18.06.2024
Partnerships between not for profit organisations such as NGOs in the North and South can be extremely rewarding, but they are not without their challenges, particularly when it comes to financial monitoring. These challenges often come from differences in culture, accounting standards and financial management skills.
In a globalised world where cross-border interactions are increasingly common, it is essential to understand the complexities of financial monitoring in these partnerships in order to address them as well as possible.
Accounting standards and financial practices
One of the major challenges in North-South partnership relations is the disparity in accounting standards and financial management methods. Not for profit organisations in the North and South may follow different accounting principles and habits, which complicates the smooth monitoring of transactions and financial reports.
These differences can lead to accounting mistakes, inconsistencies in reporting and even disputes.
Communication and culture
Communication is at the heart of any successful collaboration. However, in the context of partnership relations between organisations in the North and South, language barriers and cultural differences can hamper fluid communication. Specific financial terms can be misinterpreted due to linguistic nuances, creating misunderstandings that compromise the clarity of financial exchanges.
Unequal capacities
Economic and resource disparities between these organisations such as NGOs in the North and South can also bring problems in terms of financial monitoring. Many organisations have limited financial resources and financial management skills.
This can make it difficult to properly handle and monitor the funds received, which can potentially affect the effective implementation of projects.
Currency fluctuations
In North-South relations, currency fluctuations can have a significant impact on the actual amount of funds received by organisations in the South. Variations in exchange rates can lead to deviations from initially planned budgets, which can make financial management and long-term planning difficult.
Transparency and communication
Transparency is a fundamental element of any successful partnership. When financial information is not shared transparently, it can lead to suspicion and tension. Lack of open communication can raise doubts about the management of funds and compromise mutual trust.
Our very practical solutions to overcome the challenges
To manage these issue and promote fruitful financial collaboration between organisations in the North and/or South, it is crucial to adopt practical solutions:
Clear communication
Establishing clear and regular channels of communication is essential. Organising regular meetings or calls to discuss financial updates, reports and potential challenges can help maintain a common understanding. Understand and approve on financial deadlines, templates, regulations and specific needs from both sides at the beginning of the project. The respect of this agreement is the cornerstone of a sound collaboration.
Capacity building
Investing in training and building the financial skills of the partners will lead to improving financial monitoring. Workshops, webinars or training sessions can help both partners to understand international accounting standards, best practice in financial management and relevant technological tools and specific needs of the project and the donor associated with it.
Technology
The use of technology can simplify financial monitoring and communication. The use of accounting and financial management software can make the recording and monitoring of transactions more transparent. Videoconferencing and online document sharing tools facilitate real-time communication despite geographical distances.
The investment in a correct equipment and accounting tool is often very cheap in regards to the benefits during its regular use. Of course, this investment must fit the needs of the organization, there is no single universal set up !
Harmonisation of standards
Where possible, working together to align accounting standards and financial practices and understanding of external constraints (such as donor’s regulations) can reduce complications when preparing financial reports. It can also promote a better mutual understanding of transactions.
Conclusion
We already know that partnership between organisations in the North and South offers enormous opportunities for cooperation and mutual development. However, recognising and overcoming the challenges of financial monitoring is crucial to building strong and successful partnerships. Furthermore, sound financial management will encourage donors and partners to increase their collaboration with both organisations.
Axyom is aimed to support organisation to adopt approaches such as clear communication, capacity building, use of technology and harmonisation of standards. The reward is that partner organisations can not only meet the challenges, but also strengthen their financial collaboration, overcome cultural and contextual barriers, and work together effectively, respectfully and harmoniously towards common goals and, why not, unveil new opportunities.
Contact us
Do you have a question? Would you like to know more about the solutions that Axyom can offer your organisation? Would you like specific references for a particular type of service?
Do not hesitate to contact us via our contact page. We will get back to you as soon as possible.