Preparing Event Budget: what to do

Your event budget is basically a projection of all income and expenditure relating to the development and delivery of the event. To help you manage event finances effectively it’s a good approach to keep a ‘live budget’ on your computer – i.e. a spreadsheet that you update on a regular (daily/weekly) basis. Set up your budget in a package such as Microsoft Excel so that you have numeric functions to help you manage the financial data.

Budget Preparation Tips

> Ensure that you build appropriate contingencies into your budget.

> Present your budget clearly and make sure it is easy to read and interpret.

> Be realistic. Never include funding sources that are unlikely to materialize.

> If relevant – for example, if the event finances are processed through a parent organization – ensure the cost centre you set up in your event budget (i.e. marketing, production, etc) integrate with the ‘parent’ accounts system.

> Each and every item of event income and expenditure should be recorded in your event budget.

> The complexity of your budget will depend on the size or nature of your event.

If the budget is extensive, and you are employing a software package such as Microsoft Excel, it’s a useful approach to link worksheets to the front page ‘budget summary’ in order to keep a detailed breakdown of each line in the budget.

> State clearly if your budget is presented as NET (it does not include VAT) or GROSS (it does include VAT). Broadly speaking, if you are VAT registered and able to reclaim the VAT keep a NET event budget. If you are not VAT registered and therefore unable to reclaim the VAT keep a GROSS event budget. If in doubt, seek the advice of your/an accountant.

> Be aware of the VAT status of any income that you receive. For example, grants are generally not subject to VAT but commercial sponsorship is likely to be. Errors or misunderstandings can be costly.

> Ensure you understand your liability to pay VAT on ticket income and other sales.

> Be conservative with regards to ticket income targets. When entering a projected ticket income, ensure that you have worked out exactly how many tickets you would have to sell to achieve it. Remember to take into account any tax deductions, concession rates, group bookings or special offers and their likely impact on your target.

> It is important that you record the value of any ‘in-kind’ support you receive. However, to avoid getting your ‘in-kind’ values mixed up with the actual cash at your disposal, it’s advisable to keep a note of your in-kind support separately. If you do choose to show ‘in-kind’ figures in your budget, make sure you enter the value as an income as well as expenditure and mark both entries as ‘in-kind’.

> Always back-up and archive your budget as necessary. Ensure that you keep a record of which versions you have presented to outside parties such as funding partners.

Control Mechanisms

> The Budget Holder: It’s advisable that one person is ultimately responsible for updating and managing the overall budget – ideally the event manager or producer.

If others in the team are given authority for certain budget elements, set control mechanisms in advance and ensure they understand and agree the level of budget available to them.

> Coding: If relevant, set up an appropriate invoice coding system so that budget information can be easily entered (and filtered) in accordance with any existing accounts system.

> Purchase orders: Where possible, raise purchase orders. These not only provide a checking mechanism when passing invoices for payment, but they confirm to the supplier exactly what you want and when you want it. Ensure you add delivery details and contact telephone number, especially if the order is to be delivered to a temporary event site.

> Processing invoices: Depending on what already exists within your organization, it’s a good idea to put in place a system for approving invoices relating to the event.

One control mechanism is to attach ‘approval slips’ to each invoice in order for the budget holder to code them, ‘sign them off’ and add any appropriate notes for the book keeper (or person who writes the cheques). Whatever system you employ, ensure that invoices do not get paid until the event budget holder has approved them and has updated the ‘live budget’ accordingly. The point is to keep on top of all event expenditure.

> Petty cash: Ensure that all petty cash spend is factored into the budget. When issuing petty cash in advance, ensure that you do so in exchange for a signed petty cash slip (you can make your own or buy them from stationers). Ensure that receipts for all petty cash purchases are collected, numbered and properly coded. It’s useful to provide a petty cash template for those in receipt of cash. Here’s a sample template for you to adapt to your purposes.

 Good record keeping: Keep all your financial information on file and at hand. Make hard copies of your key documents. Back up all your computer files to CD or DVD on a regular basis.

> Cash flow projections: Ensure that you plan your cash flow effectively. The lack of available cash could well bring your operation to a halt and put the whole team and event under unnecessary pressure.

Remember that entries in the cash flow will be GROSS (i.e. they will include VAT). If you are VAT registered and the event is not the sole business of the company, your VAT payments/claims should be factored in to your overall company cash flow. Again, if you are working within a wider organizational structure, ensure that you plan your cash flow with the finance department.