2.8 Managing Finances

 Overview

Managing the finances of a VOPE in a transparent and responsible manner is imperative. This section covers some of the financial management issues that VOPEs would need to address.

According to the Business Dictionary (http://www.businessdictionary.com/definition/financial-management.html#ixzz32Fl435yz), Financial Management is defined as the planning, directing, monitoring, organizing, and controlling of the monetary resources of an organization.  The money or funds entrusted to your VOPE should be managed in such a manner as to efficiently and effectively support the objectives of the VOPE.  The Financial Management function is specialized and is usually the responsibility of the treasurer of your VOPE with the assistance of a bookkeeper or accountant and auditor. 

The following Financial Management topics are discussed in this section: 

  • 2.8.1 Registering the VOPE with Revenue Services
  • 2.8.2 Setting up financial policies and procedures
  • 2.8.3 Developing a budget for the VOPE
  • 2.8.4 Managing accounting and auditing for the VOPE
  • 2.8.5 Producing financial reports for donors, and other interested persons
  • 2.8.6 Receiving Payments
  • 2.8.7 Managing Members’ Registration Fees
  • 2.8.8 Purchasing
  • 2.8.9 Tips for running finances efficiently and transparently

 

VOPEs may need to register as a non-profit corporation/organization with the relevant revenue services or state authorities. A non-profit organization does not usually pay income taxes on profits, though there may be certain exceptions.

A good financial policy should be easy to understand, flexible, developed by involving employees and other stakeholders as well as easy to implement and administer. It is imperative for a VOPE to practise sound financial management in the most efficient way possible since VOPEs generally do not have the personnel to maintain and work with complicated financial systems.

A budget is simply an estimate of income and expenditure for a set period of time. This financial document is used to project future income and expenses and provides an estimate of whether the VOPE can continue to operate with its projected income and expenses.

Many VOPEs choose to manage some of the finance management tasks internally, but outsource accounting and auditing services to specialists. The management of the accounting and audit service providers will be more effective if you have your VOPE's expectations defined and communicated before engaging with specific service providers. This can be achieved by documenting the roles, responsibilities and structure of the Financial and Audit committees. Include this in the VOPE’s financial policies and procedures

"The financial statements(orfinancial report) are a formal record of the financial activities of a business, person, or other entity. The financial policy and procedure manual of your organization will specify when and how the financial report is published and presented to stakeholders. Relevant financial information is presented in a structured manner and in a form easy to understand.

The VOPE should provide secure and user-friendly options for members to pay their membership fees, and for special events and services such as conferences. Payments could be taken in cash, by bank deposit, via electronic funds transfers, via credit or debit card, or via electronic payment sites such as PayPal.

Once your VOPE receives membership fees, it is vital to allocate the payment to the correct member account and ensure the member is flagged as an active member and gains access to all of the member benefits. The payment transaction details, such as payment date and amount should be stored on your database to ensure a membership renewal notice is created when the membership of this particular member expires.

The procurement process involves managing a variety of activities, including ordering, receipt, review, approval of items from suppliers, endorsing supplier payments and managing suppliers against their contracts. Although supplier relationships might be less important for a VOPE, procurement procedures should specify how you manage these relationships, to ensure a high level of service is received. It is advisable to start off with developing and streamlining the procedures and policies relating to purchases in the VOPE’s Financial Management policies and procedures document.

Keywords: 
Finances, Budget, Purchase, Payments, Policy, Financial Control

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