Assuring Your Association’s Fiscal Health

Comprehensive, strategic financial management is critical to the success and growth of an association. Though the economy is slowly recovering, groups still face challenges when it comes to revenue streams, so ensuring that your financial systems and controls are up-to-date and effective can greatly improve your group’s efficiency. The following are three important steps that organizations can take to guarantee their financial health in 2014.

1. Take stock of your financial practices. Every association should have policies and procedures, also known as financial systems and internal controls, that monitor and record all financial processes. These controls create a framework of how your association should be run—including budgets, invoices, purchasing, accounts payable, etc.—and how it manages risk. Controls create continuity. They also provide board members with clarity and reassurance that the financial policies of your organization are being conducted appropriately and in accordance with the law.

In most cases, these policies and procedures are detailed in an accounting manual. Depending on the age of your association, that manual could be more than a few years old and need to be modified. After all, policies and procedures that worked well 10 years ago might not be as efficient today. Also, as organizations grow and change, it is important for leadership to take a closer look at current policies and evaluate ways to improve them.

To begin this process, associations should consider the following questions:

• When was the last time our association reviewed its financial policies and procedures?

• How has our organization changed over the past few years?

• Do our financial policies and procedures reflect those changes?

If your group’s financial systems and internal controls are out of date, consider updating them to maximize their financial efficiency.

2. Conduct an annual audit. One way to determine areas in which your association can improve financially is with an audit. While many people cringe at the word “audit,” it is perhaps one of the most important and irreplaceable resources in an association’s financial toolkit. Audits provide financial transparency. They keep an organization’s finances in check and highlight inefficiencies, or worse, financial mismanagement and fraud—something that may be of particular concern if your group is like the many associations that move tens of thousands of dollars in and out of accounts each month. Additionally, an annual audit can provide association leadership with in-depth insight into the financial health of particular programs and events, as well as the organization as a whole.

3. Evaluate programs and revenue. Programs, events and products/services are at the heart of what associations offer their members and event attendees. Because these services drive member value and are the main forms of revenue for most associations, they are inherently part of an association’s financial well-being. As with your organization’s financial policies and procedures, your association’s portfolio of offerings needs to be regularly evaluated by leadership.

You may find that certain programs, while long-standing, may no longer be providing a return on investment for your organization. If a program is not successful or members are not finding the intended value, it could end up costing your association. Working closely with organizational staff, association leadership should take a close look at all current programs and decide whether to refresh or retire them. These evaluations can be paired with an annual audit, which can help identify opportunities for new programs and services.

These three important steps can be taken by association staff or with the help of an accounting firm or association management company. If done regularly, reviewing and overhauling financial management practices can greatly improve an association’s efficiency and in turn provide better service and value for members.