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Cash flows

It is extremely important to ensure that the event’s cash flows (both incoming and outgoing) are carefully managed so that all obligations can be met on time.

 

Estimating cash flows

Estimating cash flows is important as it allows event organisers to manage their cash (i.e. they can plan to have enough cash on hand when a payment is due, and they can utilise any cash surpluses).

Event organisers must carefully forecast the month that each cash flow (both incoming and outgoing) is expected to occur. Initially this will be an estimate based upon the budget and project plan, however this should be refined as contracts are signed and the dates for payments of goods and services become known.

 

Examples

 

Banking / investments

In order to manage the event’s cash assets, event organisers should consider using a number of different types of bank account. Events should utilise transaction and savings (both on-call and investment) accounts.

Often there will be a lapse in time between receipt of funds and the requirement to pay for related expenditure, which may create a temporary “cash surplus” – event organisers should invest this money to generate interest income.

Generally longer term investments will attract higher rates of interest than an on-call savings account. However it can be expensive if cash flow forecasting is not accurate and the term investment needs to be broken in order to meet cash requirements. As such on-call savings may be more suitable.

 

Revenue / funding

Sourcing funding is vital for any event and revenue is likely to come from a variety of sources and in a variety of forms. The downfall of many events is over-optimistic forecasting of ticket sales, trust funding, sponsorship and value-in-kind revenue in the early budget planning phase. Be conservative in your budget estimations, take a ‘worst case scenario’ approach.

 

Revenue and funding sources

Sources of event funding include:

  • Ticketing
  • Participation/entry/registration fees
  • Local government
  • Central government
  • Subsidies from the relevant International Governing Body
  • Gaming and licensing trusts
  • Commercial
  • Sponsorship/partnership
  • Supplier value-in-kind deals
  • Broadcasting rights
  • Hospitality (both corporate and public)
  • Merchandise
  • Concessions.

 

Value-in-kind (VIK)

Cash funding and sponsorship is becoming harder to come by in the current financial climate and events are often competing for the same pool of money. As such many events negotiate with suppliers to provide VIK goods or services in return for certain rights in relation to the event (usually some kind of acknowledgement and “official supplier” status).

The importance of VIK as a way to relieve budget cash pressures cannot be overestimated and even small VIK deals should be pursued.

When creating an event budget it is very important to ensure that VIK is included as both a revenue item and an expense item. Often event organisers include VIK as a revenue item only, which in turn creates a budget shortfall.

 

Last updated 21 April 2016