In order to help with the smooth running of the County it is important to create a budget. The budget for each financial year should be prepared at the end of the third or the beginning of the fourth quarter of the preceding financial year.
You should consider the following.
- Previous budgets compared with actual expenditure. This will allow you to create a realistic prediction for the coming year. If possible, look at the expenditure for a number of years.
- Previous years’ income. Sources of income can include subscriptions, investments, trading and fundraising.
- Previous years’ expenditure patterns and planned activities for the budget financial year.
- Current membership numbers. This can help predict the amount of income you can expect from subscriptions.
Financial forecasting is vital in ensuring that you review the actual performance against your budget and re-forecast the financial performance of the County to the end of the budget year. This discipline ensures that, as far as possible, you will not be taken by surprise by unexpected events and that the County has the funds to be able to carry out your vision. Forecasts should ideally be done after the first, second and third quarters of each financial year.
Comparing actual performance against budgets and re-forecasting performance to the end of each financial year should be done with the County Treasurer and in consultation, for relevant areas, with Advisers, Coordinators and event organising committees etc.
When creating a budget for your County you should not forget to consider the use of any existing reserves, or indeed the accumulation of reserves in the County. See the Charity Commission website for more information on reserves.
Reserves are part of a risk management strategy and having reserves can allow for unforeseen circumstances to be managed smoothly. If there are no available financial reserves within a County it will substantially raise the level of financial risk in the county.
The County should have a reserves policy and it must be included in the Trustees’ Annual Report to the Charity Commission (if such a report is a requirement for your County).