No matter what your organization is, financial management is key. It doesn’t matter if you are private, government-affiliated, or are an NGO, it is important that you are backed by a good piece of financial management or invoicing software that can help you make short work of what is, for most people, a huge burden.
Most businesses will have a finance department to help them with this—they are responsible for looking after the organization’s accounts and finances—however, more often than not, NGOs either do not have a department like this or don’t think that financial management is important to them.
Over time, poor financial knowledge, planning, and management can take its toll.
Why Do NGOs Suffer More from Bad Financial Management?
The nature of NGOs—Non-Governmental Organizations that are not run for profit—means that they work hard to implement projects and meet the needs of deprived people and communities.
Naturally, financial management and control get left behind as attention is given to more pressing issues and projects. Because of this, NGOs are far more vulnerable to financial losses and problems, and they are more likely to succumb to financial crises when they strike.
NGOs are not operated like for-profit businesses and, unfortunately, although they are doing good in the world by heading up projects that most corporations wouldn’t even give a second thought to, they can quite easily fail and close up shop because of the absence of financial management.
NGOs Need to Understand the Importance of Financial and Invoicing Software
It is key for NGOs to realize that the management of their finances with invoicing software and other solutions is just as important, if not more important, than their projects and goals.
The incorporation of measures necessary to manage finances and negate the risk of failure through lack of funds, running out of resources, and undertaking expensive risks can help these NGOs avoid the fate of many that have gone before them. After all, it is the responsibility of an NGO and an NGO only to plan their finances and expenditures in a way that leads to a sustainable organization.
Even though NGOs are not for profit does not mean they shouldn’t be sustainable or breaking even. Even though there is no huge profit to be made, an NGO is still a business and is vulnerable to the same threats and pressures that face for-profit companies.
So, How Can NGOs Better Manage Their Finances?
There are many ways NGOs can get ahead with their finances. After all, unless you are on top of your NGOs finances, you cannot focus properly on your projects, objectives, and goals.
Here are a few key ways NGOs can achieve better financial management:
1. Use financial management and invoicing software
It doesn’t need to be anything fancy or expensive but having financial management and invoicing software tools is far better than using Excel and Microsoft Word to bill your NGOs clients, for example.
2. Make productive decisions
When you begin to sort out your NGOs finances, you will be in a better position to make more productive decisions. This has a ‘snowball’ effect which means you will be able to make better decisions regarding resource allocation, fundraising, and fund mobilizing.
3. Be accountable to donors
People who are donating to your NGO want to know exactly what you are doing with their money. For example, you are spending it on your projects and not on fancy dinners. Again, this is something that financial management software can help you with. If you rely entirely on funding, you need to be doing everything you can to appease and be transparent to your donors and sources of funding.
Financial Management Is Easy
With the right tools and mindset in place, managing an NGO’s finances is simple.
Since it is a lot easier for NGOs to go bankrupt and fall under than for-profit companies, it is something that those in charge of them really need to keep an eye on, however, many NGOs focus more on their mission rather than their finances and this is where problems can begin to arise.