Cash forecasting when grant dates are uncertain
How a non-profit plans its cash when approved grants arrive late: dates and amounts per tranche, weekly meetings and a forecast a board can read.
By Achekam · · 5 min read · For Non-profit businesses in South Africa, Nigeria, Kenya
The award letter says the grant is approved. The budget has been agreed, the programme staff are hired and the first activities have started. Then the second tranche, due "after the mid-term report", sits in the funder's approval queue for weeks. Salaries are due at month end either way.
For many non-profits this is the most stressful part of the year. On paper the organisation is well funded. In the bank, there may be only enough for one more payroll. The money is real and it is coming; nobody can say exactly when. Planning cash around that uncertainty is a skill, and it can be learned.
Approved is not the same as paid
Grant money arrives on the funder's timetable, not yours. A tranche may depend on a narrative report, an expenditure report, an audit, a site visit or a board meeting on the funder's side. Each of those steps can slip. Some funders pay in arrears, after you have spent the money, and some international funders pay through intermediaries that add their own processing time.
So the question for the finance team is never only "how much will we receive this year?" It is "what is the latest date each payment could realistically arrive, and can we pay our costs until then?"
Each tranche gets dates, amounts and an owner
ICAEW advises keeping detailed data behind a cash forecast, especially for money owed to the organisation: expected, worst-case and best-case dates; maximum, expected and minimum amounts; the probability of collection; and a named person responsible for each item. Its paper on nine principles of cash flow management sets out this and the other practices discussed below.
For grants, that means one line per tranche, not one line per funder:
| Tranche | Earliest date | Expected date | Latest date | Amount and conditions | Owner |
|---|---|---|---|---|---|
| Funder A, second tranche | Report approved on time | Typical approval time for this funder | Report queried and resubmitted | Full tranche, or reduced if spending is behind | Programme manager |
| Funder B, final payment | Final report accepted | After the funder's audit | Audit delayed | Retention held until the audit | Finance manager |
The "owner" column is what turns the table into action. The person named is responsible for knowing where the report is, chasing the funder and warning finance when the date moves.
ICAEW also recommends three scenarios, worst, most likely and best, including a prediction of the earliest date additional funding may be needed, and checking forecasts against what actually happened. Build the worst case using every tranche's latest date. If the organisation can survive that, the board can sleep.
Weekly cash meetings when a gap is close
When the worst case shows a shortfall within the next few months, monthly review is too slow. ICAEW recommends regular cash meetings, at least weekly, involving the people with insight into the cash movements expected, with action points and responsibilities written down.
In a non-profit those people are usually the finance manager, the programme managers who own each grant, and whoever approves spending. Keep the meeting short and the agenda fixed:
- The bank balance today, and what has come in or gone out since last week.
- Each outstanding tranche: has the expected date moved?
- Payments due in the next few weeks that can or cannot be moved.
- Decisions and who carries them out.
A forecast a board can follow
Board members of a non-profit are often not accountants. ICAEW recommends the direct method for cash forecasts where possible, showing cash inflows and outflows in language non-accountants understand, and clearly documenting the assumptions. It notes that the indirect method, which starts from surplus and adjusts it, is less easily understood, though it is a useful check.
So show the board plain lines: grant receipts by funder, donations, other income; then salaries, rent, programme costs and other payments; then the closing balance each month. Next to each grant line, state the assumption: "second tranche assumed in the expected month; worst case assumes a later month".
ACCA explains why this matters to the people in charge: a cash budget shows directors in advance when a deficit will need financing and when a surplus could be invested, and it can guide the timing of asset purchases. For a non-profit board, it shows when to draw on reserves, when to ask a funder for an advance and when to hold back on buying a vehicle or laptops until a payment lands.
Starting from the books in Achekam
A forecast is only as good as its opening numbers. In Achekam:
- The bank balance comes from a completed reconciliation. Bank lines are matched by suggestion and a person accepts each match, a line not yet in the books becomes a suggested journal a person approves, and a reconciliation completes only when it balances or every leftover line is explained. Start the forecast from that reconciled figure, not from the online banking balance.
- Planned spending comes from budgets: a business can set a budget per account and period and compare it with actual figures. If each grant's costs run through their own accounts, the budgets give you the planned outflows month by month.
- Spending already committed comes from approved purchase orders, which count as committed spend against the budget per expense account and period. The screen shows budget, spent, committed and available, and flags over-committed lines.
- Actual results come from the management accounts: an income statement for a chosen period beside the period before, and a balance sheet at period end, exportable as PDF or CSV.
The forecast itself is a schedule you keep alongside these figures and update each week while a gap is close.
Act as soon as the gap shows
The value of the forecast is the time it buys. Once it shows the month when a shortfall would need bridging, consider, in this order:
- Ask the funder whether the tranche can be released on a draft report, or part of it early.
- Move discretionary spending, such as equipment purchases or new posts, until after the expected receipt.
- Agree with the board how much of the reserves may be used, and on what conditions they are rebuilt.
- If bridging finance is needed, approach the bank or a supporter well before the month it is needed.
Tell the board early, with the forecast in front of them. A board that sees a gap three meetings ahead can solve it calmly; a board told on payroll week cannot.
This week
List every tranche you are waiting for, give each a latest realistic date and an owner, and test the next six months against those dates. For grants paid before the work is done, see a grant received in advance, and for tracking spending against each grant, grant budget versus actual.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
