All community groups and organisations will, at some stage need to handle money and need someone to do this for them. This person is the Treasurer.

This person will be trustworthy, accurate and responsible, and although not necessarily qualified in financial matters, will be used to keeping financial records, paying bills and banking money.

A new group will need to open a Bank or Building Society Account. To open an account in the group’s name, a resolution must be passed, the wording of which can be provided by the bank. Your group will have to fill in a form showing the names and signatures of those people who will be able to sign cheques on the group’s behalf. You will also need to show the bank the minutes of the meeting in which the resolution was passed along with a copy of the constitution.

It is worth “shopping around “ before you decide on a bank. Some offer free banking to voluntary groups, but check the small print to see what conditions are set. Some banks pay interest on current account balances, and it may be worth considering having more than one account, for example an everyday current account and a higher interest deposit account for holding larger donations and grants.

Often the location of a bank may be a factor. It is often easiest to use the most local bank, although some groups find it easier to use a bank that carries out all its business over the phone or by computer.

Occasionally a group or organisation may need to use an overdraft facility, for example to overcome a temporary cashflow problem. Overdrafts can be expensive and the bank may require personal guarantees from committee members. For these reasons, many groups try to avoid using this facility and instead borrow, where possible from committee and group members.

Basic accounting records must be kept by any small group. You will need a Cash Book to record payments and receipts, along with the dates of transactions and a description of what they relate to. The information in the cash book provides the basic Receipts and Payments Account, and is also used to carry out bank reconciliations, whereby the bank statement is checked against the cash book to make sure the two agree.

A larger organisation may use the cash book to produce a full set of accounts including an Income and Expenditure Account and a Balance Sheet. A group may also keep a PAYE account, a VAT account and a petty cash book. If your group is a charity it must , by law, keep certain accounts and full details of these are available from the Inland Revenue.

Financial Management

As your organisation progresses you will have to look at financial management , which involves examining financial transactions from the past year and projecting an idea of receipts and expenditure for the next year. What you expect to receive and spend during the next period, be it the next financial year or the next six months or even month, is known as a budget. A budget is used to work out a cashflow forecast which sets out your future payments and receipts and should show any potential shortfalls or gaps that you need to fill by fundraising, donations or borrowing. When drawing up a budget you must make sure it is linked to your groups plans and aims. If not , it is unrealistic and will not work.

These notes offer a brief outline of the accounting procedures that a group or organisation will need to have in place, but it is wise to seek professional advice if your treasurer is unsure of any points.

Useful websites:

Inland Revenue www.inlandrevenue.gov.uk