Part Two: Build a Financially Strong Nonprofit with Cash Flow Management

A lecturer and author of The Zone of Insolvency underscores the importance of cash reserves. Cash flow management is among his list of essential characteristics of financially strong nonprofits. Strong discipline with cash flow includes the following:

  • Weekly or daily monitoring of cash position,
  • Projections of cash flow for the upcoming 12 months and a
  • Board policy requiring minimum levels of cash reserves to even out seasonal fluctuations of income.
Leaders who rely on accrual-based financial statements without paying attention to cash position will inevitably be blindsided by a cash crisis.

Without these projections to manage your cash reserves, your organization’s leadership is forced to focus on survival and crisis management, rather than long-term strategic planning and development or improvement of program quality. Unfortunately, limited resources beget limited resources.

To do: Make it a management priority to examine and adjust your cash flow so you can boost your organizational capacity and responsiveness to unforeseen fiscal demands.

Refer to my first post on this subject when I explain more about setting cash flow goals and acknowledging the factors that may impact cash flow.


Erica McGeachy Crenshaw, a former Wall Street equity research analyst with 16 years of finance experience, left leading global investment bank Goldman Sachs in 2002 upon purchasing the New York City rights to AmeriSpec Home Inspection Service, the leading home inspection company in North America with over 400 offices throughout the U.S. and Canada. She subsequently acquired four additional territories in Long island, NY. Within seven years, Mrs. Crenshaw grew the business at a rapid clip and be...

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