EICM 9E Domain D Flashcards
Financial Management
Managing event funding & resources
Managing revenue sources including sponsorships, registration, grants, exhibit sales, & merchandise sales
Managing the budget
Developing the budget, establishing pricing, and monitoring and revising the budget
Managing monetary transactions
Establishing and monitoring internal controls and cash handling procedures
Sponsorships
Major funding source for events
Contributes to the financial bottom line
Helps with cash flow
Effectively maintaining relationships with suppliers/partners
Sponsor prospectus
Contains information to assist the prospective sponsor in making a decision. Includes:
Overview/history of event
ROI measures and opportunities
Description of the value of sponsorship
Letter of proposal
Audience demographics
Sponsorship benefits
Terms & conditions
Draft programme of the event content
Title or Main Sponsor
Sponsor will underwrite the majority of the event and its name will be associated with the name of the event
Tier model of Sponsorship
A most traditional sponsorship model; bronze, silver, gold levels with pre-determined benefits for each.
Credit model of Sponsorship
A hybrid between a customized model and a tiered model with pre-set benefits. Sponsors and partners can choose from a list of benefits that are assigned credit values. This model can be easier and faster to administer
In-kind Sponsors
Provides goods or services at no cost to the event. Can be very valuable in reducing overall costs
Subvention
Common industry practice in international meetings market. It is used where competition is high to attract large congresses or events. It is financial support provided by the host destination or government as an incentive to event organizers.
Application Service Provider (ASP)
Online registration companies that offer customizable registration forms, secure sites, credit card transaction processing and automated confirmations.
Hosted Buyer Program
Offers complimentary travel, accommodations, and registration for pre-qualified buyers to attend and exhibit.
Budget
Key piece of event planning information. An estimate of anticipated income and expenses for the event and provides financial control and accountability.
Fixed Costs
Costs which are incurred regardless of the number of attendees at your event. I.e. meeting room rental, marketing, insurance, signage, AV & overhead
Variable Costs
Costs that vary according to the number of attendees such as F&B, and printed material
Indirect Costs
Organizational expenses not directly related to the event, such as salaries, wages, overhead & equipment repair.
Incremental Budgeting
Review past history, preferably the last 3 years, and compare projected and actual figures from previous budgets. Review the post event report. Determine whether there have been any changes to the event goals & objectives. Update the revenue and expense items with current fees & costs. Be aware of any factors that could significantly impact attendance or costs.
Zero-based Budgeting
If the event has never been held before, there is no financial history and the budget is created using estimates of anticipated income and expenses. This practice can be helpful for events with historical budgets to avoid automatically adding expenses that may no longer align with the event’s goals & objectives.
Zero-based Budgeting Best Practices
Conduct careful research regarding the economic and business environment, potential competitors, target market and pricing.
Review budgets from similar events.
7 Common Mistakes of Budget Planning
Allow contingencies for the unexpected
Include tax and service charges
Include labor costs
Communicate clear policies to speakers & staff
Review master account daily
Rely on history for meal guarantees
Know the value of your business
Buy Forward
Method of hedging currency risk. This establishes a fixed exchange rate to accurately budget all fixed and variable costs in the home currency. This is a contract to exchange a certain amount of money on a specified date at a specified exchange rate.
Value Added Tax
This is a point of sale tax that is levied by various countries at different rates for different commodities.
Calculate number of attendees required to break even
Subtract variable costs from registration fee to get the contribution margin. Next divide total fixed costs (FC) by contribution margin (CM)
Reg fee = 500
VC = 300/person
FC = 10,000
Contribution Margin: 500 - 300 = 200
FC/CM: 10000/200 = 50
Event will break even with 50 attendees
Calculate break even registration fee
Divide fixed costs (FC) by number of attendees then add VC
FC = 10,000
Estimated Attendees = 100
VC = 200/person
Break Even Reg fee: 10,000/100 + 200 = 300
Specified profit registration
To calculate; Add specified profit to FC then divide by estimated attendance. Then add VC.
Specified profit = 20,000
FC = 10,000
Estimated attendance = 100
VC = 200/person
Reg fee: (20,000+10,000)/100 + 200 = 500
Cash Accounting
Counts income and expenses as they are actually received and paid. This method does not recognize promises to pay (AP) or expectations of revenue (AR). Income and expenses are recorded at the time of each transaction.
Accrual Accounting
Counts income and expenses as they are earned and incurred. This method records items as they relate to net worth when they are incurred, regardless of the ebb and flow of an organization’s finances.
Income Statement (profit and loss statement)
Statement of revenues and expenses over a period of time
Balance Sheet
Indicates overall financial status by subtracting expenses from income. This sheet provides the bottom line; total amount of assets, liabilities, and net worth at a particular point in time.
Cash Flow Statement
This statement does not include the amount of future incoming and outgoing cash that has been recorded on credit. This is determined through 3 methods which cash enters and leaves; core operations, investing, financing.
Chart of Accounts
A detailed list of the individual line items that make up the revenue and expense categories in a budget.
Billing Timetable
Illustrates the budget lifecycle of an event, from its inception to the final payment of the master account and helps monitor cash flow.
