These are unprecedented times that most of us we are living in right now. With the COVID-19 pandemic, financial hardship is undoubtedly a concern for many associations. I have put together a few tips to make sure your association are doing all it can do to manage finances in this time of crisis.
Have a Budget and Revise if Necessary
Many associations hold events on a small or large scale that account for a large portion of their annual revenue and, in most cases, these events/conferences have been cancelled for 2020. This means a loss of a large percentage of the association’s revenue for the year. Start assessing the result of these cancellations by doing a deep review of the current year’s budget and ask the following questions:
- What effects have the cancellations had on our revenue for the current year? Next year?
- Are their new ways we can derive revenue? Online social events? Webinars?
Finding innovative ways to engage members is a great way to potential recoup some lost revenue. See my colleague’s article on some successes we have seen in our associations.
- Can we get a refund on any deposits paid to venues or other services?
Many venues and service providers are offering forgiveness when it comes to deposits or other prepaid amounts, but it may not be that simple. Make sure are reading the fine print on contracts and understand what you are entitled to. Though a refund would be preferable, it may not always be possible. In that case, the provider may be willing to delay payment terms or extend deposits to apply to a future event.
More information on cancellations and contacts, read another colleague’s previous article.
More on developing effective budgets can be found in a previous article of mine.
Be Aware of Cash Flow and New Filing Deadlines
Assess how long your cash flow can withstand the current situation by taking a full account of all revenue coming in and expenses going out at the current time.
Also, do some research to find out if you can pay invoices later than usual or pay more attention to invoice deadlines to make sure you are holding on to cash for as long as possible. Many organizations have changed their payment terms and government agencies have changed their filing/payment deadlines in most cases.
Use Discretionary Spending
This is certainly a circumstance, if any, to get back to basics in any association; expenses should be looked at in depth to determine if they are necessary, at least for a few months. Take a look at expenses as either fixed (meaning they are reoccurring and contracted) or variable (expenses that can change over time).
You should continue to reassess as the situation continues to develop over time.
Is the time to call upon reserves previously built up? See my previous article on understanding financial statements to help assess the financial situation of your own association’s financial situation.
Also, consider your investing strategies. The markets have been volatile in response to COVID-19 and therefore this may not be an ideal time to invest. However, if you find that you have sufficient cash flow for operations, it would be wise to continue to do so. By investing over time, you are smoothing out your risk and taking the guessing game out of timing the market.
Utilize Any Financial Support Available
As mentioned previously, many government agencies are offering some flexibilities on filing deadlines and payment terms. However, it may be beneficial to file as soon as possible since your association may be due a refund that could assist with cash flow at this time.
In addition, there are several government programs that have been launched assist many financially. To find out if your association qualifies, click here.
If the right kind of support is not available, it may be helpful to reach out to the right government parties expressing your association’s specific situation.
What Are Our New Priorities?
Each association must decide for themselves what is most important to them during this time. Reassessing the association’s priorities becomes vital as they are likely being shifted whether we like it or not.
Communication is key and we have multiple methods available to us to communicate effectively even when we are not together physically.
Finally, focus on things that you can control as there is so much that is beyond our control at times. You will keep your association moving forward by knowing exactly what you can influence. This ensures the best use of everyone’s time and energy and most importantly the best use of financial resources for the future!