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Sustaining the CLT as a community enterprise

Finance – CLT Revenue Viability provides guidance on drawing up a revenue budget for the CLT once the scheme is complete which may now need looking at again.

This budget should be reviewed again before the work begins on site and when it is nearing completion so as to take account of inflation and any other changes in income or costs.

If your scheme includes elements other than housing, they will need adding to the budget. It is worth considering each on its own to examine what net contribution they can make to overheads. The High Bickington budget example includes forecast income for workshops, a community building and the provision of heating from a wood-chip boiler to all elements of the scheme. The surpluses from all the different elements are then needed to meet the cost of a part-time employee plus a range of other overheads. Alternatively these central costs could be estimated and then reallocated appropriately to each revenue generating element.

As set out under finance, you will need to be sure at this stage that

  •  you have a reserve sufficient to enable the CLT to withstand short term cash flow shortfalls caused by advance costs like insurance, late rent payments, legal fees in a dispute or other eventualities. The alternative is to negotiate a bank overdraft when needed but this is a less certain or secure route and does not deal with the possibility of incurring unexpected costs which cannot be recovered.
  •  future liabilities are provided for in particular for external painting of rented homes and for replacement of worn out components like boilers or fitted kitchens
  • arrangements for the dealing with day to day management, letting and sales issues have been thought through, whether this will done by volunteers, a paid employee or an agent such as a housing association
  • account is taken of inflation
  • the CLT Board receives quarterly management accounts showing income and expenditure against the budget; year end accounts; and a budget for the coming year prior to its beginning
  • a revenue cash flow forecast will also be needed to check that income will arrive in time to meet loan repayments, insurance and maintenance
  • on the positive side, consideration might also be given to how any surplus might be used to meet the feasibility and pre-development costs of additional developments of housing or other amenities; or even how the CLT might develop once the debt is repaid!

The project management tool provides a model revenue cash flow.