Event forecasting, reporting and management systems
Event forecasting is used to estimate when the income or expense for each budgeted activity will be incurred or received. It enables actual spend to be tracked against budget.
You should update the budget and forecast on a periodic basis (usually by month or by quarter), as many factors can impact upon the event’s financial activities. Income and expenses will become more certain as both planning and procurement of goods and services progresses.
There are 3 main reasons you might need to reforecast:
- Timing changes – where an expected income or expense is now expected to occur in a different period to when originally forecast. This may ultimately have little or no effect on the overall event budget, but may impact cash flows. It also may point to an issue with planning — that is, if a cost is going to be incurred later than expected it may mean the event’s project plan has also slipped.
- Change in value of an activity – where the value of an activity is expected to change — either increase or decrease.
- A new activity – that was not included in the original budget, but is now expected to occur.
Any change in value or timing of an activity needs to be identified and incorporated into your reforecast as soon as you know about it.
Also, you should include any changes that have a significant impact on the overall budget in the risk register.
Reporting and measurement
Given how crucial finances are, you need to ensure appropriate financial reporting is provided to the management team and board. Ideally you would submit a financial board paper ahead of each board meeting, outlining all areas of financial operations.
Important financial reporting areas include:
- budget tracker (original budget v updated budget)
- actual v forecast / reforecast
- cash flows
The main purpose of reporting is to highlight potential financial impacts on the budget. Highlighting these impacts before they occur gives the management team and board the chance to make an informed decision about the best way to deal with them.
Reporting on budget variances
You should measure the actual income and expenses for each budgeted activity against the income and expenses in your forecast (or reforecast) on a periodic (monthly or quarterly) basis. Any variances should be analysed and explained.
Recording and reconciling each of the projected variances to the budget and reporting this as part of the financial board paper helps give the board the information they need to make informed decisions. You can present this information in a number of ways, but a simple reconciliation is usually the best.
Events with Major Events funding must provide explanations on budget variances over 5%.
Financial and budget management systems
It is essential you have a good financial management system to facilitate strong and accurate record keeping and detailed management reporting.
Factors to consider when you are choosing the most appropriate financial management system include:
- the corporate structure of the event
- the length of the lead-in to the event
- the size of the event budget
- the complexities of the event.
Types of system can range from a simple set of excel spreadsheets to sophisticated accounting software such as SAP or Navision.