At SmartCapitalMind, we're committed to delivering accurate, trustworthy information. Our expert-authored content is rigorously fact-checked and sourced from credible authorities. Discover how we uphold the highest standards in providing you with reliable knowledge.
Fiscal management is the process of keeping an organization running efficiently within its allotted budget. Though the word "fiscal" can be used interchangeably with the word financial, in most cases, fiscal management refers to money management within a government entity. Overall, its goal is to improve the way the department operates by properly planning, recording, and performing procedures that relate to the budget. This involves a variety of tools, including budget spreadsheets, accounting software, and guides outlining procedures for department management.
Poor fiscal management is indicated by a lack of record-keeping and unnecessary or unplanned expenditures that can cause a department to go over budget or fail to meet its objectives. Generally, fiscal planning is done yearly, often coinciding with the fiscal year under which the department operates. A fiscal year is typically a 12-month period, but it is not always the same as a calendar year.
The types of expenditures accounted for in a fiscal budget differ, depending on the organization. Fiscal expenditures for an educational institution might include buying and maintaining property, supplying electrical power, and educating instructors. Budgeted expenditures at an emergency services department might go to purchase and upkeep of emergency vehicles, uniforms, and advanced training for emergency services professionals.
A well-designed management plan can supply a guide upon which department members base financial decisions. Detailed budgets can help prevent financial emergencies by planning recurring expenditures that an organization regularly faces, but which might come as a surprise to managers operating without proper planning. For instance, if a department has already budgeted for the cost of cleaning uniforms, the cleaning cost will not come as a surprise that costs an organization more than its budget can afford. Budgeting for this type of cost can also give a fiscal manager time to find less expensive solutions for costs placed within the budget. This saves money on avoidable last-minute emergency expenditures that might cost more than they would if they were properly planned.
Generally, a good fiscal management involves recording all fiscal transactions in a checks-and-balances system that reduces mistakes or omissions that might lead to surprise budget overages. After financial transactions are recorded, they must also be reconciled on a regular basis, usually monthly, to help a fiscal manager identify any discrepancies between the financial records and the available remaining budget. Without proper and regular reconciliation, a small error in recording financial transactions can become a large deficit over time that may create serious budget shortfalls.