Money, money, money, it’s not about the money, money, money …”

How do Trotsky and Cicero differ from Jessie J?

Well, whilst for Jessie J., it …
Ain’t about the, uh, cha-ching, cha-ching
Ain’t about the, yeah, ba-bling, ba-bling
Wanna make the world dance
Forget about the price tag…

For Cicero, however, in his Fifth Philippic, finance is very definitely “the sinews of war”.

And for Trotsky …
“If you do not train good, serious administrators at every level, even if you are right a thousand times over, you will not win. What the Bolsheviks have always lacked are organisers, good treasurers (and) accurate accounts …”.

Discussions on financial administration invariably see most of the audience yawning, looking out the window, doom scrolling Instagram or otherwise switching off. We’re all familiar with the cries of “I don’t understand finance”, “I don’t do the money stuff” and “that’s the Treasurer’s business”. For me, I’m with Cicero and Trotsky, if you want to make changes in the world, then you’ve got to martial and understand your money.

For we, in the business of social change, there should be an understanding of the three elements of finance: budgeting, accounting, and reporting.

“Finance leaders have to be proper storytellers. You have to be constantly on top of your data and tell the story behind the numbers.”
– Gerardo Adame, VP Finance at XP Power

Budgets are an essential part of business planning.
• What is your vision for the next 3-5 years?
• How is your vision broken down into objectives?
• What resources are needed to deliver those objectives, how much, when, and how often?

Understanding how and when you’ll need how much cash is fundamental. However, budgets don’t exist in a vacuum, they are simply an illustration of your overall business plan story. Social Investment Scotland has produced an intuitive week by week cash flow forecasting tool to deliver this.

“A budget is about telling your money where to go rather than wondering where it went.”
– John Maxwell

Accounting is the second chapter of our finance story:
• Relating each part of your income and spending to your budget
• Budgets being based on business plan objectives
• Objectives being related to your organisational vision.

Good accounting involves
• Those making decisions on money have the authority to do so
• Ensuring that payments match orders, are budgeted for, and have undergone agreed procurement processes
• Checks and balances: at least two levels of internal scrutiny prior to payment.

Accounting comprises several elements including
• Entering records on one of the myriad of accounting software systems
• Maintaining records
• Keeping your auditors in the loop.

Reporting is our story’s third chapter. Reporting involves
• Communicating an understanding of differing business units’ financial performance
• Trustees delegating explicit authority to sub-committees and individuals for spending and oversight
• Reports to sub-committees enabling interrogation of detail, specifically variation from budget and reasoning behind that.

Good reporting processes DON’T include Trustees
• Discussing the price of cheese rolls in the café
• Quibbling about minor under- or over-spends
• Rehashing discussions undertaken in sub-committee.

Reporting from Finance sub-committees, or senior staff, to Trustees DOES involve
• Providing intelligence rather than information
• Anticipating problems e.g., cashflow issues
• Enabling decision-making.

Summarising a reasonable approach to finance, if Trotsky was martialling resources for Cicero’s war effort, he might:
• Establish systems of planning, recording and control
• Delegate and separate layers of accountability and authority
• Always link both to the overall vision of change.