Finance

From Ni Wiki

Revision as of 04:16, 29 June 2007

Managing your chapter's finances can be a trying (boring) experience, but preparation and organization can really be the difference between sucess and failure. Healthy finances will ensure a strong future for your chapter by allowing you to recruit members, run profitable ventures, and fund excellent summer projects. This article will provide for you some tools you can utilize to maintain fiscal responsibility and ensure that your chapter remains in good financial standing.

Structure

A chapter's finacial structure is divided between the Treasurer who handles the chapter bank account and the finance committees who can request funds for venture expenses. This relationship is not unlike the one between an entrepreneur searching for capital and a bank in need of a financial return.

Budget

Principals

The best first step on the path to fiscal responsibility is to develop and maintain a detailed chapter budget. At the beginning of the year, the executive committee should outline what ventures it plans on doing and create a budget for each using the chapter accouting documents. It is also good to refer to copies of your past budgets when developing a current or projected budget for your chapter.

When developing your budgets, remember to be realistic and conservative. A well-organized budget has two parts: income and expenses. Income could include ticket sales, plate sales, sponsor donations, departmental contributions, and any other planned revenue sources. When projecting your income, list all sources and add up all contributions, then subtract 10% of the gross income just in case everything doesn’t come through.Expenses include any money you plan to spend throughout the course of the year. Your primary expenses will be related to ventures. So for Hunger Lunch you should budget expenses for food, supplies such as plates, utinsels, and promotional materials among other things.

Using the Budget Templates

Budget templates for the chapter level and individual ventures can be found on your chapter's google docs page. If you do not have a google docs page you can set one up with any gmail account. There are four basic budget templates; one for Hunger Lunch, one for Hold 'em for Hunger, one designed for any event, and one for the chapter level that incoporates general expenses & income as well as project expenses. With each template you can create a budget and then keep track of expenses and income as they come in.

Hunger Lunch The Hunger Lunch accounting document gives you the ability to plan out yearly income and expenses based on variables such as price per lunch, number of lunches, and cost of food and supplies among other things. On the front page you'll find the projected earnings calculator as well as the total income and total expenses aggregator. Feeding into this aggregator is the Running Tally on the next page. As money comes in and out you can input each item under revenue or expenses. Each entry can be itemized and color coded based on its respective category (such as "plate Sales" or "food expense"). You can also keep track of current total inflows and outflows under the "To Date" column. To aggregate, type in the equals sign into one of the Total Expenses or Total Income cells on the front page and then then click on expenses or revenue cells from the Running Tally. Once aggregated, you can divide the totals by the number of lunches held to find out how much you are averaging per lunch. As the semester goes along you can use the Actual Earnings (Projected) field see how well your estimated earnings are keeping up with what you budgeted for. On the last page you'll find a total profit loss statement with a graph showing how you did over the course of the year.

Hold 'em for Hunger The Hold 'em for Hunger accounting template has the same budgeting and income & expenses tracking functionality as the Hunger Lunch document along with a few expanded features. Expenses and income have been split between pages and there is an additional sheet to list prizes. Expenses are divided pretty cleanly along committee lines with separate categories for Sponsorship, Sales & Marketing, Food & Prizes, and Event Planning. Subcategories divide up the larger categories into fields such as "Brochure Printing", "Fliers", and "T-shirts" giving you the option of added granularity. The Income sheet has similar budgeting function as the Hunger Lunch accounting template. You can varry both ticket price and projected attendance to see how it affects budgeted income. As ticket sales come in you can feed them in accordingly from the Running Tally sheet. The prize list is fairly self explainatory. Having it on the accounting document allows you to match up expected ticket receipts with prize valuation.

Generic Event There are a wide variety of events that you can put on to raise money for your chapter. Possible events include swing dances, concerts, and/or cooking competitions to name a few. Each one of these events requires you to budget for certain expenses and track cash flows as they come in and out. Luckily the Generic Event Accounting Template is flexible enough to be used for any of these ventures. The format is very similar to the Hold 'em for Hunger template and it can be modified to suit the needs of your particular event.

Chapter Level The Chapter Level Accouting Template gives you the birds eye view of venture and project finances. At the beginning of the fall semester, your chapter should come up with a plan of what ventures to run and budget for total venture revenues and expenses. On the front page you'll find inputs for venture expenses and chapter level expenses like NI t-shirts, equipment, and dues to the national office. Income is on the second page and it includes venture income and income from chapter level activities like grants and seed money. The profit and loss summary helps you to budget for projects and start up expenses for the following year. In the first field you'll find beginning cash. After accounting for chapter level income and expenses you can calculate start up cash , money available for projects and the actual cost of projects. Retained earnings is what's actually left over for next year.

Managing your Budget

Once your chapter has finalized a budget, refer to it often and update it as needed. Your chapter will better stay on track toward reaching its goals if it maintains a budget that accurately reflects income and expenses. It is fiscally responsible to make every attempt to stay within your set budget; fiscal responsibility will aid your chapter’s future financial planning.

While the treasurer & financial officers are the primary managers of financial matters, it is important that more than one person understands the financial operations of the chapter. Make sure chapter members understand the chapter’s financial operations. A lack of understanding could lead to disregard for paying bills and controlling expenditures. If more members understand revenue potential and expenditure constraints, they will be more willing to work within them.

While every member should understand the budget, only a few people in your chapter should be authorized to handle financial transactions or access your account. Maintaining monthly financial reports and documentation could help divert a financial disaster, so your treasurer should keep a record of all deposits and expenses for comparison to your bank statments. At the chapter level the treasurer is responsible for tracking the chapter budget dispersing funds for venture expenses. At the venture level the finance committee crafts the venture budget and handles all of the finacial transactions.

Cash Handeling Procedures

Segregation of duties is an important component of the internal control environment and helps prevent errors and fraud. The ideal set of procedures would separate the following functions of the cash handling process:

1.Collecting cash and other payments

• Handling payments and entering transactions into the cash register system
• Preparing manual check listing, manual cash receipts ledger, or preparing multiple-copy receipts.
• Preparing daily cash balancing of cash register or cash drawer.
• Performing reconciliation of credit card receipts.

2.Depositing and recording

• Preparing bank deposit and deposit slip.
• Maintaining accounts receivable records (if applicable).

3.Control activity

• Reviewing daily cash balancing cash register or cash drawer.
• Comparing daily cash balancing report, listing of checks, and other manual reports to bank deposit.
• Comparing cash register report to bank deposit.

For example, at every Hunger Lunch, there should be one person who is responsible for collecting cash, checks and one cards. That person also will record income into the accounting template. Another person, the Treasurer or the Finance Committee Chairperson, will be incharge of making the deposit into the bank account. A third person,possibly one of the co-chairs, will be responsible for comparing the accounting sheets to bank statements. By separating all of these duties you will ensure proper controls over your chapter's finances.