Business activities can leap in a year if there is an effective strategy. Similarly, it can also go down if the business does not follow an effective strategy. Every business starts with a plan for the whole year and performs accordingly. However, we must also know what the company is doing according to our strategy. Thus, pausing and reviewing the business activities in the middle of the year is necessary.
This article will explain midyear reviews, especially for non-profit organizations, and how they can undertake this activity. If you want to know more about it, consult any non-profit accounting services to learn about the review activities. So, let’s begin our discussion and understand the mid-year non-profit financial review and how it can help your organization.
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What is the Importance of Non-Profit Mid Year Financial Review?
Most organizations rely on year-end reviews; however, mid-year reviews can be more beneficial as they will help you get an idea about the business’s performance sooner, and if any changes are required, you can work on them. Some of the common benefits that you can avail through mid-year financial analysis are as follows.
- Accountability and Transparency: The mid-year financial review will provide a detailed report on how the company has performed for six months, which can give confidence to the stakeholders of non-profit organizations. Thus, it holds the business accountable and transparent.
- Flexibility and Adjustments: We make financial plans for the whole year, but a mid-year review allows us to see whether changes are required. Making effective changes in a timely manner can save you from further financial losses. Therefore, this flexibility and adjustment are available with a mid-year financial review.
- Strategic Alignment: A mid-year review will help you understand whether you are aligned with your strategic plans. It will also inform you about the organization’s financial performance, missions, and goals.
What are the Key Components of a Mid-Year Financial Review?
The mid-year review should look similar to your year-end review. Thus, it means that all the financial aspects of your organization’s budget and finances must be included. Some of the common elements of mid-year non-financial review include.
Financial Statement Analysis
This statement analysis includes information regarding revenue, expenses, and cash flow. It will include balance sheets, income statements, and cash flow statements. These sheets will be analyzed in depth to understand how the organization is trending compared to the previous year. This will help you understand how the organization is performing over the six-month period.
Budget and its Actual Comparison
When you have made a budget for the whole financial year, you must understand its reality. So, this mid-year financial analysis will help you know how your budget is performing and whether it requires any changes. It will help you in comparing the projected budget and actual performance.
Grant Management
There will be a review of the status of grants and compliance in the mid-year mid-year review, which will help you understand the grant requirements and conditions. It will also ensure that the restricted and unrestricted funds are appropriately managed. This analysis will help you to know whether you are under-spending or over-spending.
KPIs
It will help you evaluate the organization’s key performance and whether you have reached your goals. If you intend to increase your reserves, how are you doing in achieving this goal? So, these are some of the important indicators that help in understanding the organization’s performance in the mid-year financial review.
You can seek help from an expert accountant to understand the financial terms of the business and how to improve the indicators if there is a loophole in the business goals.
