If your organisation receives revenue from different sources can you accurately track how the funds have been used and importantly, how much is remaining or unspent?  As highlighted in the previous post, this can be critical when you receive revenue from different sources.

Depending on the source of the funds it may be linked to a funding agreement or contract that specifies how the funds must be used.  As such, can you accurately track these funds and importantly the amounts that are unspent?  The following example highlights the critical nature and the importance of accurately tracking these amounts.

For example, recently you may have received a $200,000 grant as a result of a successful grant application that has increased your bank account to a very healthy balance of $300,000.  If after 6 months or 50% of the project you have spent $180,000 yet only 25% of the project has been completed you may be facing a liquidity or even a solvency issue.  While this may be a simple example it does highlight the importance of accurately tracking and recording how the funds have been used on a regular basis throughout the life of the project.

The best way to address this and avoid it from occurring is to make sure you complete regular reconciliations that allows you to match how much of the funds have been spent, that is then linked to the completion of the project and that the remaining or unspent funds can be monitored to ensure the project can be completed without the need to use other operating funds.  This allows you to manage your cash flow that results in the successful completion of the project and meeting the obligations of the funding agreement.