Budget Reforecasting in the Pandemic
Before the COVID-19 pandemic, nonprofit organizations typically reforecast budgets once or twice a year. Maintaining static budgets made sense when the pace of change was slower and the challenges of the reforecasting process often outweighed the benefits of repeatedly updating budgets.
As you know, times have changed.
The pandemic has created a state of constant—and rapid—change, and the best way for many nonprofits to respond is to reforecast their budgets more often.
What is reforecasting?
Reforecasting means updating your entire budget based on recent changes. It involves creating a fully revised budget, not simply adjusting a couple lines. The result is a budget that matters—a relevant, timely decision-making tool that can help your organization move forward.
When should we reforecast?
You should reforecast your budget when something big happens:
- Management changes
- Revenue streams change
- Cost drivers change
- Errors are found in the existing budget
- The world changes
The latter, of course, refers to the pandemic, which has altered just about everything about the world we live in. If you haven’t already reforecast your budget based on changes created by the pandemic, you should probably do so now. The good news is that you can then use that process to streamline your future reforecasting efforts.
Do we need a rolling budget?
Some organizations in especially volatile fields will want to adopt reforecasting with a rolling budget. For best results, a rolling budget requires an ongoing assessment in which changes can be made fast to ensure that the periodic budget to actual reporting can be maintained.
What kind of software can help?
Spreadsheets might be sufficient if your organization is small and does not expect to grow or face a great deal of uncertainty during and after the pandemic. For most nonprofits, however, it makes sense to work with products like Sage Intacct, the best-in-class cloud-based accounting software solution, which can greatly streamline and accelerate the reforecasting process while also deepening insights and enabling more accurate forecasts.
With the right software, your organization can reforecast as often as necessary, both during the pandemic and in the months and years to come—whenever unexpected changes occur.
For more information about reforecasting budgets, check out our on-demand Accounting Office Hours: Budgeting During Uncertain Times.
Insero & Co. is a public accounting firm with decades of experience working with nonprofit organizations of all sizes. Our experienced experts are available to provide consulting and other remote services—whatever your organization needs to get through these difficult times and work toward your mission.