Managing budgets involves two processes: preparation and control. You will have invested time on preparing your budget but its main value will be wasted unless you regularly refer to your budget. Events can occur during the year that mean you need to revise budgets and plans. If you don’t revise your budgets, you may miss a potential problem or an opportunity to do more.

Your management committee should refer to the budget every month or so, together with project managers, so that any problems with overspending or under spending can be corrected early on. Budgets can also be revised if, for example, you lose a donation or you receive an extra sum of money. Activity can be scaled down or increased, accordingly.

A cashflow budget will help you do this as they provide an immediate signal of financial status and are vital, as they ensure your organisation is aware of when there will be shortages and surpluses during the year. A cashflow is prepared on a monthly or quarterly basis, showing the income and expenditure during that period and the balance going forward to the next month / quarter. A cashflow can also help you plan for a known or anticipated cash flow shortage or surplus.

Reviewing your budgets and cashflow on a regular basis helps you answer three questions:

• how are we doing?
• how much of the budget is left?
• what will it look like at the end of the year?

You should start work on next year’s budget six to nine months into the financial year, depending on when you will need these figures for funders and how long you think it will take you. You should by then have a clear idea of how your expenditure and the budget match up, and the adjustments you need to make.

A budget is just one part of financial management and planning to ensure your organisation is sustainable. Financial management is about making sure your group has the right money at the right time, and that it is used in the most effective way.

Your voluntary or community organisation will also need: book keeping systems for money coming in and out; internal controls to prevent fraud or misappropriation of funds; and auditing or independent examination of your accounts at the year-end.