Understanding the importance of effective financial management is fundamental to capacity building: and capacity building is not specifically confined to the international development environment. At its simplest capacity building is: ‘A systematic strengthening of the capabilities of an organisation to perform its mission more effectively.’ (Tools for Self-reliance, 2005)
If improvements are to be sustainable, it is important to appreciate that financial management capacity must be developed across every part of an organisation. If it is developed only with finance personnel, systematic strengthening of organisational capability is unlikely to occur.
It is therefore essential for every manager to develop and enhance their understanding of core financial management practices. This is particularly business-critical where the manager may be overseeing a programme or project with multiple internal and external stakeholders who are providing resources and/or investment.
Without a reasonable level of financial awareness, any manager will be under prepared to meet their responsibilities to mobilise and oversee the management of resources efficiently and effectively. Developing financial awareness is therefore paramount in managing a programme and project or departmental budget, working effectively day-to-day with core financial principles underpinning management activity and decision-making.