Event financial management deals with the planning, organisation, and allocation of money and development of budgets towards a particular event. It also details how money is to be allocated and managed in general towards the event.
Money is the central resource when dealing with the planning and management of an event. Without it, it is almost impossible to successfully hold and run an event. The money used to finance an event comes from various sources. The sources include the host of the event, sponsors and the people who attend the events. However, these sources are not limited to money. Money can come from many different sources, liked goods in kind.
Effective financial management of an event is based on the following principles.
Accounting is a systematic practice of maintaining financial records of an event. This includes identifying, classifying, measuring, recording, interpreting and communicating financial information.
It involves recording sums of money, those paid and those received, the value of the property and the records and reports associated with these sums.
You can use a variety of software to help with the process.
Here are a few examples of software you can use:
A budget is a guiding plan which explains where money is allocated during the event. When planning for an event, there are several factors a person should consider. These include having a realistic budget and making sure all sponsors listed have committed and that they will not withdraw at the last minute. You also need to look at where your money is derived from. Budgets also look at forecast costs and expenditures which details how the money is to be spent. Budgeting ensures the allocation of money is completed in order of priority.
The Sales budget is the first part of the budget that needs to be prepared. This gives the organisation a clear guide on expenditure.
An integral part of financial management during an event is determining how much to charge. What you offer at the event helps determine what you charge. It helps decide whether it is a free, low charging or high charging event. Other factors that help determine pricing are what suppliers are charging, speakers or performers fees, transport to the event, advertising and invitations to the event. Pricing can only be determined once the budget has been prepared.
This is the process of monitoring money that comes in and goes out during the event. It is a very important role in financial management. Cash management can be enhanced by establishing payment policies and procedures e.g. when and how to pay suppliers and performers/speakers. It can also be enhanced by developing cost controls that stick to the budget. Managing cash flow ensures everyone is paid. Implementing cash handling procedures guarantees no underpayments, over-payments or double payments.
Reporting is the last component of financial management. It involves compiling all income, expenses, losses and profits for the event. This also helps determine the financial position of the event. Good financial reports helps gain trust from potential sponsors of potential events. The integrity of the financial report is crucial for the reputations of the event.
Effective budgeting, accurate accounting and pricing practices, plus sensible cash management procedures allow you to anticipate income and expenses correctly, allocate financial resources properly and maintain the appropriate financial records.
If you learn to manage your finances well, then you get more money to manage and there is no need to use your own personal expenditure.