A successful facility must be able to structure stringent guidelines for financial processing and contract management. The better you can track the more efficient your management of the data becomes. If you can not measure it you can not manage it.

 

One of the basic ingredients in financial management begins with budget preparation. The first question to answer is the amount of fixed or estimated revenues available. This can generally be broken down into three general areas, tax revenues, operational and other income. Estimated tax revenues are generally determined from collection histories or an extrapolation of a new rate from an old tax source. The implementation of a new tax should be estimated based on the assessed traceable value of the taxable commodity and verified by an outside accounting firm. In a new facility the proformas will act as a guide for operational revenue projections and in older facilities budget histories are a point of beginning. On the expense side the debt service payments will be fixed and perhaps altered after three years if some of the cost were capitalized. Line item operational cost should ideally be figured a little higher than expected and revenues a little lower than anticipated. This is a political budgeting process. In older facilities a method of preparing revenue estimates is to begin with firm contracts, adding a discount amount for tentative events and a further discounted amount for short-term business. This should be compared to historical records. A set amount or percentage should be set aside for capital purchase and contingencies. It is a prudent practice not to choke the operational needs of the facility just to accomplish a balanced or acceptable budget. Beyond the budgeting process, sound purchasing, accounting and tracking systems must be established. A monthly monitoring of the budget is essential to the proper financial oversight of the facility’s management.

It should also be noted that budgets, financial documents and reporting to the governing bodies should be kept simple and straightforward. More detailed information will most certainly be maintained but should be presented as back up to the main documents. A good budget approval process begins with submission to a finance committee followed by their recommendations, then a one on one discussion with the governing board. Lastly the document should be presented to the whole board for approval.

 

Procedures for the generation of a contract and its flow through the system are crucial. Booking procedures must be established and in written form. A check and balance system between sales, management and accounting should be established to assure compliance with regulations and procedures. Often it is advisable to appoint a contract compliance officer to assure all policies and guidelines are being followed. A written document should outline all of these procedures and include a set of definitions for terms used in the booking and contracting process. A contract must have three elements to be legal, first an offer, an acceptance and finally remuneration. Until all three occur the document is not complete.