Budgets

Annual budget 

A budget offers a club a better means of planning, provides for greater control over its activities and hence its future, makes the club more accountable to its members, and may even be viewed as a motivational tool encouraging continued financial growth through results. 

The treasurer develops a financial plan (or budget) for the club in consultation with the relevant persons or sub committees, by analysing the club's accounts to become aware of the ebb and flow of cash.  

The club's development or strategic plan should be examined to identify any additional sources of income and major areas of expenditure associated with the coming year. The budget is then drawn up outlining when money can be spent and when it should be held in reserve to cover future payments. The club's financial performance can be judged against the budget by using the monthly accounts.

The budget as a management aid 

In a world which measures success in terms of economic performance, a club can gain credibility and support from financial institutions (banks) or sponsors, including government, if it demonstrates it has a well thought out budget and is working within it. 

The handling of finance by amateur bodies can be fraught with problems. A budget can help avoid these. A tight budget will discourage unwise spending of club funds and shape a more realistic and professional approach to financial management. 

For larger clubs, dissecting the budget on a monthly basis is very useful as it enables a direct comparison with actual results as the year progresses and enables steps to be taken to rectify any problems. It also provides the opportunity to ensure that projected cash at hand is sufficient to meet payments throughout the year. 

If financial cash flow statements are presented at monthly management committee meetings, club officers will know whether expenditure is on budget or not and be able to take early steps to rectify any problems.  Once a budget has been prepared, it can be used to project future cash flows. Money not required for several months could be put into higher interest short term investments. 

A budget may also lower auditing costs as well kept financial records ease an auditor’s workload. Naturally, the more exacting the budget, the more efficient the club's bookkeeping must be. 

The budget allows the club to measure its performance in various areas. Money can be moved from projects which have underspent to others which may require additional funds.

Find out more about Planning 

Who needs to be involved?

The budget is a vital tool in effective club management and it is essential that it be drawn up to meet the club's needs over the coming period, usually 12 months. This enables the club to more effectively fulfil its aims and objectives within the framework of its plan and financial means. 

All members, especially those directly involved in fundraising or spending club funds, should be invited to discuss the budget. The more people involved in the budget preparation, within reason, the less likely that an important figure will be overlooked.  

This process of consultation also means that there is more likely to be full agreement on how the club is financially managed. Members responsible for club expenditure may also be more inclined to follow the spending restrictions within a budget if they helped to devise them. 

A club's budget can cover a wide range of areas - travel, coaching, uniforms, overheads, etc. It would be best to ask those members experienced in a particular area to estimate costs and expenditure relating to that particular area. 

A sub-committee may be the best way of looking at complex budget issues. Sub-committee members can speak to the experts, discuss the issues, and then present a recommendation to the club management committee.

Drawing up a budget 

The following points can be used as steps in the preparation of a budget:

  • Identify all possible sources of income and expenditure:

Income

Expenditure

Membership fees

Rent

Gate takings

Electricity

Hire of clubrooms

Postage

Fundraising

Telephone

Sponsorship

Stationery

Government grants

Equipment

Maintenance

Insurance

Uniforms

Travel

  • Obtain estimates from all budgeted areas such as administration and programs. Carefully estimate the amounts likely to be spent and received. The previous year's figures are a good guide
  • In effect, the budget for the coming year is an educated estimate of what income and expenditure will be. There are ways of making the estimate more accurate
  • Many of the items covered in the budget cover year to year income and expenditure. These items can be updated
  • Adjustments for inflation and likely increased costs need to be made
  • For some items it will be possible to calculate the amount which has to be paid or charged. This is necessary when there are large items of capital expenditure, e.g. replacing plumbing, or purchasing a new piece of equipment
  • Once the income and expenditure have been estimated, draw up a draft. Income should prove slightly higher than expenditure.

When a budget is being devised, it is important to make notes for the future. Predicted and actual expenditure might vary markedly in the first year, but fine-tuning over a number of years will bring the two much closer together. Notes will help eliminate any uncertainty from past budgets. 

It would be unusual if the experimental budget turned out close to balancing. The first draft may require several adjustments to make it fit reality. Alternatively, the club may have to look at its planned projects and see whether they can be done within the budget. 

If expected expenditure exceeds expected income, ways must be found to reduce expenditure or increase income. First examine large items of expenditure and trim them back. 

The options for saving money are far greater in heavy areas of expenditure as there are more dollars to play with. Go back over the options, consider all alternatives, and get more quotes if it is a work program.

Items of budget are often coded to assist in cash flow planning and reporting. This is particularly so of many computer accounting systems. 

If there is no way of cutting back costs of a program, then the program may have to be deferred till a more appropriate time.  

If income exceeds expenditure the situation is far happier. In that case the management committee must consider wise alternative use for the excess. 

Download Budget Template

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