Red Flags of Financial Problems
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Your organization may be facing financial problems if it frequently spends more than it earns, fails to pay taxes and bills on time, dips into restricted funds, has many unpaid old receivables, is disorganized about its financial situation and obligations, and focuses too much on lack of money rather than strategic priorities. Competitors are also emerging and costs are rising faster than revenue.
Red Flags of Financial Problems
- 1. Red Flags of Financial Problems Has your organization been flying financial red flags? If any of these flags sound all too familiar, your organization may need help and need it fast! Your organization frequently spends more money than it receives in revenue. You are not paying payroll taxes when they are due. Payables (the money you owe others) are escalating and going unpaid. You frequently dip into permanently or temporarily restricted funds for today’s expenses, coming up short later when the special project is ready to go. Fifty percent of your accounts receivable (the money others owe you) are 120 days or older. You have no idea how your organization got into such a financial mess and do not know where to start to pull out of it. You do not know how much money the organization owes and do not know how to find out. Lack of money has become the focus and dominant point of conversation at staff and board meetings. There are new organizations in your community that are direct competitors in terms of the services you have historically provided. A sustained jump in your operating costs is outpacing revenue.