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„ Financial
anage
ent involves
taking a istoric view of our group's
finances
„  looking at our past records of
inco
e and expenditure, ou can
for
an accurate idea of wat ou are
likel to receive and spend in te
future  oterwise known as udgeting
and forecasting
„ udgets are
uc
ore tan an
arit
etical exercise  te are a
funda
ental ele
ent of planning
and
anage
ent
„ anage
ent is aout decision
taking and tis
eans
aking
assu
ptions aout te future
„ ?e est wa to get an accurate
forecast is to stud te past
perfor
ance of te organisation and
identif trends
„ ooking at
ontl figures rater
tan annual perfor
ance figures will
naturall give earlier warning of an
cange in trend
„ learl if inco
e can e predicted
wit a ig degree of certaint, a
finance
anager can agree to
future expenditure
„ n a less certain inco
e cli
ate,

anage
ent will need to find
was of protecting te
organisation fro
risk  reducing
co

it
ents and increasing
reserves
„ t¶s ver i
portant to accuratel

easure te cost of our activities
„ ist our various activities ten
sste
aticall look at te costs of
running eac of te

„ t
is elpful to categorise te
as
eiter fixed or variale costs

„ Fixedcosts are tose wic sta te

sa
e watever te volu
e of output
and variale costs increase or
decrease directl in proportion to
volu
e
„ ?ink of te cost of using a car
over a ear  te fixed costs will
include tax and insurance,
wereas te costs of petrol and
repairs, wic will cange
according to ow
uc te car is
used, are variale
„ àervices provided  te voluntar
sector
igt not alwas e te

ost costeffective, and an
financial
anager will ave a
difficult
uggling act tring to
provide ig ualit services tat
users can afford, wile keeping a
close ee on te financial ealt of
te organisation
Comparisons between the commercial and non-profit sectors
Monitoring and reporting

Charity financial Business financial

managers managers
|

  
 




  

 

 








 
  




 
Charity financial Business financial
managers managers

m   







 
  





  

 




 



Charity financial Business financial
managers managers

Ê 
  

 



 

 
 


  
 




 
 

  


„ easuring perfor
ance in
nonprofit organisations is

uc
ore prole
atic tan in
a co

ercial enterprise,
were te return on an
investor's capital is te ke
perfor
ance indicator
„ ?ere is a legal oligation
for all organisations to
account for teir inco
e
and expenditure  see te
accounting section for full
details
„ anage
ent reporting reuire
ents
are less prescriptive as te tend to
deal wit
atters of
udge
ent and
details peculiar to an individual
organisation
„ ood practice reuires tat financial

anage
ent infor
ation sould e
availale on a regular asis, as often
as necessar for decision taking and
at freuent regular intervals for

onitoring purposes
„ For te s
aller carit
uarterl reports
a e
sufficient ut for larger
carities sould ai
for

ontl
anage
ent
accounts
„ eing on top of our casflow is
crucial
„ e certain aout ow
uc

one is in te ank and wat
ou can afford
„ f a large nu
er of receipts are
co
ing in, it's advisale to report
on a dail asis
„ Financial reports are rarel
sufficient in te
and sould
e acco
panied 
uantitative infor
ation
werever possile ?is is
especiall i
portant in te
case of services to
eneficiaries
„ t is well wort keeping financial
procedures
anual
„ ?is will allow te relevant staff  and our

anage
ent co

ittee  to consult and
operate witin its specifications
„ ou will need to decide wic of our

e
ers or e
ploees is allowed to
autorise spending, and ow
uc eac
person is ale to spend efore te
ust
ceck wit teir
anager
„ mn office assistant, for exa
ple,
igt
ave a spending li
it of  for
ite
s of pett cas, wile a
depart
ent
anager
igt ave a
li
it of ,
„ mll tese details need to e recorded
in te procedures
anual and
included in training progra
s
„ n general, nonprofit organisations are
exe
pt fro
inco
e tax under te ?axes mct
 and fro
capital gains under te
argeale ains mct 
„ ere a carit as trading susidiaries it is
co

on to transfer an profit awa fro
te
susidiar into te carit  wa of a profit
sedding covenant, tere reducing or
eli
inating an liailit for tax on profits
„ n
general financial
anagers
sould
ake sure te
properl classif receipts on
wic tax
a e recoverale
„ ovenanted donations
„ ift aid relief for single gifts
„ ifts free of capital gains tax
„ ifts free of ineritance tax
„ ifts fro
caritale trusts
„ ovenanted salaries
„ 
!"#
„ Financial
anage
ent provides

anagers wit te infor
ation and
knowledge te need to support
operational decisions and to
understand te financial i
plications
of decisions efore te are
ade
„  t
also enales
anagers to

onitor teir decisions for an
potential financial i
plications
and for lessons to e learned
fro
experience, and to adapt or
react as needed
„ $!!%!&%' %'(
%!!%!&%!!%!
)!!% !
„ Financial
anage
ent gives

anagers te infor
ation tat eiter
for
s te asis for calculating
financial infor
ation, or is used for

anage
ent control and
accountailit purposes
„ !!#"
„ Financial
anage
ent enales an
organization to identif, assess
and consider te financial
conseuences of events tat
could co
pro
ise its ailit to
acieve its goals and o
ectives
and/or result in significant loss of
resources
„ Financial
anage
ent is an
i
portant co
ponent of risk

anage
ent and needs to e
considered wit te full range of
usiness risks, suc as
operational and strategic risks as
well as social, legal, political and
environ
ental risks
„ V%'(
%'! !%%'
„ Financial
anage
ent is
necessar to ensure tat an
organization as enoug
resources to carr out its
operations, and tat it uses tese
resources wit due regard to
econo
, efficienc and
effectiveness
„ #$!!&%'
„ Financial
anage
ent is
essential for an organization to
understand and de
onstrate
ow it as used te financial
resources entrusted to it and
wat it as acco
plised wit
te

„ !%
 
„ Financial
anage
ent contriutes to
pro
oting an organizational cli
ate
tat fosters te acieve
ent of
financial
anage
ent o
ectives  a
cli
ate tat includes co

it
ent
fro
senior
anage
ent, sared
values and etics, co

unication
and organizational learning
„
 %'*$!$!
!#!!
„ Financial
anage
ent is essential
to ensuring tat an organization
carries out its transactions in
accordance wit applicale
legislation, regulations and executive
orders; tat spending li
its are
oserved
„ and tat transactions are
autorized t also provides an
organization wit a sste
of
controls for assets, liailities,
revenues and expenditures
„ ?ese controls elp to protect
against fraud, financial
negligence, violation of financial
rules or principles and losses of
assets or pulic
one
„ ml
ost ever fir
, govern
ent agenc, and oter
tpe of organization e
plos one or
ore financial

anagers
„ 

 

oversee te preparation of
financial reports, direct invest
ent activities, and
i
ple
ent cas
anage
ent strategies
„ anagers also develop strategies and i
ple
ent
te longter
goals of teir organization
„ ?e duties of financial
anagers
var wit teir specific titles,
wic include 
 
 
  

  (
  
 

 (




 

 (
!
 

 




„ 
 

„ direct te preparation of financial reports,

suc as inco
e state
ents, alance
seets, and analses of future earnings or
expenses, tat su

arize and forecast te
organization's financial position
„ 
 

„ also are in carge of preparing special

reports reuired  regulator autorities
ften, controllers oversee te accounting,
audit, and udget depart
ents
„   


„ oversee te fir
's issuance of credit,

estalising creditrating criteria, deter
ining
credit ceilings, and
onitoring te collections
of pastdue accounts
„
onitor and control te flow of cas receipts
and disurse
ents to
eet te usiness and
invest
ent needs of teir fir

„ For exa
ple, cas flow pro
ections are
needed to deter
ine weter loans
ust e
otained to
eet cas reuire
ents or
weter surplus cas can e invested
„ ? 
 



 

„ direct teir organization's udgets to

eet its financial goals
„ ?e oversee te invest
ent of funds,

anage associated risks, supervise
cas
anage
ent activities, execute
capitalraising strategies to support te
fir
's expansion, and deal wit

ergers and acuisitions
„ 



„
onitor and control te flow of cas
receipts and disurse
ents to
eet
te usiness and invest
ent needs of
teir fir

„ For exa
ple, cas flow pro
ections
are needed to deter
ine weter
loans
ust e otained to
eet cas
reuire
ents or weter surplus cas
can e invested
„w
 !

 



oversee progra
s to
ini
ize risks and

losses tat
igt arise fro
financial
transactions and usiness operations
nsurance
anagers decide ow est to
li
it a co
pan¶s losses  otaining
insurance against risks suc as te
need to
ake disailit pa
ents for an
e
ploee wo gets urt on te
o or
costs i
posed  a lawsuit against te
co
pan
„ w



„ control financial risk  using edging and oter

tecniues to li
it a co
pan¶s exposure to currenc or
co

odit price canges
„ anagers specializing in international finance develop
financial and accounting sste
s for te anking
transactions of
ultinational organizations
„ isk
anagers are also responsile for calculating and
li
iting potential operations risk
„ perations risk includes a wide range of risks, suc as
a rogue e
ploee da
aging te co
pan¶s finances or
a urricane da
aging an i
portant factor
„ Financial institutions²suc as co

ercial
anks, savings and loan associations, credit
unions, and
ortgage and finance
co
panies²e
plo additional financial

anagers wo oversee various functions,
suc as lending, trusts,
ortgages, and
invest
ents, or progra
s, including sales,
operations, or electronic financial services
„ ?ese
anagers
a solicit usiness,
autorize loans, and direct te invest
ent of
funds, alwas adering to Federal and àtate
laws and regulations
„ V


 of financial institutions ad
inister
and
anage all of te functions of a ranc office o
duties
a include iring personnel, approving loans
and lines of credit, estalising a rapport wit te
co

unit to attract usiness, and assisting custo
ers
wit account prole
s ranc
anagers also are
eco
ing
ore oriented toward sales and
arketing
„ ms a result, it is i
portant tat
te ave sustantial knowledge
aout te tpes of products tat
te ank sells
„ Financial
anagers wo work for
financial institutions
ust keep
areast of te rapidl growing
arra of financial services and
products
„ n addition to te preceding duties, financial

anagers perfor
tasks uniue to teir
organization or industr
„ For exa
ple, govern
ent financial
anagers

ust e experts on te govern
ent
appropriations and udgeting processes,
wereas ealtcare financial
anagers
ust
e knowledgeale aout issues surrounding
ealtcare financing
„ oreover, financial
anagers
ust e
aware of special tax laws and regulations
tat affect teir industr
„ Financial
anagers pla an i
portant role in

ergers and consolidations and in gloal
expansion and related financing
„ ?ese areas reuire extensive, specialized
knowledge to reduce risks and
axi
ize
profit Financial
anagers increasingl are
ired on a te
porar asis to advise senior

anagers on tese and oter
atters
„ n fact, so
e s
all fir
s contract out all teir
accounting and financial functions to
co
panies tat provide suc services
„ ?e role of te financial
anager, particularl in
usiness, is canging in response to tecnological
advances tat ave significantl reduced te a
ount of
ti
e it takes to produce financial reports
„ ?ecnological i
prove
ents ave
ade it easier to
produce financial reports, and, as a conseuence,
financial
anagers now perfor

ore data analsis tat
allows te
to offer senior
anagers profit
axi
izing
ideas
„ ?e often work on tea
s, acting as usiness advisors
to top
anage
ent