In the world of association management, few things are as important as the financial health of an organization. In my almost 40 years as a certified public accountant, I have seen many organizations flourish – and fall apart – if daily financials and overall investment strategies are not properly managed. At SEVEN12 Management, we oversee literally hundreds of accounting codes, payments and receivables, investment portfolios, you name it. That’s why keeping on top of things and reporting properly to the board of directors is so important.
Financial Oversight is the Number One Priority of Every Board of Directors
Transparency is the Name of the Game
Numbers don’t lie, and smart board members can figure out every time association staff is trying to minimize where revenue lags or expenses exceed projections. Make sure association staff is honest with the board and provides the full financial picture. If staff has exceeded food and beverage costs for a Convention, they should own up to it so the board can see the full profitability of the event.
Not only is this important for program evaluation, but come budget time for next year, you will have a more accurate picture of where you truly need to be investing, instead of guessing. Proper coding is very important. If dollars are being spent on entertainment, make sure it is being coded to that expense. We provide all our clients full account details, so a curious board member can find what they need, anytime.
Not Every Year is Going to be the Best. Year. Ever.
I know every board president wants their year to be the best, but sometimes, it simply isn’t. There could be industry complications that prohibit through-the-roof membership numbers; there could be opportunities to invest in new programs and technology; there might be turnover with association staff that limits productivity. Regardless, every board member should be looking at the full picture to determine success. Associations are not for-profit businesses, and while they should be run with sustainability and financial success in mind, the primary goal should not be to beat the bottom line and add more to reserves. That being said, make sure you are investing the funds you have to generate returns, while still maintaining a healthy cash flow.
Get a Clean Audit
Every time. I cannot stress enough how important audits, or financial reviews by outside third parties, are for the overall financial success of an association. As board members, you are financially responsible for the management of association funds. The buck does truly stop with you. Make sure outside influences are checking every financial departments’ work and accountability because that is your ultimate responsibility. At SEVEN12 Management, our clients go through an annual audit or financial review process each year and the results are immediately shared with the treasurer and then reported to the full board of directors. We are very proud that our clients have never missed receiving a clean audit review and that is something I strive to maintain every year.
There Are No Stupid Questions
When brand new to a board, I see many directors afraid to ask questions out of fear of “sounding stupid” or asking something obvious. Please ask. Half the time others want to know too and are waiting for someone to open the dialogue. It’s our job as financial services staff to provide you the full picture, and normally there is a simple answer that helps paint the full picture. With our clients, financial management and strategy is a big part of our orientation process, so that when new board members join, they have the training they need to make the right management decisions. We are all partners in this together and we are available to answer whatever questions help you do your job better.
Interested in learning more about how SEVEN12 can help? Contact us at www.seven12management.com.