Financial Management video transcript - Refugee Council
May 29, 2009

Financial Management video transcript

We’re writing transcripts to go with all of our videos. Here’s the first, for the video Financial Management – an introduction for refugee community organisations.

With John O’Brien, Chief Executive, Community Accounting Plus.

“I think the first thing to say about financial management is that by and large it’s common sense and if you do what you think is sensible you won’t go far wrong. It’s true that there are some skills and techniques you can learn that will make the job easier – and that’s very important. But I also think it’s true to say that for a successful group, for a group to good work and to deliver good services, managing the finances well is essential.”

Caption: The secrets of good financial management are to: keep things simple, develop routines, and get into good habits.

“Think of it as managing your own finances – in a way you’re managing other people’s money so you need to be even more careful and be more accountable – but it’s really not as complicated as people might think.”

Caption: 1. Financial controls

“Financial controls are very important and it’s a good practice to agree what these controls are – or rules, or procedures, if you like – and actually get them written down so that the trustees or board or committee can agree that these are our rules. And they can be very simple things like who writes the cheques – you wouldn’t, for example, want a member of staff to be able to sign cheques for themselves. I’m not saying they’d steal the money but it’s good practice. So, who can sign the cheques, who approves expenditure – that kind of thing. What are the rules for petty cash? Do you have to get a receipt each time you buy some milk? And the answer is, you ought to!”

Caption: 2. Accounts

“A good general principle when you’re keeping accounts in a very simple way when you’re keeping track of receipts and payments is: if it happened, write it down. And if it doesn’t, don’t. It’s amazing how often people get that wrong and saying ‘let’s pretend this happened and pretend that happened’, and that usually ends in tears. So, as a basic principle: if it happened, write it down.”

Caption: 3.  Budgets

“In its simplest form a budget is simply a plan expressed in terms of money. And the starting point for a budget is always that the organisation – the committee members, the staff, the volunteers, the beneficiaries sometimes – should agree what the plan is. What are we actually going to do in this period ahead – usually a year.

“Once the plan’s been set and we know what we’re going to do for a year, then someone, usually a finance person or a small group or a sub-committee, will get together to work out the budget for that. What are we going to spend on staff salaries, volunteer expenses? That kind of thing. What are the premises costs going to be? What are the administration costs going to be – telephone, rent, that kind of thing? And then any other activities, like conferences, training, that kind of thing.

“Normally you’d work out how much it’s going to cost you to do what you want to do and then the question is, well, how are we going to finance it. What income can we get? What grants can we get? What fundraising? And, of course, do we have anything in reserve? We may have money brought forward from the previous year that we haven’t spent yet. And the idea is that that financial plan – budget – will be presented to and approved by the board and then that becomes, if you like, the standard, that’s what we’re going to do – we’ve all agreed.”