M.Y.O.B. for Non Profit Organisations. A series of guides for specific industries

Transcription

1 M.Y.O.B. for Non Profit Organisations A series of guides for specific industries Data-Tech Software Pty Ltd ISBN First Edition, March 1998

2 F e e d b a c k Can you help? Every business is very different in what it requires from an accounting system. At Data-Tech Software we realise this, which is why we have written these special guides. We are always glad to hear of new ways in which our users adapt M.Y.O.B. to meet their needs. This can be anything from a creative use of a standard report to a specially customised form peculiar to your business. If you use M.Y.O.B. in a special way for your business, and we haven t covered that in this guide, we d love to hear from you. This way we can share tips amongst our users and make ongoing improvements to these guides. Alternatively, if you would like to comment on any of the content in this special business documentation, your feedback is always more than welcome. You can contact us in any of the following ways: guidefeedback@datatech.com.au Fax: Mail: Data-Tech Software PO BOX 6093 NORTH SYDNEY NSW 2060 Thank-you! Acknowledgement. This work is partly derived with permission from the Woodslane Press publication: Making the Most of M.Y.O.B. ISBN Woodslane Press may be contacted on (02) Case Studies. Please note that although the case studies used in this guide are based on actual businesses which use M.Y.O.B., the names of the businesses have been fictionalised for publication. Great care has been taken to ensure that the information found in this guide is both accurate and helpful. However, it remains your responsibility to verify the legal and accounting impact of any information which is used in your business. Data-Tech Software advise that changes to your accounting system should be discussed with your accountant prior to their implementation. In no event shall Data-Tech Software be liable for any direct, indirect, special, incidental, consequential or similar damages arising from the use of this publication. Non-Profit Organisations 2

3 C o n t e n t s Introduction 5 Which M.Y.O.B. program will be best for our organisation? 6 Financial year-ends 7 Can M.Y.O.B. have financial years ending in any month? 7 Can the payroll year be different from the financial year? 7 The Essentials 7 Step One Choose a Template 7 Step Two Review your Chart of Accounts 7 Step Three Check your Preferences 9 Step Four Set up Opening Balances 9 Step Five Ready to Go 9 Designing your information system 10 Three key concepts 10 Understanding the difference between general ledger accounts and job numbers 11 The practicalities 12 Managing your income 13 Where do I record the receipt of grants and subsidies? 13 How do I issue receipts? 13 How do I create customer accounts? 14 I issue the same account to many different people. Are there any shortcuts? 14 I invoice some customers an identical amount on a regular basis. Are there any shortcuts? 15 How do I record pledges? 16 Can M.Y.O.B. send reminders for unpaid pledges? 17 Case Study Valley Neighbourhood Centre 18 Dealing with expenses 19 The essentials of recording expenses 19 When should I use Purchases and when should I use Write Cheques? 19 Where do I show my sales tax exemption number? 19 How can I see at a glance how much is owed to suppliers? 20 Clubs and associations 21 How do I deal with membership income? 21 Can I use M.Y.O.B. for my member database? 21 Can M.Y.O.B. remind me when subscriptions are due for renewal? 22 Can I split members into groups, and print member listings based on these groups? 23 Non-Profit Organisations 3

4 C o n t e n t s Case Study Rowe Creek Swimming Club 24 Payroll issues 25 Can I allocate a single paycheque to more than one cost centre? 25 How do I set up leave provisions? 26 How do I provide for leave in the accounts? 27 Finance Management 28 How do I create monthly budgets? 28 Can I create annual budgets? 28 Can I create multiple budgets to track different grants? 29 We receive funding in one lump sum. Can I spread this out evenly as income throughout the year? 29 How do I manage sinking funds or building provision funds? 30 How do we show unused grant money at the end of financial year? 31 Can I set up M.Y.O.B. to auspice funds for other groups? 32 Can M.Y.O.B. track assets and calculate depreciation? 33 Case Study Cuillin Chamber of Commerce 34 Reports 35 Can M.Y.O.B. produce an Income and Expenditure report? 35 Can M.Y.O.B. report on a cash basis? 36 Can I track particular grants and report on them? 37 What reports are most useful for non-profit organisations? 37 Can M.Y.O.B. produce reports for people with little English or no accounting background? 38 End of Year 39 What reports should I print at end of year? 39 Will starting a new financial year affect my payroll? 39 Do job totals for each cost centre carry forward when I start a new year? 40 Index 41 Non-Profit Organisations 4

5 Introduction This M.Y.O.B. guide has been written specifically for nonprofit organisations. It complements your M.Y.O.B. User Guide and provides answers to the most common questions asked by non-profit organisations. Is this guide for you? This guide is suitable for a wide range of non-profit organisations, including associations, chambers of commerce, charities, clubs, community groups, churches, neighbourhood centres, political groups, etc. There is a certain amount of crossover between this guide and three other guides. If your organisation buys goods for resale you may wish to refer to M.Y.O.B. for Retailers; if your organisation provides medical services you may wish to refer to M.Y.O.B. for Medical Practitioners; if your organisation provides childcare services you may wish to refer to M.Y.O.B. for Education and Training. This guide starts with a short section that walks you through getting started. This is followed by commonly asked questions and answers, grouped under section headings. Interspersed through these questions you ll find Case Studies where you can read about real organisations and how they have set up M.Y.O.B. A suggestion for new users is to read these Case Studies, then browse the question headings with them in mind. Users already familiar with M.Y.O.B. might read the Case Studies for tips and new ideas. If a topic is of particular importance, it is flagged with a warning sign and the word IMPORTANT! If you see an instruction such as Choose Setup>Preferences this means go to the Setup menu, shown at the top of your display and choose the Preferences command. One more thing. You ll notice that for ease of writing, we refer only to M.Y.O.B. Accounting and not to M.Y.O.B. Premier. However, this guide applies equally to M.Y.O.B. Premier, which has all the features of M.Y.O.B. Accounting plus more, as well as providing multi-user access. Have fun! Non-Profit Organisations 5

6 Which M.Y.O.B.? There are four members in the M.Y.O.B. range of accounting software: M.Y.O.B. FirstAccounts, M.Y.O.B. Accounting, M.Y.O.B. Accounting with Payroll and M.Y.O.B. Premier Accounting. All can all be used for retailers. There are important differences between each program, and you should review these differences to ensure you choose the one that s right for your needs. M.Y.O.B. FirstAccounts is intended for small service businesses (such as consultants and businesses which invoice based on labour and time). Features include: Sales, Chequebook, General Ledger, Purchases and Card File command centres Standard Jobs System, enabling cost and/or profit centre reporting. M.Y.O.B. Accounting has all these features, and adds: Full inventory management essential if you plan to use M.Y.O.B. for purchasing and reselling. Enhanced (multi-level) Jobs System, enabling advanced cost centre analysis. Advanced reporting (i.e. more reports, custom report options and close integration with other applications such as spreadsheets) Ability to budget for jobs, projects or cost centres. M.Y.O.B. Accounting with Payroll adds: Fully integrated payroll, a vital time-saver if you have three or more employees. M.Y.O.B. Premier Accounting adds to all these features: Multi-user capability. This means that more than one user can operate M.Y.O.B. simultaneously. For example, you could use M.Y.O.B. at reception for receiving payments and issuing receipts, and at the back desk for bookkeeping and reporting. Unlimited transactions, cards, contact details (limited effectively by the size of your hard drive). Improved password security and audit trails, complete with user log-in details for every transaction. Enhanced cost centre analysis is important to track different grants or projects and to analyse the income and expenses of the various services your organisation provides. Inventory management and enhanced reporting can also be useful for non-profit organisations.these features are found in M.Y.O.B. Accounting, Accounting with Payroll and Premier. M.Y.O.B. Premier is recommended if you will be using M.Y.O.B. as an extensive database of clients and/or vendors; or if you require a long historical record of transactions or multi-user access. Premier also has the most sophisticated range of commands and features of any M.Y.O.B. software. If you require payroll management (highly recommended if you have three or more employees), then M.Y.O.B. Accounting with Payroll or Premier is recommended. Integrated payroll features plain paper group certificates, comprehensive entitlement and leave management and more. Employees can be paid by direct bank transfer. A paycheque can take less than a minute to process, while an entire pay run may only take a few minutes. Your accounts and required payroll information are always up-to-date. No matter which software you are using or choose to start with, upgrading to another member of the family is straightforward, cost effective and can be made at any time. Asset Management. Non-profit organisations will find that M.Y.O.B. AssetManager provides powerful, easy-to-use management of fixed assets. Everything from buildings, to computers, to shop fittings. It includes service details, serial numbers, owner details, asset groupings and component transfers. Calculation of depreciation is automated and AssetManager creates depreciation journal information which is a snap to enter directly into your accounting system. Further information on the M.Y.O.B. range of software can be obtained by calling Data-Tech Software on This guide assumes you are using M.Y.O.B. Accounting with Payroll; all of the information works with M.Y.O.B. Premier. Most of the information also applies to M.Y.O.B. FirstAccounts. Non-Profit Organisations 6

7 Financial year-ends Can M.Y.O.B. have financial years ending in any month? Yes. In your Setup Interview M.Y.O.B. will ask you to specify the last month in your financial year and you can choose any month. Be careful though once selected, this choice cannot be changed. Can the payroll year be different from the financial year? Yes. Whatever you select your financial year to be, this will not affect your payroll year, which in Australia always ends in June. All you have to do is specify your current payroll year in the General Payroll Information window that appears during payroll setup. The Essentials The following five steps are a brief guide to getting started. Each step highlights important information with non-profit organisations specifically in mind. You should use this information in conjunction with the Getting Started documentation provided with M.Y.O.B. Step One Choose a Template You use the M.Y.O.B. Setup Interview to create a new data file for your business. Step 5 of the M.Y.O.B. Setup Interview asks you to Choose a Template. Choose the Non-Profit Organisation template; it provides a sample chart of accounts and is a good starting point for most non-profit organisations. Don t worry if this chart of accounts template isn t perfect you can add, change or delete as many accounts as you like. Step Two Review your Chart of Accounts Before entering your opening balances, you need to adapt the standard M.Y.O.B. chart of accounts so that it that it suits the unique needs of your organisation. What is the chart of accounts? The chart of accounts is a list of classifications to which you will allocate transactions in your business. There are eight major general ledger account categories and it pays to understand each one, so that you use the right ones at the right time. Refer to the User Guide that comes with M.Y.O.B. for more information on creating new accounts, editing accounts, or deleting accounts. Figure 1 (shown on the next page) illustrates the eight major account categories. Non-Profit Organisations 7

8 Figure 1. The M.Y.O.B. Chart of Accounts Account Category Assets Liabilities Equity Income Cost of sales Expenses Other Income Other Expenses What it means Things owned by your organisation. Put your office furniture, computers and buildings here. Asset account numbers start with 1. What your organisation owes. Includes loans, taxes payable and outstanding supplier accounts. Liability account numbers start with 2. The accumulated surplus carried forward from previous years. Examples of equity accounts are accumulated earnings or reserve accounts. Clubs and associations may wish to rename the Header account called Equity to read Members Funds. Equity account numbers start with 3. Money in! Grants, subsidies, donations, fees for services provided. Income account numbers start with 4. The direct costs of producing income, e.g. goods purchased for resale. Non-profit organisations often do not have any cost of sales accounts. Cost of sales account numbers start with 5. Overheads and day-to-day running costs. Includes bank charges, electricity, postage or wages. Expense account numbers start with 6. Extraordinary income that is unusual in its nature. Could include capital gains or insurance recoveries. Other income account numbers start with 8. Extraordinary expenses that are unusual in their nature. Could include lawsuit expenses, capital losses, or large maintenance costs. Other expense account numbers start with 9. Non-Profit Organisations 8

9 Step Three Check your Preferences You can design M.Y.O.B. so that it works the way you want it to. You can do everything from changing the appearance of your M.Y.O.B. windows, to asking for automatic backup prompts each time you quit the program. It all happens via the Preferences command. To review your preferences, go to Setup> Preferences and explore the System, Reports & Forms, Chequebook, Sales, Purchases and Security tabs. Remember your choice of preferences does not commit you to this for ever and ever, for you can change your preferences at any time. One preference setting is a must, especially for new users. Make your data file changeable. If you make mistakes, you can correct them, without needing to make complicated reversing journals. To do this, go to the Security tab in Preferences. Remove the checkmark from Data File Records CANNOT be Changed; Saved Entries Must be Reversed. For more details on how each preference setting works and what it does, refer to the User Guide that comes with M.Y.O.B. Step Four Set up Opening Balances Next, you need to enter opening balances. To enter opening general ledger account balances, click Setup>Balances>Account Opening Balances. To enter opening balances for outstanding customer accounts, click Setup>Balances>Receivables. To enter opening balances for outstanding supplier accounts, click Setup>Balances>Payables. If you wish to only enter opening balances for a few accounts, in order that you can get up and running, you can. Bare essentials will probably only be the carried forward balances of your bank accounts. Your opening account figures won t balance, but M.Y.O.B. will store this out of balance amount in the Historical Balancing account. You or your auditor can fix this later. If required, refer to Getting Started guide that comes with M.Y.O.B. for more information on opening balances. Step Five Ready to Go Some last comments before you launch into action 1 Always remember to save as you go: press CTRL-S (Windows) or CMD-S (Macintosh). Alternatively, all current M.Y.O.B. software has an Autosave preference. All you need to do is go to Setup>Preferences>Security and set the time interval between saving to 5 minutes. If you don t save and there is a power failure or computer crash, you will lose all the work you ve done that day. 2 Work out how to back up onto floppy disk, or other removable media, now. You might have been lucky so far, but nobody can guarantee that they will be immune to power surges, theft, fire or hard disk failure. If you don t know how, read the manual, or phone a friend. But don t put it off! If you don t work it out now, you ll probably forget about it until it s too late and then you ll be sorry. Non-Profit Organisations 9

10 Designing your information system Three key concepts Every transaction that you record in M.Y.O.B. can include the following information: 1 The Name of your customer (e.g. a client, donor, member or sponsor) or your supplier. 2 The Allocation Account. This is the general ledger account number from your chart of accounts and refers to the type of income or type of expense. 3 The Job Number. This job number can be used for jobs, projects, locations or cost centres. Figure 2. Analysing your business performance with M.Y.O.B. Every transaction you record in M.Y.O.B. can include the following information: Customer or Supplier NAME Job number, Project number or Cost Centre Income type, Cost of Sales type or Expense Type The Card File Sales and deposits can be grouped according to customer name, e.g. Dept of Health Dept of Sport & Recreation Purchases and cheques can be grouped according to supplier name, e.g. Supplier A Supplier B General Ledger, Jobs List Cheques, deposits, sales and purchases all include a Job column. If you wish, jobs can be grouped together to track different cost centres, grants or projects. Job description Job # Adventure Education Project A JobStart Project J Traineeships T WOSYA Grant W General Ledger, Chart of Accounts All transactions ask for an Allocation Account, which refers to income and expense types, e.g Income grants Income traineeships Income fund-raising etc Cost of sales Direct labour costs etc Advertising Bank charges Computer supplies etc. Non-Profit Organisations 10

11 In the Write Cheques window below, you can see how this concept works in practice. The Name of the supplier is recorded in the Card field, the type of expense is recorded in the Allocation Account field and the job code is recorded in the Job column. You can use job numbers to track cost centres, such as projects, grants or different ventures Understanding the difference between general ledger accounts and job numbers General ledger accounts are the names that you choose in order to categorise your income and expenses. For example, income accounts might include Grants, Fund-raising, or Donations. If you like, you can create Header Accounts, with Detail Accounts underneath. For example, under a Header Account called Grants you can have Detail Accounts such as Education Grant, Building Grant and Arts Grant. IMPORTANT! Job numbers provide an additional way for you to categorise your income and expenses and can be used as cost centres. Cost centres have many applications for non-profit organisations, for example: Your organisation might administer several different grants and need to report on the expenditure and funds remaining for each grant. You could do this in M.Y.O.B. by creating a unique job number for each grant. Your organisation might provide various services, e.g. after hours childcare, Meals on Wheels and transport for the handicapped. You could analyse the income and expenses for each of these services by creating a unique job number for each service you provide. Your organisation might operate in more than one location, e.g. an information service in several different towns. You could report on the running costs of each location by creating a unique job number for each one. Non-Profit Organisations 11

12 The great thing about Job Profit & Loss reports is that they allow you to report separately on each cost centre, as well as allowing you to report on the organisation as a whole. Jobs can be grouped in a way similar to general ledger accounts, with both Header Jobs and Detail Jobs. This means that you can have cost centres within cost centres. For more on jobs, refer to Can I set up M.Y.O.B. to auspice funds for other groups? and Can I track particular grants and report on them? The practicalities 1 Customer names and supplier names are recorded in the Card File command centre. Click Cards and then New. Select your Card Type carefully and complete the card details. 2 General ledger account numbers and names are recorded in the General Ledger command centre. Click Chart of Accounts and then Edit or New to change or to add new account categories. Header Accounts will create headings within the body of your Balance Sheet or Profit & Loss report. Detail Accounts will sit below these headings. 3 Job numbers and names are recorded in the General Ledger command centre. Click Jobs List and then Edit or New to change or to add new jobs. Header Jobs create headings within the body of your Job Profit & Loss report. Detail Jobs sit below these headings. Non-Profit Organisations 12

13 Managing your income Where do I record the receipt of grants and subsidies? Go to the Chequebook command centre and click Make A Deposit. Record the Date, Amount and Payor (the Payor is the person or organisation from whom you have received the grant). Select an income Allocation Account. This will start with 4- and should be called something like Income from Grant or Income from Subsidy. Enter a Job number, if relevant, and click Record. How do I issue receipts? Receipts are essentially the same as invoices but are smaller with less detail. The way to issue a receipt using M.Y.O.B. is to take a standard invoice layout and customise it. M.Y.O.B. makes this process easy. All you have to do is select Print Invoices and then click Customise. You can create boxes, lines, insert your logo, alter fonts and add comments whatever you like. You can also delete unwanted information and columns, such as memos, sales tax totals, or shipping details. You can customise your receipt to make it look exactly as you want it to look. To print receipts, first create a Sale from the Sales command centre and record brief details in the Description and Journal Memo fields. Record the amount paid in Paid Today and select Print. (If you don t wish to create a new Card for each person you issue a receipt to, create a card called Cash Receipt.) For more information and tips on customising forms, refer to the User Guide that comes with M.Y.O.B. Non-Profit Organisations 13

14 How do I create customer accounts? Some organisations may provide services on account and need to supply a printed invoice. To do this, go to the Sales command centre and click Sales. Next, click Type to choose the most appropriate invoice format. There are three main invoice formats, referred to as invoice Types in M.Y.O.B: Service, Item and Professional. If your invoices require many lines of description then a Service or Professional invoice will be best. Professional invoices include a Date column for each line of the invoice, but Service invoices do not. Sometimes it is most efficient to bill using Item invoices, even if your bills consist entirely of services provided. This is because M.Y.O.B. allows you to set up hourly rates and other fees as items in the Items List. Item invoices speed up your billing, for when you select an item from the Items List M.Y.O.B. will print the name (e.g. Handyman Services), the rate, the quantity, and will also calculate the total. Other charges such as phone calls or photocopying can be shown in the same way. An invoice for annual membership for a Chamber of Commerce Invoice details are only entered after you have selected the invoice type. Tab your way from one field to the next and when you ve finished, click Record. I issue the same account to many different people. Are there any shortcuts? Absolutely! Sometimes you might wish to send an identical invoice to numerous people, such as an invoice for a seminar, a one-off service fee, or a joining fee. It s possible to set up a library of ready-to-use invoice templates in M.Y.O.B. so that you don t have to type the invoice from scratch each time, and to make repetitive billing a quick and easy process. Non-Profit Organisations 14

15 To do this, go to Sales in the Sales command centre and create your first account. However, when you are ready to record it click the Save as Recurring button instead of Record. Name this recurring sale appropriately (e.g. Membership Fee; Maintenance Fee, etc.). Click OK to return to your original invoice and click Record. For the second and subsequent invoices, simply go to create an invoice, click Use Recurring, and select your recurring sale. M.Y.O.B. will complete all invoice details automatically. All you need to do is change the Customer name each time, clicking Record (not Save As Recurring) once this is done. I invoice some customers an identical amount on a regular basis. Are there any shortcuts? Yes. Some organisations invoice the same customer an identical amount on a regular basis, such as annual membership, quarterly maintenance fees or a regular subscription. You can set up M.Y.O.B. so that it will issue these invoices automatically, whenever they fall due. To set this up, you first need to create a recurring invoice: 1 Create an invoice, but before completing it, click Save as Recurring (one of the buttons at the bottom of the invoice). 2 In the dialogue box that appears, enter the customer name, and next to Frequency specify how often you plan to bill this customer. Click Record. 3 Back on the invoice, click Record. 4 Repeat this process for every customer that you invoice regularly. Next time these fees or membership dues fall due, all you have to do is this: 1 Click the To Do List in the M.Y.O.B. Analyst and then go to the Recurring Sales tab. This shows each customer s Name, the date fees are Next Due and an Action checking column. 2 If any invoice details have changed from the previous time (such as an increase in membership charges) click the arrow next to the customer s name, and edit the invoice. Click Record to save these changes and record this sale. 3 For all customers whose invoice details have not changed, click in the Action column against their names. 4 Click Record and M.Y.O.B. will automatically generate accounts for these customers, dating them with the current date. Go to Print Invoices in the Sales command centre to print these. Non-Profit Organisations 15

16 How do I record pledges? Occasionally, charities or non-profit organisations run fund-raising drives where they ask people to pledge their donation. Here s how to record a pledge when it s received: 1 For each pledge received, go to the Sales command centre and click Sales. Enter the name of the donor if you don t already have their details on file, hit the TAB key and then click New. This way you can add their information on the fly without leaving the invoice window. 2 Click Type and choose Item as your invoice type. 3 Record the details of the pledge as shown below. Enter the date that the pledge should be received by in the Promised Date field. If you like, record how the pledge was made in the Salesperson field. Click Pending when recording pledges in M.Y.O.B. 4 Click Pending (not Record!) when these details are complete. The neat thing about recording pledges as Pending invoices is that they are kept separately in a not quite ready basket. M.Y.O.B. does not show pending invoices as income or as accounts receivable. This is perfect, as most non-profit organisations work on a cash reporting basis and (quite wisely!) don t recognise pledges until money is banked. When you do receive money from a pledge, go to your To Do List and click the Pending tab. Find the invoice in question, click in the Action column and then click Record as Actual. This converts the pledge into a real invoice. All you have to do now is go to Customer Payments and record the payment. If you wish to send donors receipts, go to Print Invoices, change the Invoice Status to Closed and click Print. For more on how to create a customised receipt, refer to How do I issue receipts? Non-Profit Organisations 16

17 For a list of pledges that are due, go to your To Do List, click the Pending tab and look at the Promised Date column. Can M.Y.O.B. send reminders for unpaid pledges? Yes. With a little creativity, it s quite easy. Although M.Y.O.B. can t send customer statements for pending invoices, you can customise an item packing slip to be a reminder notice. First go to Print Invoices, select Packing Slip as the Invoice Type and click Customise. Next, identify the fields that you don t require and delete these by going to Edit> Erase Selected Field. (If a field that you require is displayed in grey, double-click on it and click against the comment Field is Active.) Personalised details can be printed onto a standard pre-printed reminder letter You can choose to insert large blocks of text into the packing slip, or alternatively you can print the barest details from this packing slip (e.g. donor s name, amount of pledge and the due date) onto a standard pre-printed letter, as shown in the screenshot above. Either approach will work. Non-Profit Organisations 17

18 Case Study Valley Neighbourhood Centre Organisation Name: Valley Neighbourhood Centre Organisation Focus: To facilitate community services in the local area, including a handyman service for old people, vehicle hire for community groups and renting space to the local after school care service and other groups. Overview: Valley Neighbourhood Centre use M.Y.O.B. to record all income and expenses and to issue accounts and receipts. Description: The Neighbourhood Centre have used the Jobs List to create four cost centres: one for their handyman service, one for their vehicle hire service, one for rental income and one for overall administration. Every transaction is coded with a job code so that the Neighbourhood Centre can print Job Profit & Loss reports that monitor whether each service they provide is financially self-sufficient. The Neighbourhood Centre record all grant income using Make a Deposit and record all expenses as they are paid using Write Cheques. They raise receipts for handyman work and invoices for vehicle hire using Sales. They rely on customer statements and Analyse Receivables to make sure that community groups pay vehicle hire fees promptly. The Neighbourhood Centre create budgets for their organisation overall as well as budgets for each cost centre. They report to their Management Committee using the Profit & Loss [Budget Analysis] report. They make sure all entries are correct by regularly reconciling their bank account. Conclusion: The Neighbourhood Centre divide their organisation into four cost centres using jobs. They record income using a combination of Make a Deposit and Sales. They record all expenses as they are paid using Write Cheques. They create budgets for each cost centre and for the organisation as a whole. They make sure their entries are correct by regularly reconciling their bank account. Non-Profit Organisations 18

19 Dealing with expenses The essentials of recording expenses Here are some basic tips that you should know when recording expenses: 1 Understand the difference between Write Cheques and Vendor Payments. Only use Vendor Payments if you are recording your purchases in the Purchases command centre and if you are recording a payment for an outstanding account. Use Write Cheques for everything else, such as bank charges, rent payments, leases or petty cash. 2 Don t forget to enter bank charges and periodical payments from your bank statement. To do this, go to Write Cheques and override the Cheque No with a small description, such as Fee, FID, or LEASE. 3 Regularly reconcile your bank accounts! IMPORTANT! Learn how to reconcile your bank accounts. It may seem an awesome task at first, but it is actually quite easy once you get going. Reconciling your bank accounts is the only way to ensure that the information you enter into M.Y.O.B. is correct. When should I use Purchases and when should I use Write Cheques? If you wish to record supplier accounts as they arrive and to be able to see how much you owe at any one time, then you should use Purchases to record all your outstanding accounts. Certainly, the larger your organisation, the more important it will be for successful financial management to track outstanding payables. This means that when you receive an account, you record it using Purchases and that when you later settle this account, you record the payment using Vendor Payments. If you don t receive a great deal of goods on account, or if you tend to settle all accounts very promptly, it is probably more efficient for you simply to record these bills at the time they are paid. If so, you don t need to use the Purchases command centre at all. All you need to do it to go to Write Cheques and record the account at the time it is paid. Where do I show my sales tax exemption number? If you are claiming sales tax exemption for any purchase, you are expected to provide a purchase order with your sales tax number shown. M.Y.O.B. will ask you for your sales tax number at setup. To check that this information is correct, go to Setup>Company Information and verify the Sales Tax Number field. Non-Profit Organisations 19

20 Go to Company Information to set up your sales tax number M.Y.O.B. will now print your sales tax number on all purchase orders. To change the size, font or position of this number, click Print Purchases and then Customise. How can I see at a glance how much is owed to suppliers? M.Y.O.B. will only give you this information if you are recording your outstanding accounts using Purchases. From the Purchases command centre, click Payables in the M.Y.O.B. Analyst. You will see a summarised Analyse Payables report, aged as at the current date. Click the white arrows to go straight to a detailed breakdown of any supplier s totals, or click Print to print the report. Non-Profit Organisations 20

21 Clubs and associations How do I deal with membership income? There are two possible ways the quick and simple method, or the detailed method. It all depends how your office works and how you receive membership income. The quick and simple method This method works if you don t need M.Y.O.B. to act as your membership database, issue receipts, create reminders for membership due or to record the names of who money is from. All you need to do is issue hand-written receipts if requested and bank the money as normal. Later, go to Make a Deposit and working from your bank deposit book record each day or week s banking, entering Membership Income as the Allocation Account. Note that regardless of how many subscriptions make up each day s banking, you only require one deposit entry in M.Y.O.B. If you intend to use this method, do first check with your auditor that it provides sufficient detail for your accounting records. The detailed method This method is great if you need to create receipts, have M.Y.O.B. remind you when memberships fall due, or if you wish M.Y.O.B. to act as your membership database. This is what you need to do: 1 Create a Card for every member. If you already have this listing in a word processor, spreadsheet or database you can import this information directly into M.Y.O.B. Refer to the User Guide that comes with M.Y.O.B. for more details. Record membership income using Sales. An Item invoice type is probably the quickest. 2 If this membership is going to be renewed regularly, refer to Can M.Y.O.B. remind me when subscriptions are due for renewal? for information about recurring sales and the contact log. 3 Record the amount received in the Paid Today field. 4 Click Print to record the sale and issue a receipt. Can I use M.Y.O.B. for my member database? Yes. Unless you need to store a lot of very specific and unusual information about your members, then the M.Y.O.B. card file is an ideal tool for your membership database. All cards have fields for you to record name, address and phone details. There s also a salutation, contact name and notes field in each card. If you need to, you can adapt what any field is used for. For example, you could record members birthdays in the Notes field, next of kin in the Contact Name field, or member numbers in the Fax# field. Non-Profit Organisations 21

22 You can easily export members details into a word processor, spreadsheet or database, either via Personalised Letters in the Card File command centre, or via the File>Export menu in the General Ledger command centre. Can M.Y.O.B. remind me when subscriptions are due for renewal? Yes. There s two different ways of doing this. Methos 1: Create reminders using recurring sales Set up each membership as a recurring sale, as explained in I invoice some customers an identical amount on a regular basis. Are there any shortcuts? This means that when that membership next falls due in will appear as Overdue in your To Do List under the Recurring Sales tab. If you want to send a reminder to the member, you can zoom into the sale from the To Do List, record it as Pending, and print it. This invoice can then be sent to the member as a reminder that their renewal is due. Method 2: Create reminders using the Contact Log Another approach is to use the Contact Log. Go to the Card File command centre and click Contact Log and then New. Type the date their membership is next due in the Recontact Date field. This means that when that membership next falls due in will appear as Overdue in your To Do List under the Contact Alert tab. You can use the Contact Log to track when membership renewals fall due If you want to send a reminder note to the member, click on Personalised Letters in the Card File command centre. Specify a date in the Recontact On/Before field and click OK. Check the names in the Review Cards window and click Export. M.Y.O.B. will create a file that you can use as a mail merge file in your word processor, so that you can send personalised reminder letters to each overdue member. Non-Profit Organisations 22

23 Can I split members into groups, and print member listings based on these groups? Yes. There are several reasons why you might want to group your members. For example, you might wish to: Group members according to their membership type, e.g. gold membership, silver membership, guest membership. Group members according to their grade, age or sex. Monitor how members were referred to your organisation, so that you can get an idea of how effective your advertising strategy is. Dividing members into groups or categories is easy in M.Y.O.B., simply by using Identifiers. Every card in the card file has a field in it called Identifiers. There is an alphabet of identifiers to choose from: you can give any meaning you like to each identifier, and any card can have more than one identifier. An example might help. A local Conservation Society wants to group members according to their membership type and according to their special skills. They might set up their identifiers as follows: Identifiers provide an easy way to group your members Note that a member can have more than one identifier. For example, a pensioner member who can help with plant identification would have PI as their identifiers. Non-Profit Organisations 23

24 Case Study Rowe Creek Swimming Club Club Name: Rowe Creek Swimming Club Club Focus: The swimming club provides training and competition facilities for the local community. It is an incorporated association that raises all income from membership and fundraising. Overview: The swimming club has a very simple M.Y.O.B. set up. It uses M.Y.O.B. to record all income and expenses and to run its membership database. Description: Various club members are responsible for issuing hand-written receipts at the pool. Later the treasurer types these receipt details into M.Y.O.B. using Make a Deposit. She records all expenses as they are paid using Write Cheques. The swimming club uses M.Y.O.B. as a membership database and records each swimming club member as a card in the M.Y.O.B. card file. This card records all their personal details, and spare fields such as Notes and Contact Name are commandeered to record swimming grade information. The age group is indicated using Identifiers so that the club can ask M.Y.O.B. to print member listings based on age and a Contact Log is maintained for each member. This log uses the Recontact Date to indicate when membership fees next fall due, so that the Contact Alert List acts as a fee reminder printout. The swimming club prints monthly Profit & Loss and Balance Sheet reports and makes sure all entries are correct by regularly reconciling the bank account. Conclusion: The swimming club records income using Make a Deposit and expenses using Write Cheques. The membership database is set up using the M.Y.O.B. Card File. The treasurer makes sure all entries are correct by regularly reconciling the bank account. Non-Profit Organisations 24

25 Payroll issues Can I allocate a single paycheque to more than one cost centre? Yes. Although there s only one Job column in an M.Y.O.B. paycheque, it s easy to split a single paycheque across more than one cost centre. Go to the Payroll command centre, click Payroll Categories, select the Wages tab and click New. Create an additional wages category for every cost centre to which you allocate wages expenses. Call these Base Hourly 1, Base Hourly 2, Base Hourly 3, etc. Click Employee for each of these categories and mark off those staff who work for more than one cost centre each pay period. The idea is that each Base Hourly wages category can be used as a separate cost centre. For example, in the cheque below the centre co-ordinator worked 15 hours for the Mobile Transport unit (cost centre M) and 10 hours for Aged Care Services (cost centre A). It s easy to allocate pays to more than one cost centre It s difficult to allocate superannuation and workers comp across multiple jobs. We recommend you don t allocate these expenses to any one cost centre in particular, or else allocate these expenses to the cost centre that took up the most time in that pay period. Non-Profit Organisations 25

26 How do I set up leave provisions? Always express entitlements, such as holiday leave, sick leave or long service leave, as a percentage of Base Hourly wages in the Entitlement Information. This is most reliable method of calculation. The examples below show how to calculate your percentage. Holiday pay The Annual Leave Act governing all employers provides for 20 days of holiday per year for every employee. You need to convert this to a percentage of the total days worked per year. Total working days per year 52 x 5 = 260 Total holiday days per year 20 = 20 Percentage holiday days (20 x 260) 100 = % Sick Pay It is likely that your award varies, providing for fewer days sick pay in the first year of employment than in subsequent years. If this is the case, you need to set up two separate Entitlement categories in your payroll. Call the first category Sick Pay 1st Year and call the second category Sick Pay 2nd and subsequent Yrs. Total working days per year 52 x 5 = 260 Total sick days per year 15 = 15 Percentage sick days (15 x 260) 100 = % Setting up sick leave entitlement Non-Profit Organisations 26

27 Long service leave It is a good idea to make provisions in your financial accounts for long service leave. The Long Service Leave Act governing all employers allows for 4.33 weeks for every 5 years worked. Total working weeks in 5 years 52 x 5 = 260 Total weeks leave per 5 years 4.33 = 4.33 Percentage long service leave (4.33 x 260) 100 = 1.666% With any entitlement, don t forget to click the Exempt button in the Entitlements Information window. Wages categories such as bonuses, leave loading or overtime should be excluded from entitlement calculations. How do I provide for leave in the accounts? First go to Reports>Index to Reports and click the Payroll tab. Select the Entitlement Balance [Detail] report and click Filters. Choose Lifetime as the Period and click against Sort by Accrual. This report provides a dollar value for the amount your organisation owes in long service leave, holiday leave, and sick leave. To create a provision in your Balance Sheet for these leave amounts you need to do a General Journal Entry. Debit a wages expense account (e.g. Long Service Leave expense) and Credit a liability account (e.g. Provision for Long Service Leave). Use your entitlements report as a reference for making wages provisions Normally, this journal is only performed at end of financial year. Don t forget to reverse it when payment for leave is finally made. Non-Profit Organisations 27

28 Finance Management How do I create monthly budgets? To enter a budget for an account, first go to Chart of Accounts in the General Ledger command centre. Double-click an account for which you wish to create a budget. In the Edit Accounts dialogue box, click Budget to go to the History and Budgets dialogue box. You re there! Creating budgets is easy If your budget for a particular account is the same each month, click Shortcut. Here you can enter the monthly amount just once and M.Y.O.B. will complete the whole year s budget automatically. Can I create annual budgets? Yes. Many non-profit organisations don t budget on a monthly basis, but on an annual basis. During the year, they compare how much of their annual budget has been used up and the value of funds remaining. To do this, enter your entire annual budget for each account in the first month of the year. For example, if your annual budget for telephone expense is $3,000 and your financial year runs from January to December, enter the entire budget amount of $3,000 in January. This way, M.Y.O.B. can tell you throughout the year what percentage of your budget had been consumed. If you require greater flexibility in the presentation or layout of your budget reports, it s easy to export M.Y.O.B. s Profit & Loss [Budget Spreadsheet] report to your favourite spreadsheet. To do this, click on Disk from the Index to Reports and save this report as a Tab-Delimited Text File. Next, open up this text file using your favourite spreadsheet. Non-Profit Organisations 28

29 Can I create multiple budgets to track different grants? Yes! If your organisation is a recipient of more than one type of grant, you may need to budget for each grant separately. To create monthly budgets for each grant In this case, the best approach is to create unique income and expense accounts for that grant in your Chart of Accounts. For example, if you had a grant for a mobile library you might have an income account called Grant Mobile Library and expense accounts called Motor Vehicles Mobile Library ; Wages Mobile Library, etc. To create annual budgets for each grant In this case, the best approach is to create a unique Job number for each grant. To enter budget details for each job go to the Jobs List in the General Ledger command centre, highlight the relevant grant and click Budgets. The list of accounts which follow allow you to enter a total budget for all relevant income and expenses. This budget will be a budget for the entire period of the grant and will not set itself to zero when you start a new financial year. The great thing about this is that if your grant spans across a financial year end (perhaps your financial year runs from January to December but the grant runs from March to February), M.Y.O.B. will carry forward all budget totals. However, if you have a grant that renews each year and for which the budget changes, you will need to return to the Jobs List and edit the budget figures at the beginning of each year. We receive funding in one lump sum. Can I spread this out evenly as income throughout the year? Many non-profit organisations receive their funding in one lump sum at the beginning of the year. This is great for cashflow, but tends to distort Profit & Loss reporting; one month of the year shows an enormous profit, but all the other months show a substantial loss. To show funding income evenly throughout the year, do the following steps: 1 First, create a new liability account called Unused Funds. 2 When you receive a lump sum of funding, go to Make a Deposit allocate the funding to this Unused Funds account. 3 Divide this lump sum by twelve (or by however many months it is meant to cover) to establish the real amount of income you receive each month. 4 Go to General Journal Entry and create a journal that Debits your Unused Funds account and Credits your Income from Funding account, as shown below. Non-Profit Organisations 29

30 Use General Journal entries to show funding income evenly throughout the year 5 Click Save as Recurring to save this journal as a recurring monthly journal. 6 Each month, go to your To Do List and select the Recurring Transactions tab. Click in the Action column to record this general journal. If done correctly each month, the balance of your Unused Funds account should be zero at the end of the funding period. How do I manage sinking funds or building provision funds? Some organisations like to create sinking funds or building provision funds so that they can provide for future large expenses. Usually these amounts are transferred to a separate bank account and an expense account is debited for the amount of the provision. Here s what to do: 1 If the sinking fund has its own bank account, create a new asset account in the Chart of Accounts called Sinking Fund or something similar. Make this account a Detail Cheque Account. 2 When money is transferred to the sinking fund, go to Write Cheques and select the Sinking Fund as your Allocation Account. 3 Next, go the General Ledger command centre and click General Journal Entry. 4 On the first line of this journal Debit an expense account called Building Maintenance Expense, Repair & Maintenance Expense or something similar. 5 On the second line of this journal Credit a liability account called Provision for Building Maintenance or Provision for Repairs & Maintenance or something similar. This will show repairs and maintenance as a consistent expense from year to year, regardless of when these repairs are actually carried out. Non-Profit Organisations 30