Membership Organisation; not-for-profit; £20m turnover
The organisation had a business plan, but performance was not monitored, particularly when it was upgrading its premises. All managers were struggling to understand the management accounts and more importantly, monitor their performance in line with the business plan.
A membership organisation, steeped in history and retaining its ‘club’ style, both in terms of business and financial control. The organisation had a healthy cash flow – that allowed for the capital expenditure on the upgrade of the premises and it to over-run!
To modify the culture of the organisation from that of a club – with a relaxed attitude to spending controls – to one that was more professional and planned in approach – in line with its new business plan. There was no real financial direction, and the managers needed support in this transition – particularly the Facilities Manager (FM) who tended to manage individual projects, rather than track his annual finances.
Budgets were set up in line with the business plan – and a five year plan for the FM.
In addition, the financials were translated into the activities of each department and managers were trained to better assess their progress through the year.
Easy to follow management accounts were created, with commentary: managers were able to track their progress; the FM was able to report on the performance of each project, each month and the Board were able to monitor the balance and take informed decisions.
Once trained, the managers were able to prepare the commentary, giving the board a far greater insight to the variances. This meant the managers could give more detailed forecasts, with the added advantage that this formed part of the year-end audit work.
Additionally, the organisation now had a more true cash flow that could be managed effectively.
The organisation now operates on a more professional basis, making better business decisions, particularly in terms of capital expenditure.
Case Study: Tracy Lewis (Click here to see her profile)