MicroStart: A Guide for Planning, Starting and Managing a Microfinance Programme.
CHAPTER THREE
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F. REPORTING

1. Setting Goals
2. What Is Success?
3. Responding to Stakeholders
4. Importance of Audits
5. Minimum Reporting Information

(1) Setting Goals

Each project should aim for success in six areas:

Goals should be concrete and measurable. The following concrete measures are given as an example. Your project may set higher or lower hurdles.

Reach 2,400 clients by the end of three years.



GROWTH INDICATOR TREND DESIRED SOURCE OF DATA
Number of clients served Up standard monthly reports
Number of loans disbursed Up standard monthly reports
Average loan size Up (to $250 limit) standard monthly reports


  • Portfolio Performance
Reach delinquency and default rates of less than five per cent of the portfolio at any one time.


PERFORMANCE INDICATOR TREND DESIRED SOURCE OF DATA
Default rate Down (to below 5%) standard monthly reports
Delinquency rate Down (to below 5%) standard monthly reports


  • Operating Efficiency
Spend less per client and less per loan by year three.


EFFICIENCY INDICATOR TREND DESIRED SOURCE OF DATA
Clients per staff Up standard monthly reports
Revenue per client Up standard monthly reports
Cost per client Down standard monthly reports
Net surplus per client Up standard monthly reports


  • Financial Strength
Attain total financial self-sufficiency in five years. Have we borrowed too much? Will inflows cover outflows next month? Next year? Are all funds earning interest?


STRENGTH INDICATOR TREND DESIRED SOURCE OF DATA
Cash available for lending Six months reserve cash flow analysis
Cash available for operations Six months reserve cash flow analysis


  • Service
      Receive top ratings for client satisfaction.


SERVICE INDICATOR TREND DESIRED SOURCE OF DATA
Client satisfaction Up (average 80%) surveys


  • Impact
Perceive an improved standard of living in the villages served.


IMPACT INDICATOR TREND DESIRED SOURCE OF DATA
Increased sales for client Up surveys
Community improvement Up surveys


(2) What Is Success?

It is possible to run your project without stopping to examine how well you are doing. All your time and attention may be focused on delivering services without pausing to measure success or identify failings. Over time, shortcomings which simmer unnoticed will boil over into crisis.

Your project goals and the mission of your agency will determine the kind of success you hope to achieve in the next five years. As you brainstorm success with your staff, ask a variety of questions. We've included a few examples.

How big do we hope to grow?
How many groups can we form year by year? How many people do we hope to reach? What are the limits on growth?

What do we expect from our clients?
What percentage of our loans can be paid on time and in full?

Can we succeed financially?
What is our cost per loan, per client, per dollar of credit issued? How fast should these costs be dropping over the years? When will our revenues cover our costs? Can we become self-sustaining? When?

What do our clients expect from us?
How will we know if we are meeting their needs? How will we measure client satisfaction? How will we ensure that we are staying ahead of competition?

What is our economic or social impact?
Have we improved the economic well-being of our clients? How will we know? Are communities better off as a result of our services? What would we measure?

Remember that the data you have collected in interviews and loan applications discussed in Chapter Two are a vital part of building a baseline from which to compare clients' success. A local university, particularly in the areas of anthropology and economics, can be used effectively to help estimate impact over time. University or local donors may also be able to help fund such activities.

(3) Responding to Stakeholders

Any measurement of performance should keep in mind the primary stakeholders in the programme. Different groups will measure success in different ways. Be sure your evaluations can satisfy many points of view.

Project managers
Senior staff need to estimate demand, understand client needs and measure how well the programme is satisfying those needs. They also must evaluate field staff performance to maximize revenues and maintain efficiencies. One of management's primary interests should be the project's movement toward self- sufficiency.

Banks
Banks are interested in financial performance, specifically indicators on your financial statements (balance sheet, income statement, cash flow). They have developed key ratios and criteria for success. Get to know these criteria.

Agency board
Your agency board and, perhaps, board of advisors, will be reviewing financial performance as well as adherence to your stated mission.

Borrowers
Borrowers will have an interest in the success of the programme. After all, they are the direct beneficiaries of all its services and their cooperation can mean the difference between success and failure. Timely feedback will increase their sense of ownership in something that benefits the whole community.

Donors
Donors will review your financial performance. Some may be interested in the impact of your programme on local communities and on clients.

(4) Importance of Audits

Annual audits are a fundamental requirement for organizations working in microfinance. They validate your financial statements and give comfort to your funders that your organization is well managed. Often audits are also extremely helpful in finding deficiencies in your systems and identifying potential problems. It is important to secure the services of an auditor who is acceptable to donors and others who fund your organization.

(5) Minimum Reporting Information (1)

The following tables include the minimum data which should be reported, and which will comprise a consistent basis for financial analysis of your programme.

Portfolio and Outreach



1. Number and amount of loans outstanding at beginning and end of reporting period. ______
2. Number and amount of loans disbursed during reporting period ______
3. Number and amount of small saver deposit accounts at beginning and end of reporting period. Show compulsory and voluntary savings separately ______
4. Arrears (on loans outstanding basis). Unpaid balance of loans with payments overdue more than 30 days. There should also be an aging of arrears report, covering, for example, 60 and 90 days and one year. ______
5. Percentage of female clients ______
6. Number of staff (only those involved with savings and credit activities) ______


Interest Rate Policy


7. Effective annual interest rate paid by clients incorporating all required fees (and calculated on a declining balance basis), both nominal and real. Effective rate paid to savers. ______
8. Local annualized interbank lending rate and 90-day CD rate ______
9. Local annual inflation rate (give source) ______


1. See Annex: Micro and Small Enterprise Finance: Guiding Principles for Selecting and supporting Intermediaries, Washington. DC.

Income and Expense Information



INCOME ______
10. Interest and fee income from loans (excluding accrued uncollected interest on non-performing loans) ______
11. Income from investments ______
12. Other operating income from financial services ______
13. Total income: ______
EXPENSES ______
14. Staff expenses (salaries and benefits) ______
15. Other administrative expenses (includes depreciation) ______
16. Loan losses. All loans over one year in arrears should be written off, as far as local rules permit. Institutions should describe their criteria in recording loan losses. ______
17. Interest and fee expenses (itemized by source of funds) ______
18. Total expenses: ______
19. Net operating profit: ______
OTHER INCOME AND EXPENSES ______
20. Non-operating income (if any) ______
21. Non-operating expenses (if any) ______
22. Donations ______
22a.
For operating expenses
______
22b.
Capital contribution (identify purpose, e.g., loan fund
equity, fixed assets)
______
ASSETS ______
23. Cash on hand and in banks ______
24. Mandatory reserves ______
25. Short-term investments ______
26. Loans outstanding (must match indicator 1, above) ______
27. Less: Loan loss provisions ______
28. Net portfolio outstanding ______
29. Long-term investments ______
30. Fixed assets (after depreciation) ______
31. Other assets ______
32. Total assets: ______
LIABILITIES ______
33. Savings and time deposits from target group clients ______
34. Other deposits ______
35. Loans from central bank ______
36. Loans from other banks ______
37. Other short-term liabilities ______
38. Other long-term liabilities ______
EQUITY ______
39. Paid-in equity (shareholders) ______
40. Donated equity ______
41. Retained earnings ______
42. Other capital accounts ______
43. Current year profit or loss ______
44. Total Liabilities and Equity: ______


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