Cash-Flow Accounting Can Simplify Nonprofit Finances and Create More Working Capital, Book Says

NEW BOOKS

Cash Flow Strategies: Innovation in Nonprofit Financial Management
by Richard and Anna Linzer

Organizations should consider using a cash-flow method of accounting, recording only income and expenses that are received and paid and setting aside “any transactions that do not involve cash, such as depreciation or amortization,” write Richard Linzer, a financial and organizational consultant, and Anna Linzer, a poet and writer.

The authors summarize the benefits of this type of fiscal management with this formulation: “Cash-flow approach = better understanding of fiscal matters = greater comprehension by board and staff = wider participation in decision making = better decisions and due diligence.”

The Linzers explain the method and when it can be useful, and provide advice on how nonprofit groups can incorporate cash-flow accounting into their operations.

They also say that credit can help charities “achieve financial stability without large cash reserves or emergency fund-raising campaigns.”

“By borrowing and repaying during the course of the year, your institution is demonstrating that it is using the line of credit exactly as it is meant to be used, to obtain short-term funds when you need them and repaying these funds when you don’t,” they argue.

Each chapter offers several examples of documents, charts, credit applications, and other materials, and a CD-ROM includes programs that help with budgeting, cash-flow forecasting, and using real estate to support a nonprofit group.

Publisher: John Wiley & Sons, 111 River Street, Fourth Floor, Hoboken, N.J. 07030; (201) 748-6000; fax (201) 748-6088; http://www.wiley.com; 253 pages; $90; ISBN 978-0-7879-8147-1.