Building a better financial management system

One of the four objectives drafted in the Bridging the Gaps programme is strengthening the capacity of our partner organisations. The prevailing ideas and practices are primarily focused on building technical skills of the staff. Bridging the Gaps partner Mainline broadened this approach to the financial management systems of the local partners. A striking illustration is the capacity strengthening relating to the financial management system of LARAS in Indonesia.

A sound financial management system (FMS) means that financial resources are managed responsibly and used efficiently. This will help organisations, Including our local partners, to be accountable and efficient, and gain and build trust of its surroundings, and hence be more effective in their service delivery. A strong and trustworthy local organisation will be more attractive to funders and more capable to mobilise resources for the beneficiaries.

Mainline knows from experience that the required documents and reports it receives from local partners do not always demonstrate the real condition of their financial capacity. Understanding the actual situation and giving the needed guidance can be necessary to support the local partners to become strong and independent.

Assessment of LARAS’ financial management system

A good example of Mainline’s capacity building relating to the FMS is our work for LARAS, our partner in Indonesia, in June 2014. We did an assessment, and looked into the different aspects of the financial department, including the human resource policy, budgeting, accounting, recordkeeping, and treasury management. We compared written protocols and manuals with the reality in the workplace , and also investigated whether financial information is used for decision‐making at different levels.

Assessing these components helps us to gain insight into the organisational structure, the workload and qualifications of the financial staff members as well as the systems that they use. Interviews with the relevant staff members were an important part of the assessment.

LARAS staff member: ‘The informal setting during the assessment and the one‐to‐one interviews in the garden helped us to open up and to discuss all the issues and problems openly.’

Open discussion

Mainline always performs assessments in an informal way, to stimulate an open and honest discussion about issues that the organisations face. It is, in the end, not always easy for the local partners to be frank about the challenges they face, because often these are not purely finance related. Building trust helps to discuss different issues openly.

Trainings, feedback, and so on

Based on the outcomes of the assessment, we provide our local partners with trainings, allow them to contract higher qualified staff members, and guide them to purchase the right financial software, hire a local mentor, and so on. We give practical feedback and discuss and solve issues directly if possible. Sometimes, an extra computer is needed just to be able to perform the tasks. And, sometimes, a management training is required, for instance when the partner organisation has changed over the years. Capacity strengthening is an ongoing process that needs long‐term attention and budget.

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