Include revenue guarantees in the budget and forecast cash accounts

Description

A revenue guarantee is a commitment from a donor or sponsor to provide a certain amount of funds to the non-profit. These can be conditional, requiring the non-profit to meet specific criteria or milestones. This feature in a planning and forecasting product enables organizations, particularly in sectors such as Non-profit and Education, to record, track, and manage the revenue that is assured or anticipated from funding sources like grants and donations.

Example Use Case

Scenario: A non-profit organization relies heavily on funded grants and charitable donations to support its initiatives. They use CPM software for financial planning, budgeting, and forecasting. Their current challenge is to accommodate their revenue guarantees, such as confirmed grants and pledges, into their planned cash accounts.

Solution: The CPM software incorporates a feature that allows them to record their revenue guarantees directly into their budget and forecast cash accounts. This not only ensures that all guaranteed revenue is accurately accounted for but also improves cash flow forecasting and allows for better financial decision-making.

Considerations

When revenue guarantees have conditions attached (e.g., reaching a certain project milestone), planners must budget for these conditions, ensuring that expenses tied to achieving these milestones are accounted for. Best case, the CPM tool you're evaluating includes this as a module where you can add projects, basic milestones, and the cash that is freed up upon completion of those milestones. This, when connected to the model, will streamline the cash forecasting process.

Also consider the amount of time it takes from completion of the milestone to cash received. Immediately? After a lengthy confirmation period? All factors must be considered to ensure an accurate cash plan.

Questions to Ask a Vendor

• Adding New Revenue Guarantees: Is there a specific location where we can add revenue guarantees with any associated milestones and other drivers? If so, does the output of this flow to our cash forecast?
• Custom Addition: If you don't offer a pre-built module, have you added this capability for another customer? If so, what functionality did it include and what maintenance was required?
• Integration: How well does this feature integrate with other modules in your system, such as grants and donor management?