By Mindy Abramowitz, CPA, CGA
Of the many tasks that the staff (or volunteers) of small or medium-sized magazines must wrangle, financial management is one of the least glamourous, yet most indispensable to the success of the enterprise. Lapses in oversight and management can result in cash shortages and unnecessary panic at tax time or when grant applications are due. Fortunately, a diverse range of affordable software applications are available to assist with some of the repetitive and time-consuming aspects of bookkeeping and financial management. Many of the bookkeeping applications on the market offer an option to download bank and credit card transactions and integrate with other third-party applications you might use to track sales, staff time and expenses. These standard features automate a lot of the data entry required to complete your accounting. Spending less time recording data means you have more time to make informed decisions and plans for your organization. Here are a few other considerations to help introduce financial planning and management efficiencies.
Integrate Bookkeeping and Budgeting Functions
A budgeting tool is a common feature of most commercial bookkeeping applications and most of them allow you to budget on a monthly, quarterly or annual basis to suit whatever reporting frequency works best for your organization. The obvious advantage to building your budget directly in your bookkeeping software is that it eliminates most of the manual effort involved in preparing budget reports. Assuming your books are up-to-date, producing a report should be as simple as selecting a budget versus actual report from the application’s menu choices. From there, you can customize the report to set appropriate date ranges, the basis for comparison, and other useful criteria. Or, export the report to Excel or any other compatible spreadsheet to carry out more complex analysis.
Create Discrete Budgets
Depending on the size of your organization and the nature of activities it carries out, you might find it helpful to create budgets with various benchmarks and measurements in mind. For example, for a print magazine, a production budget that sets out the anticipated revenues and expenses for the magazine on an issue-by-issue basis might prove most meaningful. An online publication might benefit from budgeting for content acquisition and publication separately from its other revenue-generating activities.
These discrete budgets should tie to the organization’s annual budget. Think of them as nesting budgets. The figures detailed by the editorial budget should match the corresponding section of the overall financial planning document for the magazine as a whole.
The names for this type of budgeting differ from one bookkeeping application to another, but make sure your software has the ability to subdivide your budget by class, customer, project or fund. Please bear in mind this budgeting feature is usually restricted to paid applications and might entail an upgrade to a more robust plan or software edition. However, you’ll probably discover the value of the time saved and improved functionality will exceed the incremental software cost.
Define Clear Responsibilities
Who creates the budgets in your organization? Who makes financial decisions? Who records financial transactions? Who reviews reports and monitors financial performance? These roles likely overlap in organizations with a small number of staff and volunteers to do everything that needs doing, but it is still important to be aware of these tasks and whose responsibility they are.
The budget should reflect the magazine’s strategic plan for a fiscal period. For it to do its job, it is crucial that you develop and communicate a plan for its execution. People should be made aware of what budgets or parts of budgets they control and what authority they have to carry out their duties within the budget framework. For the budget to work as a roadmap, people have to follow it and evaluate whether it is doing its job.
Oversight
One of the chief complaints about the financial planning and budgeting process is that budgets become obsolete too soon to be useful. Circumstances differ from what they were expected to be and the budget loses its relevance. However, it might be helpful to think of the budget in more flexible terms. Plans change, so do budgets.
Once you have established your systems for budgeting and reporting, use the information you now have at your disposal. Run budget vs actual reports regularly so that you know what is going on in your organization’s finances in time to address any areas that are not meeting the targets set for them. After you have identified problems and successes, consider how best to correct course. Does the budget need updates to better reflect the evolving realities in your business and publishing environment? Should you delay, accelerate or otherwise revise your plans to avoid running out of cash at critical times or to take advantage of positive trends? Is the magazine heading where it should and, if it is not, why not? What has to happen to align the present reality with the desired outcomes?
An effective budget and management practice should be responsive and flexible. It should help focus and streamline the financial activities of your organization by providing the means to assess whether they are accomplishing their goals and by revealing strengths and weaknesses in the current plan of action. For many organizations it is a matter of shifting the emphasis from data collection to strategy and analysis. Or from an operational perspective, it might make sense to break down plans or budgets into manageable components. Explore the tools that will permit you to dedicate less time and attention to the mechanics of tracking and reporting financial information. Automate data entry where possible to increase the availability and timeliness of your data. Delineate clear roles and protocols for evaluating the plan on an ongoing basis. Refine and recalibrate the organization’s goals on the fly instead of reviewing them from an historical vantage point.
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