1. Introduction to Managing Your Finances
Date 20th November 2018
Diane West

2. Learning Aims This webinar session will cover: The basics…..setting up
Developing your annual budget
Understanding the cashbook
Dealing with Petty Cash
Managing Income & Expenditure

3. The basics…setting up Setting your financial year
Appointing someone responsible for finance
Setting a reporting regime
Doing simple accounts

4. Developing your annual budget
Starting point for good financial management is to estimate what you think you need for the next 12 months.
Understanding the level of funds coming into the group, the income.
Ensure that your expenditure is within the levels of income that you have.

5. Budget headings Made up of income and expenditure Income 2018/19
Donations
Hall Hire
Grants
Contracts
Fees for Services
Expenditure
Accounts
Internet and Telephone
Postage and Printing
Travel and Training
Website
Total

6. Budget headings AGM Rent Committee meetings Printing
Volunteers expenses Staffing costs
Heat/light Mobile
Insurance
Training and DBS checks
Licenses for playing music or DVDs

7. Accounting for income and expenditure
When setting a budget we focus on:
Confirmed Income & Expenditure
Expected Income & Expenditure
Don’t include details of income you haven’t yet applied for or that you think you might have.

8. Key Points to Remember Don’t make up costs – ‘best informed estimate’.
Income/expenditure amounts need to balance.
Avoid setting a deficit budget – unless you have funds carried forward to cover it .
Any new income received – then change the figures as you go.

9. Setting up Financial Systems
You can manage finance in a number of ways:
Manual receipts and payments
Excel spreadsheets
Finance software:
Quickbooks; SAGE

10. Pros and Cons of ….. Which will be the best for you?? Consider:
Skill / IT levels of people in the organisation
Cost of any system
How information can be shared
How information can be stored

11. Understanding the Cashbook
Cashbook – record of all receipts (income) and payments (expenditure) for the group. Same principles apply whether the system used is manual or electronic. All cash and cheques need to be recorded and paid into the bank to create an audit trail.

12. What is an audit trail
An audit trail can be either a paper or electronically based trail that provides documented history of a transaction within a group. It allows an auditor/independent examiner to trace the financial data from the cashbook to the source document. E.g. Invoice/online payment/bank statement

13. Recording Income Date Detail Ref Amount Grant Donation 20/11/18
Grant from Lambeth
2205
£300
21/11/18
001
£60
002
£10
Total
£370
£70

14. Understanding the Cashbook (3)
CASH PAYMENTS (EXPENDITURE) Payments to be made by cheque, Direct Debit or BACS where possible. Payments should not be made unless the expenditure can be verified by a valid invoice OR form of documentation e.g. receipt/invoice.

15. Recording Expenditure
Date
Detail and comment
Ref
Amount
Building
Printing
20/11/18
Travis Perkins
Inv 33
£65
21/11/18
Happy Snaps (AGM)
Inv 55
£17.50
Lidl (refreshmts) 7
£8.50
Total
£91

16. Petty Cash – Key Principles
Make educated guess as to what level of ‘float’ likely to need (often small amounts e.g. £50/£100)
Use a lockable cash box – keep in secure place
Ensure that no payment is made with proof of expense incurred
All claims to be signed and authorised

17. Accounting for Petty Cash
Every time petty cash is paid out the relevant paperwork needs to be completed
If receipt not available – i.e. oyster card, still complete a voucher with full details
Consider setting a maximum amount to be paid out in cash

18. Accounting for Petty Cash
Each voucher dated/numbers and entered in book and filed
Each voucher signed and authorised
When reconciling petty cash book with balance in tin do it with a second person
When recording details try to use the same categories as in cashbook so that the headings tie up with other areas of expenditure

19. Managing Income & Expenditure
Process of financial management within organisation is an ongoing activity there are key financial practices:
Reconciliation
Management Accounts
Cashflow Projection
Essential that the system keeps a regular check on the financial position at any one time

20. Reconciliation
Purpose: check income and expenditure in line with BANK ACCOUNT and understand the current financial position Essential in understanding the cash flow position of the organisation - is there enough money in the bank to pay the bills that will be due

21. Steps of Reconciliation
This is a simplified checklist ……
Bank Balance at the beginning of the period
List of income
List of expenditure
Any cash in hand
Bank Balance at the end of the period

22. Reconciliation Bank Balance …….. £2056 1/9/2018 Income Total £200
For the period of September to November
Bank Balance …….. £ /9/2018
Income
Donations
Grants
Fees for Services £200
Total £200
Expenditure
Accounts
Internet and Telephone £50
Postage and Printing £6
Travel and Training
Website
Total £56
Bank Balance …….. £ /11/2018

23. Reporting to your committee
So each quarter the committee need to have a report which lets them know: Whether the budget is working Any big differences between what you thought you were going to get as INCOME and what you have spent Whether the CASHFLOW is healthy and whether or not action will need to be taken and minuted

24. Key Internal Controls Banking Arrangements Signatories
Authorisation levels

25. Jargon Revisit Income Simple Accounts Expenditure Restricted
Cash flow Unrestricted
Budget Creditor
Reconciliation Debtor
Capital Revenue

26. Common mistakes…pitfalls
Recycling income
Misuse of Petty Cash
No audit trail
No second person to authorise
Pre signed cheques
No reconciliation