What steps can your association take to improve your financial practices?

Successful financial management is crucial for every association. The unique nature of associations means there is no steady income like any other conventional business, meaning the capacity of the nonprofit. To ensure financial stability and success, associations must proactively implement best practices to improve, maintain and create sound financial management.

Here are four tips that can help your association improve its financial practices:

1. Diversify Revenue Streams
Associations typically rely on membership dues and sponsorships as their primary sources of revenue. However, diversifying revenue streams can help reduce financial risks and increase the likelihood of meeting financial goals. Consider exploring other revenue streams, such as events, learning programs, and product or service sales.

2. Create an Annual Operating Budget
An annual operating budget would be your association’s financial plan and guide. It will outline yearly goals and objectives, indicating that expectations can be met or superseded. Adhering to an operational budget also assists in making faster and well-informed decisions about allocating resources.

3. Understand Financial Statements
Financial information from balance sheets, income, and cash flow statements provides valuable insights into your association’s financial health. Understanding these financial statements can help identify areas for improvement.

4. Establish Financial Policies and Procedures
Establishing financial policies and procedures ensures that everyone in the association understands the expectations and procedures for handling finances. It includes creating a straightforward process for handling payments and expenses, setting guidelines for reimbursements, and having a system for monitoring financial activity.

At AMC Association Management Company, we understand the importance of funding for associations and are committed to helping them implement best practices for financial management and providing annual support for these processes.

Effective financial management practices can help your association reduce financial risks, achieve financial goals, and ensure long-term success. By diversifying revenue streams, creating an annual operating budget, understanding financial statements, and establishing financial policies and procedures, associations can set themselves up for economic success, stability, and contribution.