Keep Detailed Accounting Records
All clubs are legally required to keep accounting records which log all of the club’s financial transactions.
You also need to keep records of other information, including:
- Member subscriptions – a database of all members, including names, contact details, fees paid/owed.
- All income received - receipts should be issued for all income received.
- All payments made - invoices and receipts should be kept for all payments made.
- Fixed assets – a description and location of equipment etc.
- Stock – stock movements and balances.
- Cash – 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 will 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, accounting records 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
Have you considered using an online software system?
Another option is an off-the-shelf accounting software package or an online, cloud-based accounting solution. The advantages of this 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.
Monitor and Review 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.
Make Budget Monitoring and Controlling Simpler
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 (check out our handy template here)
- 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
Produce 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
Hold a Fixed Asset Register
A club can hold many items of equipment which can be valuable, so it is important 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.