6A: Financial management

Any sports facility is likely to have a range of payments in and payments out to keep track of

Section 6 progress

Good financial controls will be needed to ensure adequate cash flow is available.

It is critical when setting up a financial management system that you involve an accountant in the process. This is necessary to ensure you are equipped with the expert advice needed to make informed decisions. A system should be implemented, as early as is practical, that meets all the needs of the organisation in terms of reporting and planning.

It is vital to have a computerised system in place to help understand and grow the organisation. For a small and medium sized sports facility there are financial management systems available to purchase out of a box at a relatively low cost. Examples include Sage Line 50, Quickbooks and Iris.

Budgeting is essential to control the finances of the organisation – it is key to business growth and success

For larger businesses a bespoke system may be required. It is advisable not to run budgets using excel spreadsheets. They are not complex enough to translate a change in the profit and loss figures through to the balance sheet and cash flow. It can also be very time consuming to compare actuals and variances. In contrast with e.g. Sage it is possible to just click a button and produce the report.

Budgeting is essential to control the finances of the organisation - it is key to business growth and success. Variance reports need to be reviewed in detail and if there are large variances you should question why these have occurred. Was it a one-off or should the budgets be re-looked at and updated?

Budgeting during the construction phase

Budgeting and forecasting are particularly important during any construction phase. When circumstances change you should run forecasts based on different scenarios. This will allow you to identify risks and make the management team aware of any cost escalation. The earlier this happens the easier any adjustments will be.

The construction stage of any development process presents the biggest financial risk to a project. Make sure you keep track of any changes to the design and their cost implications. Once construction has been completed you should reconcile invoices with the original contract.

Contractors may attempt to add provisions to the contact; you need to check that these are valid to ensure overpayments are not made. You must set aside money at the end of the construction phase for subsequent payments to contractors over the next twelve months. This retention money is paid once the building has been in operation for a set period and any defects have been resolved. Do not allow this to be swallowed up by general expenditure.

There are likely to be significant VAT implications involved in the costs of building or refurbishing an asset or facility. This is a complex area of taxation law and it is important to seek professional advice. This will incur a cost but it negates the risk of being hit by a large and unexpected tax bill.

Community: Has the community organisation got a financial management system in place to support its current and future business needs.
Community: Are good financial management practices and procedures agreed or in place?
Community: Has VAT advice been taken from a professional?