In order for a club to be successful and sustainable, the funds that come from members and other sources need to be used wisely and effectively. That’s why financial governance is a big priority.
Governing your Finances
What Does Governing a Club’s Finances Involve?
- The right individuals involved in financial matters
- The right structure with appropriate authority and delegation
- The right controls and procedures in place
- The right information to make effective decisions
The Right Individuals
The main financial role within the club is the Treasurer. This is a vital role, so it is important you recruit someone who is organisational and confident in dealing with figures and managing money.
What Does the Role of the Treasurer Involve?
The Treasurer is responsible for the club’s finances and acts as the main financial officer for the club. Their duties may include, but are not limited to:
- Preparing the budgets
- Sorting out financial affairs, including banking income, paying invoices and monitoring the bank account and cash flow
- Preparing the club’s financial reports and presenting them to the committee
- Providing guidance to the committee on the management of finances
- Responsibility for financial procedures and processes
Find out more about a Treasurer’s role description here.
The Right Structure
Although the role of the Treasurer is important, it is just one part of the club’s financial governance structure. You need to ensure that no one single person is ever able to carry out financial transactions on behalf of the club from start to finish. You need to build in some safeguards.
In a small organisation, like a club, this can be difficult to achieve. Some things to consider include:
- Appointing budget holders with responsibility to manage budgets
- Setting up levels of limited spending authority
- Setting up a finance sub-committee to monitor club finances more closely
- Ensuring the committee understands and reviews the finances as they are ultimately responsible
It is a good idea to create a chart showing your financial structure so that everyone is aware of the part they play.
The Right Controls
Having the right structure will make it easier for you to put in place the right procedures and controls so that you reduce risk and help ensure your club does not get into financial difficulty.
These processes should be clearly outlined in your financial procedures so that people in the club are aware and can comply.
Examples of Procedures and Controls include:
- Cash income is signed by two individuals
- There are limits of authority for spending
- The Chair reviews the Treasurer’s bank reconciliation (this is the difference between the bank balance and the corresponding amount shown in the club’s own accounting records)
- Documentation (like invoices and receipts etc.) is retained
- Conflicts of interest are managed
The Right Information
Having the right financial information presented at committee meetings will make sure that the right decisions are made with the club’s finances in mind.
The Treasurer should prepare a financial report on a regular basis and this should include the following:
- An Income and Expenditure Account, which is compared to the budget
- A Balance Sheet – showing club assets and liabilities
- Any other information considered necessary, e.g. cashflow forecasts, details on debtors and creditors
The Finance Report should also be sent to each committee member in advance of meetings so that there is sufficient time for scrutiny and questions.
For example, the below may be asked:
- Are there any expenses not yet paid but that should be included in the financial statements?
- Have you included any payments that have not yet cleared the bank account?
- Is there any unbanked income that needs to be accounted for?
If these items are not included, the club’s cash position will look healthier than it actually is. This may result in poor decision making, such as additional expenditure being approved leaving the club with an overall shortfall of cash.