Improving your financial management
This page of the Guide is aimed at organisations who realise they have many inter-related problems with their financial management.
Once a strategic decision to improve financial management is made, the next question is how to go about doing it.
- Warning about change management
- Where are we now?
- Where are we going?
- How do we get there?
- Making the most of training
Change is nearly always met with resistance. People generally do not like change for a variety of reasons, including fear of the unknown and all the extra effort that it requires. Be prepared for an uphill journey that might be tiring, but immensely rewarding.
The most critical aspect to successful change management is getting ‘buy-in’ or support from key people in your organisation, particularly senior management. Ensure staff are informed, consulted and given the opportunity to give input and feedback.
Three strategic questions for improving financial management
An important starting point is to assess the current situation. It is helpful to define the problems before trying to fix them.
You can use Mango's Health Check as a participatory self assessment tool covering all the key areas of financial management, to discover which areas are healthy and weak. The Health Check is most effective when completed in a workshop with senior management, some Board members, finance and programme staff to build buy in. This approach requires identification of someone in the organisation with group facilitation skills, time, determination and management support to lead the process and see it through.
Mango’s Integration Checklist can also be used as a self assessment tool, focussing on getting finance and programme staff to work together effectively.
Alternatively, you could engage a consultant to facilitate a financial management assessment. The consultant could use the Health Check or other tools or approaches, but it is critically important that the process is participatory and involves a range of staff.
This route has cost implications, which would need to feed into your budget for next year. Many donors are enthusiastic about improving financial management.
If you have used Mango’s Health Check to assess your strengths and weaknesses, a good target is to achieve ‘low risk’ status in each of the sections and an overall score over 300. By looking at the analysis of your answers, it will be easy to identify which areas need most work.
Any assessment process should highlight areas of weakness and make recommendations. The answer to ‘where are we going?’ should be the implementation of the most important recommendations.
Do remember that it is a continuous process, and may need to be taken in steps rather than all at once.
You will be able to implement most improvements yourself. Here are examples of recommendations that cost nothing to implement other than decision, commitment and senior management support:
- ensuring that financial and programme staff meet together to discuss the budget monitoring reports and decide on appropriate actions
- ensuring that each and every payment made by the cashier is properly authorised
- carrying out witnessed and documented cash count reconciliations every month end
- changing signatories to get people who are available, to avoid signing blank cheques
There may be other areas where you feel you need technical support to improve, such as computerising your accounting records, recruiting qualified finance personnel, training staff or board members, updating a finance manual, carrying out regular internal audits etc.
In this case, consider the following options and advice:
1. Use Mango’s Guide
- Mango’s Guide (www.mango.org.uk/guide) contains free advice and downloadable tools covering a wide variety of areas. Use the search function to see if there guidance on the area you need.
2. Get help from other NGOs
- Ask other NGOs in your network or region if they have found solutions to similar challenges. They may be able and willing to help.
3. Ask you auditor
- You auditor may be able to provide you with other services
4. Recruit staff or engage a consultant
- Mango maintains a register of qualified finance staff with field experience available for short or longer term assignments.
5. Training for staff and board members
- Mango offers highly acclaimed training courses covering a range of financial management issues. If you have not already done so, set aside funds for training in your next budget (1% of salary is a good rule of thumb for staff development). You can also see if you qualify for assistance under our Bursary scheme.
Sending staff or board members on a training course has the advantage of exposing them to new ways of thinking about finance and learning new skills. However, if only one person in your organisation is trained, it can be very difficult for them to come back and implement changes on their own. Trainees on our courses frequently tell us on their evaluation forms that they would like their boss to attend the course for this reason.
One of the best ways to get the most out of a financial training course is to send more than one person, e.g. the programme manager and finance person together, so that they can work together to implement changes after the course.
It is common practice for people to write reports after attending a training event. While this might generate documentation for an audit trail, it is unlikely to result in any change. The individual benefits, but the organisation may not.
It is better if the trainee(s) have an opportunity to share the key messages and action points from the training in a meeting. To increase the chances of this being successful:
- Where possible, ensure that those who attend training courses have the potential to become change agents (i.e. are proactive and confident)
- After the training, allocate time for the trainee(s) to prepare so they can present what they learnt
- Make the meeting compulsory for key people to attend, including at least one Senior Manager
- Allocate sufficient time for the meeting
- Take the action points seriously, allocating responsibility to particular individuals
- Appoint a ‘champion’ who is given permission to chase up others on what they have promised to do
- Set a date for a review meeting to check on progress