Managing Your Finances

All family planning managers are responsible for ensuring that the resources of their program are used responsibly and appropriately. Every manager needs to be skilled in financial management because an important part of any manager's job is planning, monitoring, recording, and controlling the financial resources which are used to get the work done. In addition, private sector managers, as well as an increasing number of public sector managers, are developing long-term financial plans to generate enough income to cover program costs or expansion. This chapter will provide you with a working knowledge of a number of financial management concepts and skills to help you to prepare financial plans and to monitor closely and use your program's resources in the most responsible, appropriate, and cost-effective manner possible.

Financial management means managing an organization's resources to meet organizational goals and objectives as effectively as possible by using those resources to carry out planned activities. Financial management also ensures that there are adequate resources available to carry out the activities which have been outlined by the organization during the planning process.

Most family planning organizations are nonprofit and define their goals and objectives in terms of services they provide to a community. These service objectives are usually determined periodically during the planning of the program. Once the goals and objectives have been set, the tools and techniques of financial management are used to ensure that adequate funds are available to achieve these planned objectives in the most cost-effective way.

The planning process serves to define service objectives and describe the activities necessary to achieve them. The expenses that are incurred in carrying out these activities are then financed either by the services that are being provided or by outside sources. The financial management cycle therefore consists of providing services, receiving cash, paying for expenses, and reporting to donors and other outside sources on the use of funds that have been provided.

As manager of a family planning program, you will need to know enough about financial principles to be capable of:

• Preparing a budget for your work plan;
• Projecting revenues and monitoring cash flow;
• Controlling and managing funds (establishing basic standards and controls);
• Financial monitoring (comparing program results with budget projections);
• Determining and comparing the cost of services;
• Meeting both donor and institutional reporting requirements;
• Understanding and using financial reports for decision making.

These topics will be described in the following pages. They have been singled out in this handbook because many family planning program managers are being challenged to:

• Maintain or expand services in the face of reduced funding from donors or governments;
• Institute alternative financing of family planning services, which requires the development of multi-level financial management controls;
• Compare the effectiveness of different service approaches or sites within the system, which require the development of ways to measure the cost of family planning services;
• Meet the different reporting and procedural requirements of multiple funding sources.

The financial duties of managers in the public and private sector differ. In the public sector, most family planning program managers are given a fixed budget allocation. If their allocation is not sufficient, their only choices are to try and obtain an increase or to cut expenses. Often, their ability to make these adjustments is restricted, as they have limited knowledge of personnel costs, and civil service regulations give them little control over the hiring and firing of staff. Furthermore, they may be working within a set system of accounting standards, financial controls, and informational reports that they can do little to change. However, in many ministries, financial systems are becoming more decentralized, and their is increasing interest in charging fees for services to cover at least part of the cost incurred by the program. As a result, increasing numbers of public sector managers face financial management tasks that were formerly limited to the private sector, such as studying the cost-effectiveness of their clinic-based versus community-based services.

In the private sector, the family planning program manager's degree of control over the finances and financial systems of the organization varies widely, depending on how large and hierarchal the organization is and what position the manager holds. In general, private sector managers are freer than public sector managers to modify financial information systems, decide on strategies to increase income and cut expenses, and control staffing patterns. Private sector organizations are much more likely to generate income through sales of goods or services, as well as to need to monitor closely their progress in generating income.

Good managers in both the public and private sectors provide the greatest amount of service possible for the resources they manage, while maintaining the standards of quality described by the program.