Financial management

Whatever the size of your organisation, sound financial management is essential for sustainability. Rather than being seen as a separate function (just 'doing the books') the finance function should be integrated within, and add value to, your organisation’s fundraising and overall planning activities.

This section will help you understand:

• how to develop a financial strategy
• implement sound management accounting procedures
• and understand charity reporting and tax rules of financial accounting.

Financial strategy

A financial strategy enables your organisation to assess the financial needs and sources of support required to meet your organisational objectives and fulfil the mission, whilst also planning for continued growth to enable stability. Only when this has been done can discussions on preparing a budget begin.

This section is for financial directors, chief executives and trustees.

• Read about financial strategy
• Read about investment

Or jump to information on:

• Financial planning
• Risk
• Developing an investment policy
• Receiving investment income or social investment.

Management accounting

Managing financial resources is about getting the most from the resources you have available. It involves implementing resource management procedures and controls that can include managing costs as well as maximising opportunities. Management accounts are useful internal documents that help you to control cashflow and assets, as well as plan for the future.

This section is for finance director and other members of staff working with accounts

Management accounting covers:

• Cashflow management
• Budgeting
• Working capital management
• Dealing with financial difficulties - cashflow crisis and insolvency advice.

Or jump to information on:

• Full cost recovery
• Model cash flow forecasting
• Developing controls for cashflow and assets or working capital management
• Identifying and managing financial difficulties / cash flow crisis and insolvency
• Developing spreadsheets for budgetary controls
• Sharing and making management accounts accessible.

Financial accounting

Your organisation’s accounts give information about its past performance and overall financial health. Preparing a clear set of financial accounts will help your organisation be accountable to its external stakeholders and stay financially sound. While management accounting is largely forward looking, your financial accounts will focus on your organisation’s past performance.

This section is for financial directors, chief executives and trustees.

Read about financial accounting.

Or jump to information on:

• How to conduct a financial health check
• Preparing charity accounts according to the Statement of Recommend Practice (SORP)
• Auditing guidance
• Tax rules for charities.

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About this section

This financial management section has been written to support finance professionals new to the charity sector, trustees, and chief executives.
Where different rules or standards apply depending on the size or type of organisation is explained in each relevant section.

If your organisation has a social purpose but is not registered as a charity as well as the advice given in this section also take a look at advice provided by Business Link.

This section was revised and updated 2012 by Yogita Rajani, Client Advisor to Charities at UBS Wealth Management and Charity Accounting and Financial Management Masters student at Cass Business School.