Tag Archives: #financial control

How to tell whether you are managing the finances of your organization in a prudent manner

Managing money

The following questions can help you understand whether you are managing the finances of your organization in a prudent and sensible manner.

  • Where is your organization money kept?
  • What interest are you earning on it?
  • Is this the best place for your money?
  • Who has authority to withdraw money, how much and for what reasons?
  • What policy statements exist to guide levels and items of expenditure?
  • How do you report what was spent?
  • Who keeps the records?
  • Who checks the records?who audits your accounts?
  • What financial controls are in place in your organization?
  • How do you save on projected expenditure?For example:
  • Travel-look for accounts, group rates.
  • Accommodation-seek volume discounts,make arrangements with one hotel and use it whenever needed.
  • Seek donations of resources-e.g office space, office equipment, vehicles,fuel, insurance and clothing.Are there others?
  • How successful have your money management practices been in the past?
  • What do you need to improve?

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How to buget in a successful company

Budgeting

A budget is a plan for your programme expressed in financial terms.In order to create your budget you need to know how much money you have coming in, how much you are spending and how much money you should be spending.This requires you to identify the following:

  • Sources of revenue,or how much money will come in including in kind contributions.
  • The costs of the services your organization delivers.
  • Overhead costs including salaries,rent and electricity.
  • Any other costs, such as investment in equipment, maintenance,value in kind,volunteer benefits and payroll taxes.
  • Once you have the information , you can develop a budget, outlining areas where revenue will be spent.When calculating expenditure, remember to consider inflation or increases in costs such as fuel increases,or annual salary increases.Be careful not to over estimate the income and underestimate the expenditure.The last step is to get approval for your budget.In many organizations approval of the budget is done by the board.Be sure to avoid:
  • Spending resources without a budget.
  • Starting initiatives for which there is no budget alloted in the respective year.
  • Reallocating budget resources from one item to another because this shows a lack of financial control.
  • Asking funding sources for more resources because you did not estimate your budget accurately.
  • Multiplying charges to seek additional revenue by having more than one source cover any expenditure.Such as charging travel costs to both the club and federation.
  • Large price tag on miscellaneous/other items.
  • Large overhead budgets which include high salaries or unnecessarily high rent.

You should control expenditure of the budget with regular reporting on the differences between actual and budgeted results.This analysis helps you to:

  • Identify quickly whether things are going on as expected.
  • Identify where corrective action is required.
  • Review plans, policies and decisions in light of performance.
  • Revise budgets if necessary.
  • Plan and coordinate the use of resources.
  • Predict potential problems.

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How to manage organization finance.

One of the cornerstones of a successful organization is having a sound financial management.Everyone with financial responsibility must understand the following terms:Assets, Liability, Running costs, Surplus,Deficit,Liquidity,Reserves, Balance sheet, Income and expenditure statement, Capital expenditure, Operating expenditure.

Keeping accounts-Accounting is the process of tracking and cataloguing income and expenditure.It is also a key tool for financial control.You will need to keep accounts that show daily transactions as well as an overall picture of the financial workings of the organization.Accounts should show income and expenditure and keep track of assets and liabilities.A petty cash account should be opened and kept separately to account for the actual cash kept by the organization.

Financial statements -The two main documents that need to be be presented to the membership of the organization are balance sheet and the income and expenditure statement (or profit and loss account). Complementary documents may be required.These documents will give members a feel for the financial stability of the organization and as stated above are tools for financial control.

Balance sheet – Your balance sheet is the list of assets and liabilities your organization has at a given time.It sets out the fullest financial picture of your organization at a particular time and reading.The balance sheet must contain the following:

  • The final balances of the preceeding financial year.
  • Break down of the capital employed
  • Details of freeholds and leases.
  • Value of patents and trademarks
  • Valuation of fixed assets and how the figures we’re arrived at.
  • Details of any investments and their values.
  • Loans
  • Cash and debts
  • Stock and the basis of it’s valuation.
  • Total bank loans and overdrafts.

Income and expenditure statement This statement is an analysis of how the capital or net worth of your organization has changed over a given period.It is a record of income generated and expenditure incurred over this period.An income and expenditure account must show:

  • Turnover: total value of income that your organization receives during a particular period of time.
  • Income from rents and invest
  • Equipment hire charges
  • Depreciation charges and how they are arrived at.
  • Interest on loans
  • Tax charges (if applicable)
  • Transfer to and from reserves
  • Any exceptional accounting adjustments.

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Success! You're on the list.

How to manage organization finance.

One of the cornerstones of a successful organization is having a sound financial management.Everyone with financial responsibility must understand the following terms:Assets, Liability, Running costs, Surplus,Deficit,Liquidity,Reserves, Balance sheet, Income and expenditure statement, Capital expenditure, Operating expenditure.

Keeping accounts-Accounting is the process of tracking and cataloguing income and expenditure.It is also a key tool for financial control.You will need to keep accounts that show daily transactions as well as an overall picture of the financial workings of the organization.Accounts should show income and expenditure and keep track of assets and liabilities.A petty cash account should be opened and kept separately to account for the actual cash kept by the organization.

Financial statements -The two main documents that need to be be presented to the membership of the organization are balance sheet and the income and expenditure statement (or profit and loss account). Complementary documents may be required.These documents will give members a feel for the financial stability of the organization and as stated above are tools for financial control.

Balance sheet – Your balance sheet is the list of assets and liabilities your organization has at a given time.It sets out the fullest financial picture of your organization at a particular time and reading.The balance sheet must contain the following:

  • The final balances of the preceeding financial year.
  • Break down of the capital employed
  • Details of freeholds and leases.
  • Value of patents and trademarks
  • Valuation of fixed assets and how the figures we’re arrived at.
  • Details of any investments and their values.
  • Loans
  • Cash and debts
  • Stock and the basis of it’s valuation.
  • Total bank loans and overdrafts.

Income and expenditure statement This statement is an analysis of how the capital or net worth of your organization has changed over a given period.It is a record of income generated and expenditure incurred over this period.An income and expenditure account must show:

  • Turnover: total value of income that your organization receives during a particular period of time.
  • Income from rents and invest
  • Equipment hire charges
  • Depreciation charges and how they are arrived at.
  • Interest on loans
  • Tax charges (if applicable)
  • Transfer to and from reserves
  • Any exceptional accounting adjustments.