash flow projection for

Chyla Graham: I recommend doing at least three months. So the template I provided does because I like to

I'm a planner by nature. So for me, having at least a year outlook is very helpful.

But for most organizations. I say at least three months in advance because you don't want to get to the end of the quarter and say, Oh, we have no idea what next month might look like. Again, there are no guarantees, but you at least want to have an idea of what should this be, what should be looked like. So that's my recommendation is three months at least

Excellent. And one other questions so far. And just a reminder, if you do have questions, you can submit them on the Q AMP, a portion of your control panel. But the next question is, how has cash flow, different from a forecast.

So like cash flows from a forecast because that forecast isn't closer to what was asked about that budget versus actual a forecast is thinking of

Hey what typically it's like looking at the income statement and thinking how close we get to our budget numbers in terms of revenue and expenses.

It's not necessarily taking into account how is that going to affect our cash at the end of the month. So the forecast to say okay we anticipate this. This is how that will bring us closer to the actual

How close. Will we be to our actual budget and it's only looking at the income and expense side of it not taking into consideration of what effect does that have on our cash.

Melissa Waters: Wonderful, thank you. Those are the questions that we have for right now. So, Kyla, I'm going to let you add any last minute remarks and then we will wrap it up but

We had one come in right as I was talking, I've come across cash flow projection models, whereby there they are plan versus actual columns, instead of just projection. Do you recommend this approach.

So can you do that part of plan versus what

Plan versus actual columns, instead of just projection

Chyla Graham: That is helpful. I would say

That our approach is helpful if you know that

Your board or you from a management standpoint needs to see that comparison. I think that would help you refine that process. So yes, I would say, yes, go for it. Um, we just didn't. I didn't think about that when I set this up so yeah

Melissa Waters: He said, in other words, comparing your projections with actual thing.

Chyla Graham: Yeah, no, I think that would be very helpful from a management perspective, especially if that means you're going to end up having to go back to the board and say, hey,

We totally underestimated this and we really need to make some revisions. I think that would be helpful for them to see where are you, where are you planned and where you actually ended up

Melissa Waters: Awesome. Thank you.

Say I will give people just one more opportunity if they have questions, but

While we're waiting, just a reminder we are recording this, we will send you all of the links that kind of provided today, along with a copy of the slides and the recording and a follow up email and you also have her contact information if you need it.

And we do have another question that came in. If this helpful, I do a three year projection monthly I project forward but keep a previous months, years in the spreadsheet and change them to actual to use for good info.

Chyla Graham: I feel like that is that helps you have some more contacts. I think it's, I always recommend in terms of for a budgeting perspective and planning for the future, being able to look back

I've never, I've never thought of it like, how much would you save that cash flow for how long would you say that castle. I've never thought of saving it for three years. But I think that's a very good

Plan for those of you who are still working on your 2021 budgets. One of the things I would recommend

Is if you're if you're still like face with some uncertainty about how much revenue might be bring in one of the great tips that I've heard. And so I'm sharing with you all. It is checking to see if your

First, it might depend on how old your organization is I'm looking back to see what were some of your lowest numbers. If you guys existed back in 2008

Maybe you want to go back to 2008 and see what happened for you end up 2008 beginning of 2009 to see how did, um, at least if you're in the US, HOW DID THE HOUSING crash. How did all of that affect your giving

And using that to sort of start your baselines. So that is just one tip that if you're like, where do we start being conservative. Doesn't hurt.

In this in this case of like how do you treat your cash flow if you start there. And then you can adjust up from a management perspective feels a little bit more comfortable than saying, of course, we're going to get $100,000 in one month if that's not typical for your organization, not putting that in so

Again, here's my contact information, my email. See, Graham at synergy accounting advisory if you or anyone who still having trouble accessing the download

If you send me over an email, I will try to troubleshoot it for you.

Or just sent you the email. And then if you needed to talk, check out my calendar and I'm happy to have a conversation

And just figure out, like what it is that you need. If we need to walk through the castle projection before you present it to the board. And those are free. So if that is a concern about like why would that be, it's fine. I would love to talk

Melissa Waters: And thank you so much for your time today in the presentation, I'm getting a lot of feedback in the chat saying how great it was. And thank you for the document. So we truly appreciate it.

And I want to thank everyone else for joining us today. If you're interested in more topics like this or webinars, please go to JM T consulting com and visit our webinars page, and I hope that everyone has a wonderful day. Thank you.

Chyla Graham: Have a good one. Bye bye.