B R A D ' s ON L I N E R M E M O- - -
TO: Interested Onliners FROM: Brad Pendable - CPA
RE: QBuxBox System ORIGINATED: February 2008
BuxBox.E X P L A N A T I O N:
OK OK .... I can hear you saying "What in the world are you talking about this time"?
Well, basically BuxBox (elsewhere, when QuickBooks, or Quicken, is involved, we reference this as QBuxBox ) Accounting is an alternative to most budget processes - it is a way to keep your financial records so you spend only what you have money for that purpose in a BOX. Please go to 0601 for some more information about what we call the QuickBooks Fund Accounting Method Number 3. After July 2006, be sure and go to this SPENDING CONTROLS web site for more assistance along these lines. Also Click Here and learn about the expense Accrual Basis system and especially the system as outlined when you go this FinFax system..
It often pertains to smaller Ministries and it obviously implies that the Ministry is prone to be short of cash to pay their operating costs. Or it is a process that assists Ministries that have operated at a deficit in the past to 'right their ship', etc.
A BOX is where money goes in and out and you always know exactly how much remains. Some of us will better identify with the following terms: ENVELOPE , BAG, POCKET; or even BILLFOLD or PURSE. Please Click Here and notice how I have used this term in that particular setting. By whatever name, the BuxBox process functions at a Ministry like the following:>> Remember (2), this only pertains to the Ministry's General Purpose Fund (GPFund), or to undesignated/unrestricted money that comes into the Ministry and you as Ministry leaders decide how to spend it in carrying out your exempt purpose, etc. The administration of the GPFund could be viewed as "We-Shalt" and the SPFunds below could be viewed as "Thou-Shalt."
>> It does NOT pertain to Special Purpose Funds (SPFunds), or to designated/restricted money that can only be used for the indicated purpose.
>> The Ministry determines in advance which GPFund "Expense Groups" are to be paid in order of priority and you establish a BuxBox for each "Expense Groups" or category.
>> Then when GPFund money comes in, it is placed in priority order in the applicable
>> If said BuxBox has any money in it, then you can spend, etc.
>> This BuxBox effort is an attempt to respond to such things as:
I S S U E S:
1. "Undesignated/unrestricted Income" must be handled prudently.
2. Ministries need strategies and tools in order to do this.
3. Within Ministries, such income is often sparse and must be closely monitored.
4. Regardless of the authorized Budget, the Ministry Finance Team can only spend what they have.
5. If purchases are made via a Charge Account, or via Credit Cards (any type of Plastic), an option is for you to pay them weekly and not via the monthly statement, etc. Go Here for more details.
6. You do NOT borrow internally in order to cover shortages of such income.
7. Reliable and timely financial reports are a MUST
STRATEGIES/TOOLS:
We recommend such strategies/tools as the following:
---- Survival ----
Determine well in advance the 'must pay in order to survive' items. Examples might include fixed operating expenses like: >> Operating salaries/benefits; >> Facility repetitive expenses (rent or mortgage; utilities, etc). Each Ministry decides what "Survival" means to them.
---- Assignment ----
Then when "undesignated/unrestricted" GPFund money arrives, it is immediately assigned to the applicable BuxBox, or "Survival" area, by pre-determined order of priority. When that BuxBox, or "Survival" category, has enough money, any residual is available for the next authorized priority area.
---- Weekly Report ----
The effect of the above process is shown in the following sample weekly financial report.
QBs Acct Types Assets:
Bank Checking- Savings
16,787
Fixed Assets
Total Assets
16,787
Liabilities:
Acct Pay Payables
1,689
Fund Balances - Net Assets:
SPFunds
Equity Donor Restrictions
700
Equity Building Fund
4,000
Equity (Deficit) from last year
(6,362)
Equity Board SetASides
15,774
14,112
GPFunds
Available for this Year's Operations:
Equity Church Staff Costs
562
Equity Missions Costs
234
Equity Mortgage & Facility Costs
56
Equity Program #1 Costs
34
Equity Program #2 Costs
100
986
Total Fund Balances
15,098
Total Liab & Fund Bal
16,787
Please note the deficit above of $6,362 from the previous fiscal year. Constituents have pledged (Faith Promise, etc) to cover this deficit as it was inappropriately borrowed from the SPFunds. If the weekly pledge receipt does not cover the weekly need of $122 (1/52rd of $6,362) then this is the first weekly assignment priority.
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COMMENT ABOUT CHURCHES:
In this setting, Church leaders must know soon after the Sunday offering just exactly what there is to spend for ministry and/or operating costs. It would seem that Survival issues pertain to costs in the following order of priority. 1st - Sal/Benefits; 2nd - Agreed commitments or installments; 3rd - Other fixed operating costs and if anything remains, then 4th - necessary Ministry spending in approved sequential order. See comments above about coverage of the Operating deficit of prior year, etc. Please go to 0002 for some more perspective on this type of system and/or process.
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UPDATED LAST:
July 04, 2008Fresno, California
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