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„ Financial anageent involves
taking a istoric view of our group's
„  looking at our past records of
incoe 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
aritetical exercise  te are a
fundaental eleent of planning
and anageent
„ anageent is aout decision
taking and tis eans aking
assuptions aout te future
„ ?e est wa to get an accurate
forecast is to stud te past
perforance of te organisation and
identif trends
„ ooking at ontl figures rater
tan annual perforance figures will
naturall give earlier warning of an
cange in trend
„ learl if incoe can e predicted
wit a ig degree of certaint, a
finance anager can agree to
future expenditure
„ n a less certain incoe cliate,
anageent will need to find
was of protecting te
organisation fro risk  reducing
coitents and increasing
„ t¶s ver iportant to accuratel
easure te cost of our activities
„ ist our various activities ten
ssteaticall 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

sae watever te volue of output
and variale costs increase or
decrease directl in proportion to
„ ?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
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





Charity financial Business financial
managers managers



„ easuring perforance in
nonprofit organisations is
uc ore proleatic tan in
a coercial enterprise,
were te return on an
investor's capital is te ke
perforance indicator
„ ?ere is a legal oligation
for all organisations to
account for teir incoe
and expenditure  see te
accounting section for full
„ anageent reporting re uireents
are less prescriptive as te tend to
deal wit atters of
udgeent and
details peculiar to an individual
„ ood practice re uires tat financial
anageent inforation sould e
availale on a regular asis, as often
as necessar for decision taking and
at fre uent regular intervals for
onitoring purposes
„ For te saller carit
uarterl reports a e
sufficient ut for larger
carities sould ai for
ontl anageent
„ eing on top of our casflow is
„ e certain aout ow uc
one is in te ank and wat
ou can afford
„ f a large nuer of receipts are
coing in, it's advisale to report
on a dail asis
„ Financial reports are rarel
sufficient in te and sould
e accopanied 
uantitative inforation
werever possile ?is is
especiall iportant in te
case of services to
„ t is well wort keeping financial
procedures anual
„ ?is will allow te relevant staff  and our
anageent coittee  to consult and
operate witin its specifications
„ ou will need to decide wic of our
eers or eploees 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 exaple, igt
ave a spending liit of  for
ites of pett cas, wile a
departent anager igt ave a
liit of ,
„ mll tese details need to e recorded
in te procedures anual and
included in training progras
„ n general, nonprofit organisations are
exept fro incoe tax under te ?axes mct
 and fro capital gains under te
argeale ains mct 
„ ere a carit as trading susidiaries it is
coon to transfer an profit awa fro te
susidiar into te carit  wa of a profit
sedding covenant, tere reducing or
eliinating 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 anageent provides
anagers wit te inforation and
knowledge te need to support
operational decisions and to
understand te financial iplications
of decisions efore te are ade
„  t
also enales anagers to
onitor teir decisions for an
potential financial iplications
and for lessons to e learned
fro experience, and to adapt or
react as needed
„ $!!%!&%' %'(
)!!% !
„ Financial anageent gives
anagers te inforation tat eiter
fors te asis for calculating
financial inforation, or is used for
anageent control and
accountailit purposes
„ !!#"
„ Financialanageent enales an
organization to identif, assess
and consider te financial
conse uences of events tat
could coproise its ailit to
acieve its goals and o
and/or result in significant loss of
„ Financialanageent is an
iportant coponent of risk
anageent and needs to e
considered wit te full range of
usiness risks, suc as
operational and strategic risks as
well as social, legal, political and
environental risks
„ V%'(
%'! !%%'
„ Financial anageent is
necessar to ensure tat an
organization as enoug
resources to carr out its
operations, and tat it uses tese
resources wit due regard to
econo, efficienc and
„ #$!!&%'
„ Financialanageent is
essential for an organization to
understand and deonstrate
ow it as used te financial
resources entrusted to it and
wat it as accoplised wit
„ !%
„ Financial anageent contriutes to
prooting an organizational cliate
tat fosters te acieveent of
financial anageent o
ectives  a
cliate tat includes coitent
fro senior anageent, sared
values and etics, counication
and organizational learning
„ Financial anageent is essential
to ensuring tat an organization
carries out its transactions in
accordance wit applicale
legislation, regulations and executive
orders; tat spending liits are
„ 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
„ mlost ever fir, governent agenc, and oter
tpe of organization eplos one or ore financial
oversee te preparation of
financial reports, direct investent activities, and
ipleent cas anageent strategies
„ anagers also develop strategies and ipleent
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 incoe stateents, alance
seets, and analses of future earnings or
expenses, tat suarize and forecast te
organization's financial position

„ also are in carge of preparing special

reports re uired  regulator autorities
ften, controllers oversee te accounting,
audit, and udget departents

„ oversee te fir's issuance of credit,

estalising creditrating criteria, deterining
credit ceilings, and onitoring te collections
of pastdue accounts
„ onitor and control te flow of cas receipts
and disurseents to eet te usiness and
investent needs of teir fir
„ For exaple, cas flow pro
ections are
needed to deterine weter loans ust e
otained to eet cas re uireents or
weter surplus cas can e invested
„ ? 

„ direct teir organization's udgets to
eet its financial goals
„ ?e oversee te investent of funds,
anage associated risks, supervise
cas anageent activities, execute
capitalraising strategies to support te
fir's expansion, and deal wit
ergers and ac uisitions

„ onitor and control te flow of cas
receipts and disurseents to eet
te usiness and investent needs of
teir fir
„ For exaple, cas flow pro
are needed to deterine weter
loans ust e otained to eet cas
re uireents or weter surplus cas
can e invested

oversee progras to iniize risks and

losses tat igt arise fro financial
transactions and usiness operations
nsurance anagers decide ow est to
liit a copan¶s losses  otaining
insurance against risks suc as te
need to ake disailit paents for an
eploee wo gets urt on te
o or
costs iposed  a lawsuit against te
„ w

„ control financial risk  using edging and oter

tecni ues to liit a copan¶s exposure to currenc or
coodit price canges
„ anagers specializing in international finance develop
financial and accounting sstes for te anking
transactions of ultinational organizations
„ isk anagers are also responsile for calculating and
liiting potential operations risk
„ perations risk includes a wide range of risks, suc as
a rogue eploee daaging te copan¶s finances or
a urricane daaging an iportant factor
„ Financial institutions²suc as coercial
anks, savings and loan associations, credit
unions, and ortgage and finance
copanies²eplo additional financial
anagers wo oversee various functions,
suc as lending, trusts, ortgages, and
investents, or progras, including sales,
operations, or electronic financial services
„ ?ese anagers a solicit usiness,
autorize loans, and direct te investent of
funds, alwas adering to Federal and àtate
laws and regulations
„ V  of financial institutions adinister
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
counit to attract usiness, and assisting custoers
wit account proles ranc anagers also are
ecoing ore oriented toward sales and arketing
„ ms a result, it is iportant 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
„ n addition to te preceding duties, financial
anagers perfor tasks uni ue to teir
organization or industr
„ For exaple, governent financial anagers
ust e experts on te governent
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 iportant role in
ergers and consolidations and in gloal
expansion and related financing
„ ?ese areas re uire extensive, specialized
knowledge to reduce risks and axiize
profit Financial anagers increasingl are
ired on a teporar asis to advise senior
anagers on tese and oter atters
„ n fact, soe sall firs contract out all teir
accounting and financial functions to
copanies 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 aount of
tie it takes to produce financial reports
„ ?ecnological iproveents ave ade it easier to
produce financial reports, and, as a conse uence,
financial anagers now perfor ore data analsis tat
allows te to offer senior anagers profitaxiizing
„ ?e often work on teas, acting as usiness advisors
to top anageent