The Rural Community Assistance Partnership (RCAP) has released a new guidebook to help small, rural communities manage the finances of their drinking water and wastewater utilities.

RCAP’s The Basics of Financial Management for Small-community Utilities is a primer on the oversight of a water system’s financial aspects. It explains in simple language how to read common financial documents—balance sheets, income statements and cash-flow statements. The guide includes a discussion on the framework that is necessary for effective financial management, which should have various policies in place. The guide provides sample text for all of the basic financial policies a small utility should have. The text of each policy is also provided in the section for the guide on the RCAP website so a utility can download it, adapt and edit it for its own use.

The guide is ideal for members of a board or council overseeing a water utility who may not fully understand the reports provided by the utility’s accountant or bookkeeper and the terms these financial specialists use. Leaders of utilities need to understand their system’s finances as a central aspect of its operation and be informed regularly about them in order to make sound decisions. This guide explains in straightforward terms the information that financial reports provide and how to interpret the information.

“Financial resources are central to the operation of any enterprise, from small businesses to large corporations to the smallest utilities,” said Robert Stewart, RCAP Executive Director. “A utility’s board should be receiving regular financial reports and, most importantly, understand what they are saying. They are a regular check-up on the financial health of your operation.”  The guide was written by Community Resource Group, the Southern RCAP, which has many years of experience in training and helping small communities understand their utilities’ finances.  “This guide is an introduction to financial management for someone who isn’t a financial specialist,” explained Stewart.

RCAP has produced a short video to help promote use of the guide. The four-minute video can be shown at events such as conferences or meetings or viewed by individuals who want to learn about the guide before obtaining it. It is available at www.vimeo.com/32533757.

The Basics of Financial Management  s one of ten guides, as well as related multimedia resources, that RCAP has produced in 2011 for small, rural communities. Each guide has been written and reviewed by field staff who are experts in the subject of the guide they are producing. All guides are general enough to apply to most communities across the country, regardless of their location, size and their state’s rules and regulations. The RCAP national office in Washington, D.C., is responsible for the distribution of these resources, which will complement and support RCAP’s field work in providing in-person, customized assistance through its 145 Technical Assistance Providers.  A list of the other ten guides that will be produced and a description of each is at www.rcap.org/commpubs.

The guidebooks are being funded as part a $5 million grant of ARRA funds secured by RCAP and furnished by the U.S. Department of Agriculture-Rural Development.



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