As event planners we are always concerned with whether we are within our budget, whether there will be enough budget and of course, whether we will get a decent ROI on our event. Some of us are lucky enough to have an accountant or bookkeeper near by, but it is nonetheless very important that we all know what’s ‘what’ in our finances. After all, how will you know you’re doing well if you don’t even know what you need to look for? At Azavista, we have come up with 4 tips that will help you take control of your event accounting and finances and stay on top of your event money matters;
1. Understand the terminology
There are four essential terms to understand (and apply) in your event accounting and by using these elements, you should have a clear overview of your money matters.
A balance sheet – normally shows you how you’ve been doing over the most recent three years of your business. It lists your assets (e.g. cash you have in the bank), money that needs to be paid to you, your business assets, and any liabilities your business might have (i.e. debts to be paid by your business, etc.).
A Profit & Loss Statement (P&L) – shows you what revenue you are bringing in to your business as well as any costs you might have to run your business (e.g. marketing, venue renting, catering, etc.). The idea here is that you find the difference between your revenue and your costs and determine the actual profit (or loss) your event has brought in.
Accounts Payable/Receivable – are essential to organised and well-managed finances. Simply put, accounts payable are the people (accounts) that you owe money to and accounts receivable are those that owe you money. To maintain a solid overview of your cash flow, I really can’t stress the importance of these two concepts enough – remember to pay your bills but also be sure to collect the money owed to you.
Your Project Cash Flow – is essential to predicting how your business will do in the future. It is important to be able to predict an accurate cash flow in order for you to see whether you will meet your financial obligations (or not).
2. Organise your budget(s)
Not only is it important to know what’s happening in terms of your overall financial situation, it is also vital that you set a budget for each of your events as well. As event planners, we always start with a list of projected expenses and, of course, you know (as well as I do) that it’s not possible to predict exactly what the future will bring.
List your biggest and most obvious expenses, but do not forget the smaller details – luckily, this will become a lot easier as you become more experienced in planning your events. This said, it is also important to add an emergency overflow into your expenses, since again, it is not always possible (or easy) to predict the exact future. List your projected income to your event budget, this way you will be able to compare your predictions to the actual financial outcomes of your event – this will also benefit you while planning your future events!
3. Take advantage of technology
Long gone is the time of keeping your books up to date. Technology has advanced a lot further than even merely using Excel to manage your finances and I urge you to test out some applications or software that meets your finance-needs. There are a multitude of event planning software out there, some of them are integrated with a number of other tools such as email marketing or event analytics (among other things). Watch this video to see how.
4. Understand your obligations and responsibilities
Now you might have good overview of your finances and understand how to do what you need to do in order to manage a successful event. Always remember to ask yourself though, is there anything I might have forgotten? Do you need to take out insurance for your business? Do you need any specific certification or documentation for your event planning? Again here, the devil is in the details and as with most things in life, practice makes perfect and the more often you apply these tips, the easier it will become.