Estimating, sourcing and managing cash flows for events

This page is about how to ensure an 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 lets you manage your cash — you can plan to have enough cash on hand when a payment is due, and you can take advantage of any cash surpluses.

You 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 you know the dates for payments of goods and services.

Example

Cash flow — 2011 IPC Athletics World Championship [XLSX, 43 KB]

Revenue and funding

Sourcing funding is vital for any event, and revenue is likely to come from a variety of sources and in many forms. The downfall for 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.

Sources of event revenue and funding can 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 goods and services

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 event organisers negotiate with suppliers to provide value-in-kind (VIK) goods or services in return for certain rights for the event (usually some kind of acknowledgement and 'official supplier' status).

VIK is a really effective way to relieve budget cash pressures and we recommend you pursue even small VIK deals.

When creating an event budget make sure you include VIK as both a revenue item and an expense item otherwise this will result in a budget shortfall.

Bank accounts and investments

To manage the event’s cash assets, consider using a number of different accounts ie, a transaction account and a savings (both on-call and investment) account.

Often there will be a delay between funds being received and the need to pay for related expenditure. This may create a temporary 'cash surplus' that you can invest 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 you need to break the term investment. In this case, on-call savings may be more suitable.