Financial Management & Forecasting
As part of the sustainability planning process, network members need to forecast the potential financial and budgetary implications of their decisions on the network's future operations. As with all aspects of sustainability planning, future budget estimates should be considered flexible and subject to change due to unforeseen changes in the operating environment (for example, changes in policy).
The National Rural Health Resource Center (NRHRC), as part of its webinar series on financial planning for rural health networks, suggests three rules of financial planning:
- Revenue and expenses must be in balance.
- There must be adequate resources available.
- The network organization must be able to replenish or renew itself.
In addition, networks should be aware of common missteps as they plan their financial future:
- Financial planning without strategy: It is difficult for a network to engage in strategic planning without first setting financial goals based on the network's vision. This may result in inefficient and unsuccessful budget forecasting. (See more information about strategic planning in Module 4).
- Lack of contingency plan: Because the potential for future funding is subject to unforeseen circumstances, having a back-up plan allows for unexpected expenses and extra income.
- Poor cash forecasting: Without a realistic idea of future cash inflows and outflows, it is difficult to make good financial decisions.
- Lack of approval from network members: The potential for conflict among network members is particularly acute when addressing financial issues if all parties are not on board with the financial decision-making.
According to the NRHRC, other commonly cited issues that have hindered the financial planning process include: taking too long to complete, requiring too much effort, and too many people involved in the process. However, in spite of these barriers, financial planning is an important process to undertake, as it informs the feasibility of future network activities.
Resources to Learn More
of Financial Forecasting for Rural Health Network Leaders
Recording of a webinar providing financial forecasting guidance and materials for rural health networks
Organization(s): National Rural Health Resource Center