PDPM Budgeting Presentation

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    01-Dec-2014
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by Brandon Fischer and Amy Hillock

Transcript of PDPM Budgeting Presentation

  • 1. BUDGETING BASICSPDPM | A. HILLOCK & B. FISCHER

2. BASIC PRINCIPLES A budget should Directly reflect organizations mission & priorities Chart a direction for allocating and maximizing use of resources Tend to history of finances and future projections Futurity through rolling budgets Be tailored according to the scope & size of program/project Be compared to actual performance of projects Allows staff to isolate gaps/misdirected funds 3. EFFECTIVE BUDGETINGAn effective budget is Realistic Consistent Flexible Measurable Should plan for Short vs. Long Term Investments 4. PREPARING A BUDGET Determine programs & activities for thebudget period Budget expenses and revenues Based on historical data, forecasts &economic climate Develop a draft budget Include previous yr budget, current yr andcash flow Review/modify your draft Have board review and approve Revise if necessary Monitor and record budget activity 5. CASH FLOW VS. PROGRAM BUDGET Program Budget Gives detailed costs of every activity or input that goes into program objectives, noting dates of fund disbursement (BUDGETING)Cash Flow for monitoring the variance betweenprojected and actual income /expenses on a recurring basis (usuallymonthly)(BOOK KEEPING) 6. CASH FLOW PLANNING Difficulties Volatility, Unpredictability (esp. with Disaster Relief) How to Account for cyclical and seasonal fluctuations in cashinflow / outflow Adjustments made when cash inflow less than outflow May call for postponing expenditures/accelerating client billings Plan for lags between invoicing/billing for services andactual receipt of cash Chart expenditures according to payment deadline Factor in debt repayments 7. WHERE TO STARTWITH A CASH FLOW Zero-BasedIncremental Starts from 0, assuming Assumption is programsno program isand depts. are pre-necessary and no approvedmoney spent Only increases and decreases in resources Orderly evaluation of allocatedall revenues and Focus on changes sinceexpenses previous FY numbers Aim is for quantitative Less focus on rigidmeasurabilitycalculations 8. ADDITIONAL BUDGET REPORTS Annual, quarterly or monthly projects of incomeand expenses For entire organization, its divisions and depts. Revenue projections by type Donations, gifts, grants, etc. Individual project and dept. projections Service delivery costs ie. cost per patient/beneficiary Cash flow short and long term Historic and project fund-raising revenue & expense Staffing models 9. NON-PROFITS Flexibility! Contingency plans Lead-time for grant requests multi-year programs, etc. Unpredictable cash flows & contributionrevenue Can be dealt with by postponing expenditures,accelerating constituent billings Money allocated appropriately* Under common law, non-profits have a duty todonors/grantors to use gifts for the purpose thefunds were given 10. LEAN, ADAPTABLE & ETHICAL Transparency & sustainability Priorities in balance reflect priorities of theorganization Bear in mind the needs of the beneficiaries andstakeholders Reporting mechanisms built in to alert management ofcause for change Budget inherently a push mechanism, but shouldalso be pulled by beneficiaries/stakeholders Should not only set ceiling prices, but also floorprices 11. OTHER CONSIDERATIONS As much money as possible in federally insured,interest bearing accounts Once cash reserves exceed operating costs,consider longer-term investments Staff increases, technological investments Budget spreadsheets often, requested by third-party stakeholders / [potential] donors Tracking of expenditures enhances ability to reportaccomplishments