Report : Financial Best Practices In Financial Management

Develop a financial plan to feasibly meet our budget constraints (KMAONE, 2013). In order to maintain an in-house

ReferencesRobert D. H. & Associates (2005). THE JOSSEY-BASS HANDBOOK OF NONPROFIT LEADERSHIP & MANAGEMENT (2nd ed.). San Francisco, CA: John Wiley & Sons, Inc.

Financial Management is an important aspect of how a business operates efficiently. The way that the finances are controlled can determine how successful the company is. The finances of a business allows for the growth of the company. The five practices of financial management: capital structure decision, investment appraisal techniques, dividend policy, working capital management and financial performance assessment are critical when assessing a company. The performance of a company plays a key role on how successful the company is on meeting goals. There are different strategies and tools that a company can implement and if they are used to effectively the company can meet their goals. If a company has good finances, a good

I know that providing information of financial reports is the primary objective for useful and productive decision making. This is absolutely critical for a manager in a business. For this ability I will depend on the financial reports to give me an idea of where the profits and losses were for a specific period of time, and it gives me a business look at the past, present and future in regards to expenses of operation. Within these expenses is an array of costs that include; lease or payments of buildings, salaries, utilities, profit margins, product cost, employee expenses, company benefits, comp insurance, supplies, equipment, and any other outgoing expense for the business including accounting and attorney fees.

V. Explain to individuals and groups the details of financial assistance available to college and university students, such as loans, grants, and scholarships.

When people talk about support for nonprofits, they typically refer to financial supports. “Money is a constant topic of conversation among nonprofit leaders: How much do we need?

This paper was originally written for Financial Management for Nonprofits 380, taught by Professor Zelhart.

The first thing that can be learned about every nonprofit comes from reviewing the Statement of Activities and the following Statement of Functional Expenses. These statements describe a broad categorization of the different program related services provided and the supporting services needed to run those programs. Expenses related to these programs are defined as those directly relating to the organization’s mission or purpose. For AHA, their programs include research, public health education, professional education and training, and community services. Supporting services are those that do not directly relate to the mission or purpose of the organization, and therefore can be further split into services required to generate future contributions and services to run the administrative side of the organization. The Statement of Functional Expenses provides a breakdown of natural expenses (salaries, rent, professional fees, etc.) by the different program and supporting services. This allows the user to see a breakdown of the salaries expense number by program, fundraising, and administrative staff. A common tool for comparing and evaluating nonprofits is to compare program expenses to

It is the utmost concern of the leadership in the nonprofit to guide the organization through financial control. Through the guidance of the board of directors and officers, the organization aims to achieve its mission and vision. This accomplishment cannot be done without the strategic plan of financial control put into place by the leadership. It is important to set up internal controls and according to the Council of Nonprofits, financial management practices that are systematically used to prevent misuse and misappropriation of assets, such as occur through theft or embezzlement" (Council of Nonprofits, 2016). Leaders in the nonprofit world would do well to ensure they are following all the standards of best business practices and remaining accountable to the board, state, and

The nonprofit sector faces many challenges that make it more difficult to measure its financial performance. Young (2007) states that the survival of nonprofit businesses depends upon receiving financial funding from outside donors such as donations from charities, government contracts, endowments et cetera, and the necessity for having several different revenue sources is a challenge for nonprofit management. In addition, he points out that securing capital for operating is also much different than in the traditional business world. Fortunately, scholars have provided tools and information that will help nonprofits manage and measure their unique financial performance so they may make informed decisions and guide their organizations to sustainability (Young, 2007).

Our class readings discussed how fluctuations in grants (for any variety of reasons) can have a substantial impact on the ability of nonprofits to fulfill their missions. Steven Rathgeb Smith

Through research, I found the following information from an article from Arthur Anderson accounting firm who has studied successful organizations, both profit and non-profit, and discovered what budgeting practices are used. Important benefits of improving the budgeting process include better companywide understanding of strategic goals, more coordinated support for those goals, and an improved ability to respond quickly to competition. A discussion of best practices used by leading companies to develop budgets follows. (Gruner & Jahr, 2003, Inc Magazine).

The budget reports are designed to give a clear overview of how the business is running. Every expense can be calculated as a percentage of the total expense/margin to see if it is cost effective. If it is being overspent then something needs to be done. This could be a number of things such as reducing spending, reducing or increasing staff levels, cross-training staff, incorporate techniques to increase sales, reduce stock levels, outsourcing, and renegotiating supplier costs.

A non-profit organization cannot be effectively managed if it is not effectively planned. One of the challenges facing non-profit organizations has been long range, strategic planning. Long range, strategic planning in the non-profit sector is essential to the success of an organization. Long range, strategic planning encompasses broad policy and direction setting, internal and external assessments, attention to key stakeholders, the identification of key issues, development of strategies to deal with each issue, decision making, action and the continuous monitoring of results. (Herman, The Jossey-Bass Handbook of Nonprofit Leadership and Management, 154) While it is important to deal with the short term planning and activities of non-profits, managers or directors must consider the future of their organizations. Successful planning should be comprehensive, integrating all areas of responsibility of an organization.

Financially healthy nonprofits use income-based, rather than budget-based spending which allows them to have income projections that are realistic and helps to determine realistic costs (Zietlow, Seidner, 2014). The most successful nonprofit should have an operating reserve to finance shortfalls and hopefully allows them to have a positive cash flow at the end of the year (Zietlow, Seidner, 2014). However, most nonprofit organizations fight to manage cash flow due to how income and the expenses often may occur at different times, so that there may not be enough cash to pay for the expenses as they become due and payable (Zietlow, Seidner, 2014).