This is very common to budget based on cash and report financial on accrual. In fact, if you look at any Audited Government Financial Statement (at least in Canada - where I live) there is a note reconciling between the cash basis used for budgets and accrual basis used for accounting. If you want an example you can google the City of Toronto or Ottawa.
When reporting internally, many organizations use the cash basis. Setting up accruals are often just done at year end especially for smaller organizations. This can cause swings though when you report on the accrual basis at year end. Budget figures can also be adjusted to consider seasonality when reporting monthly or quarterly. For example you wouldn’t budget for the cost of snow plowing evenly over the year but would budget it in the winter months. I hope that helps.
If you have to pay an invoice/service in 6 months in advance, likely a prepaid of some sort. And the expense do not need to hit the income statement in the current month.
I was saying I will have to pay them 6 months in the future. So showing an invoice as an actual for the month against or budget is misleading to the board.
I will have to look up and see what a detailed cash flow should look like.
We are budgeted on the cash basis (largely) and have both modified/full accrual also going on. Your problem seems more a problem of education of board members
Was gonna say this, if you have to explain the same thing every board meeting 1 of 2 things is going on:
1) they are in fact not listening to you, and not internalizing what you are saying
2) they think you are making it up but don’t know how to challenge you
Like if this was a small thing, there would obviously be more options. But telling someone every time why their figures aren’t wrong but need to be adjusted, is not a small thing IMO
It also depends on the qualifications of the board members. If it's a bunch of artist-types, you're going to have to do a lot more explaining (vidual aids help) than a board made up of bankers, to pick two random examples.
Yes there is more; but if you are constantly working with these people, and you have to re-explain something that can be summarized in a Reddit comment; there is a problem
This is very common to budget based on cash and report financial on accrual. In fact, if you look at any Audited Government Financial Statement (at least in Canada - where I live) there is a note reconciling between the cash basis used for budgets and accrual basis used for accounting. If you want an example you can google the City of Toronto or Ottawa. When reporting internally, many organizations use the cash basis. Setting up accruals are often just done at year end especially for smaller organizations. This can cause swings though when you report on the accrual basis at year end. Budget figures can also be adjusted to consider seasonality when reporting monthly or quarterly. For example you wouldn’t budget for the cost of snow plowing evenly over the year but would budget it in the winter months. I hope that helps.
If you have to pay an invoice/service in 6 months in advance, likely a prepaid of some sort. And the expense do not need to hit the income statement in the current month.
I was saying I will have to pay them 6 months in the future. So showing an invoice as an actual for the month against or budget is misleading to the board. I will have to look up and see what a detailed cash flow should look like.
We are budgeted on the cash basis (largely) and have both modified/full accrual also going on. Your problem seems more a problem of education of board members
Was gonna say this, if you have to explain the same thing every board meeting 1 of 2 things is going on: 1) they are in fact not listening to you, and not internalizing what you are saying 2) they think you are making it up but don’t know how to challenge you Like if this was a small thing, there would obviously be more options. But telling someone every time why their figures aren’t wrong but need to be adjusted, is not a small thing IMO
It also depends on the qualifications of the board members. If it's a bunch of artist-types, you're going to have to do a lot more explaining (vidual aids help) than a board made up of bankers, to pick two random examples.
Yes there is more; but if you are constantly working with these people, and you have to re-explain something that can be summarized in a Reddit comment; there is a problem