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Old 25th February 2014, 02:00 PM
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rich rich is offline
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Join Date: Nov 2008
Location: Shebbear, N Devon
Posts: 1,642

It's not that difficult to do a cash flow forecast. After all, every business does, in some way. It's also quite reasonable for any organisation to accumulate reserves, either as retained profits or a surplus in the case of a not-for-profit organisation.

It used to be the case, when BFTA marketed insurance, that they had to buy the insurance from the brokers by making two 50% payments, one up front, before any of the insurance for that year had been "sold" to clubs and the premiums received. I recall when I was asked to look at this some years ago the amount of money was in the order of 8,000 needed to pay the first instalment, and this was at a time when the BFTA constitution did not allow it to borrow funds, so it needed that liquidity at the start of the year.

As most expenditure is covered on an annual basis, there is not much of a case to be made for having a cash reserve any bigger than a year's trading. I think any organisation that has more than 12 months' turnover as reserves, ought to then be able to justify why it is holding such funds, and should be asked by the members to do so.

RobF is correct if any losses in the latest accounts can be explained and are transient. ChrisC is right insofar as no organisation can afford to sustain losses consistently, and viability of the business model is the correct question in that case.

Last edited by rich; 25th February 2014 at 02:02 PM. Reason: apostrophe in the wrong place