Controlling your Finances
Controlling the finances of your club will be much, much easier if you keep accurate records in a way that can be used to report against your annual budget. Being able to measure your annual budget against your actual income and expenditure will allow you to control your club’s finances and quickly spot if things aren’t going to plan!
All clubs are legally required to keep accounting records which log all of the club’s financial transactions.
You also need to keep other records including:
- Member subscriptions - database of all members, including names, contact details, fees paid/owed.
- Record of all income received - receipts should be issued for all income received.
- Record of all payments made - invoices and receipts should be kept for all payments made.
- Asset register of fixed assets – detailing description and location of equipment etc.
- Stock book – detailing stock movements and balances.
- Cash Book – details of all bank and cash transactions.
- Bank/building society account statements.
These records will then be used to prepare the club’s annual accounts and would be required by the club’s auditor/accountant, as well as by HM Revenue and Customs in the event of a tax inspection.
Choosing how to record your club finances is important. Depending on the size of the club and the volume of transactions being processed, the accounting records can be maintained on something as simple as a spreadsheet or by using an accounting analysis book.
However, they do have a number of disadvantages:
- They can be prone to human error
- They can be time consuming
- They do not lend themselves to comparing actual income/expenditure against budget.
Another option is an off the shelf accounting software package or an online cloud based accounting solution.
The advantages are:
- Speed – they can save processing time
- Accuracy – they provide tools such as bank reconciliations
- Reports – actual v budget comparison reports at the click of a button.
- Security – records can be backed up on the cloud
- Accessibility – records can be accessed from any location with an internet connection.
Examples of popular software packages for clubs are QuickBooks (desktop and cloud) and Xero (cloud).
Your governing body may be able to help you choose the most appropriate software for you.
Monitoring and reviewing financial information
A stable and successful club keeps on top of its finances!
One way to do this is by producing regular financial reports showing how much money is coming in and how much is going out, preferably every month. Your reports should also compare actual performance to your budget so you can see if the club is on track with its financial plan.
If actual income or expenditure is not going according to your budget or plan, you can swiftly take action to bring things back into line.
Ways to help with budget monitoring and controlling
There are a number of ways to help keep track of your finances:
- Delegate responsibility to budget holders
- Implement financial procedures and authority limits on spending
- Produce regular actual v budget reports for budget holders
- Ensure accounting records are updated regularly and reconciled to the bank accounts
- Monitoring performance against cash flow forecast
- Consider forming a finance sub-committee
- Producing regular management accounts
Regular Management Accounts
Producing regular (ideally monthly) management accounts will help you review and monitor the full financial picture of the club. Using a suitable desktop or cloud based software package will make this easier.
Management accounts should consist of the following reports:
- Income and Expenditure against budget
- Balance Sheet – showing all of the club’s assets and liabilities
- Any other information that’s appropriate, such as money due in and money due out.
Fixed Asset Register
A club can hold many items of equipment which can be valuable so it is important for to hold a register of assets. The register will usually contain the following information:
- Date of purchase
- Responsible person
It can also help the club when dealing with insurance company requirements, renewals and claims.
If you would like finance training, Business Wales offer online courses. You need to register before taking a look at the Managing Your Finances module which covers cash flow, budgeting, accounts, profit and loss and balance statements.