Financial management : a strategic lever for Social and Solidarity Economy organisations
Whether you’re a for-profit business, a charity, a social enterprise or an NGO, financial management can often seem daunting. And yet, knowing and tracking your budget, understanding financial statements, analysing and using this data to anticipate and optimise your activities are crucial, especially when your organisation is expanding. This is particularly true in the current context where public funding is shrinking, undermining financial stability, or even the survival of impact-driven organisations. When running a social business, each stage of development calls for tailored financial management tools.
Why is strong financial management important?
To:
- plan ahead and understand your funding needs to reach your goals;
- reduce risks in the face of unpredictable funding decisions;
- strengthen your organisation’s credibility with partners and funders;
- make well-informed strategic decisions.
💡 Note: Financial management is not a substitute for statutory accounting (usually handled by a certified accountant), but rather a complement. It provides a more dynamic, hands-on approach that supports day-to-day operational decision-making.
1. Laying the foundations for financial management
Many organisations start to manage their finances rigorously once they become more professional: When they hire their first employee, when the business grows, when seeking the first important funding. At this stage, it is essential to learn how to build and monitor a budget and a cash flow plan.
This involves:
- Developing a clear and structured initial budget;
- Creating a cash flow plan (a projection of incoming and outgoing funds);
- Setting up budget and financial monitoring dashboards.
It is common for an organisation starting to grow to move from cash accounting (which records cash flows when they are received or disbursed) to commitment accounting (which records cash flows as soon as they are committed, even if the money has not yet been received or paid). This is essential to anticipate future expenses and have an accurate view of the financial situation. In France, commitment accounting is a legal requirement for budgets above a certain level.
These concepts are especially useful for associations in the early stages of structuring, particularly when it becomes crucial for the organisation to understand where the money is going, what the key spending areas are, and what future cash needs will be required.
2. Automating and professionalising financial management
When an organisation enters a phase of consolidation or growth, the need for more responsive and comprehensive financial management becomes increasingly important.The challenge is to move from a ‘handmade” approach to one that actively supports the organisation’s medium and long-term strategic vision.
This involves:
- Identifying and implementing appropriate tools (accounting software, automated dashboards, simplified extraction of accounting data);
- Setting up an annual forecast budget broken down by quarter or semester;
- Regularly reviewing budget assumptions in light of actual spending, as well as revisiting projections for income or activity levels;
- Integrating the monitoring of fixed and variable costs into strategic thinking, to better understand key levers and break-even points.
In this way, financial management becomes a decision-making tool supporting the organisation’s mission, helping to answer questions such as : Which recruitments can we plan for? Do we have the capacity to take on a new project? What resources will be needed in six months or a year?
3. Implementing analytical financial management
When an organisation diversifies its activities or operates through multiple projects, partners or locations, it becomes essential to know exactly which resources are funding what. This is the role of cost accounting, which makes it possible to allocate costs and income to the relevant areas for analysis.
To set up an analytical financial system, it is important to :
- Carry out a preliminary analysis to identify the key data to be monitored;
- Draw up an analytical plan tailored to the structure’s realities;
- Use and disseminate monitoring tools differentiated by project, region, or mission.
This type of financial management makes it easier for the organisation to identify which projects are financially sustainable or break-even, which one requires long-term support, and it also helps support grant applications where precise data on how funds are used is often requested.
4. Structuring fundraising and modelling the future
For each key stage of their development (seed phase, consolidation phase, scaling phase, etc.), organisations need a quantified and medium-term strategic vision. This requires a more technical work through a provisional business plan in order to :
- Translate the planned strategy into a financial model: where do we want to be in 3 to 5 years’ time?
- Build a coherent financial projection aligned with the strategy: forecast profit and loss statement, annual financing plan, investment and cash flow projections
- Identify annual financing needs and, from there, define a financing strategy: self-financing, subsidies, sponsorship, fund-raising, etc.
This work is particularly important during the regional spin-off phase, when an organisation is planning to open new branches as part of its spin off strategy. In this case, the key assumptions need to be set out, separate budget forecasts drawn up (pilot branch, network under construction, etc.) and the requirements over time need to be projected.
✅ Check-list – The essential tools for financial management
ScaleChanger can help organisations :
- Identify their key performance indicators with internal stakeholders
- Build their business dashboards
- Strengthen budget management and cash flow monitoring
- Optimise the organisation of the finance department
- Establish relations with your financial service providers (chartered accountants, banks, funders)
- Identify financial risks and implement control procedures
The results :
At the end of a ScaleChanger support mission, organisations:
- Have clear processes and procedures to steer their financial management,
- Dispose of relevant tools to improve the robustness and fluidity of financial management,
- Have an action plan to organise or strengthen their financial management in anticipation of their scaling journey
- Are more serene and can make decisions supported by tangible evidence
- Have greater confidence in raising funds
To go further :
📙 Check out our article Everything You Need to Know About Financial Management.
You are facing financial steering challenges, contact us: contact@scalechanger.org
Date: 16 april 2025
