Guidelines for financial management of a savings group
Savings groups offer several benefits to their members, which is why everybody is advised to join one. However, it is important that the savings group be a trustworthy, reputable group. Lack of planning on the group manager’s end may lead to squabbles, discontentment, and in the worst-case-scenarios, loss of money.
As the financial manager of such a group, there are several guidelines you can follow to ensure growth, transparency, and contentment among your members:
Establish the habit of setting aside a set amount of money every month. Before determining the minimum monthly savings required from individuals, make sure to examine seasonal changes in savings practice.
Ensure your savings group has a procedure in place for dealing with the funds of group members who choose to leave the savings group, or are ordered to leave for a number of reasons.
Consider encouraging individuals to save in the common fund, and receive interest on their savings. This, though a rare occurrence, is one worth contemplating if you want to attract new members to your organization.
Allow members of a group to save for a specific reason, such as setting up a weekly savings account to pay off a bank loan.
All loan requests must be directed to the organization or the organization’s officers. The loan must be accepted or rejected by the policymakers, following the filing of the application, with the entire process on record.
When loans are issued, repayment plans must be completed and recorded.
By the end of their financial cycle, the savings group should close their books.
All money management and allocation decisions should be documented and traceable for all members to see.
Giving a group member a second loan before their first loan is fully repaid should be carefully considered, especially if they are behind on their payments.
Your savings organization will need to create and manage its own book-keeping system and records. Integrating with a savings group platform like ecobba may be able to assist your organization with this, as doing it manually could lead to errors, leading to disagreements, and loss of trust from your members.
Creating an organized system ensures a trustworthy organization, which leads to contented members, whose numbers keep growing.