Financial Management

Financial management for the SACCOs involves decisions on how the SACCOs‟ operations will be financed (sources of funds), how the funds are utilised (investment decisions) with the overall objective of achieving the SACCO mission and goals. Financial management thus focuses on the development of strategies to prudently manage the financial assets of the SACCOs as well as using tools and techniques for financial planning to achieve its organisational objectives.
Like all other microfinance institutions, the managers and board of the SACCOs have a fiduciary duty to prudently manage the financial resources of the SACCO. As part of this responsibility, the directors are legally required to prepare and present financial statements that show the financial performance and position of the SACCO over a specified period.
The information extracted from the financial statements is then used in assessing the stewardship of the board and management and to what extent the financial objectives have been achieved. The SACCO‟s financial objectives may include amongst others;
 Maximizing of capital growth
 Attaining financial Sustainability
 Prudently managing the assets and liabilities of the SACCO
The SACCOs‟ financial statements by themselves tell only a flat story. From a cursory look at the figures in the financial statements presented by the directors, and managers, one may not be able to decide whether the SACCO is doing well or badly, whether it is financially strong or vulnerable. To extract from them a meaningful story that relates to the SACCO‟s vision, mission, objectives and plans, and the extent to which these have been achieved, finance professionals have developed several tools and methods collectively referred to as Financial Analysis which collectively aid Financial Management.
The discipline of financial analysis, therefore, is one of extracting meaningful interpretation out of general financial statements. Financial analysis involves comparing one figure against another to produce ratios, and assessing whether the ratio indicates a weakness or strength. The comparison can be with other Institutions, or for the same institution but over different periods. Financial ratio analysis can be broadly grouped into the following categories;
 Profitability ratios
 Liquidity ratios
 Solvency ratios
 Portfolio quality ratios
 Efficiency ratios

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One Response

  1. Reblogged this on Kenya's Co-operative Movement and commented:

    This is my new Blog.

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