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STUDENT GROUP FINANCE TRAINING 2016/17

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Presentation on theme: "STUDENT GROUP FINANCE TRAINING 2016/17"— Presentation transcript:

1 STUDENT GROUP FINANCE TRAINING 2016/17

2 Financial Management Types of Income Membership Student group grants Fundraising events Non-fundraising events Other grants and sponsorship Donations Types of Expenditure Purchases Reclaim Expenses Pay Invoices

3 Membership When determining membership fees, Student Groups should consider: What activities are you planning as a student group? What costs will be associated with these activities? What income do you need to cover these activities? Think regular activities and one off activities? Think longer term not just short term – some memberships cover multiple years? Minimum membership for student groups is £1 Registration and payment is done via the union website – membership should not be taken any other way (risks with cash) Student group secretary has administration rights to the website and can run membership reports to cross reference income Membership is the main source of society income, when setting the price for membership these are the things that should be considered. What activities are you planning as a student group and how much will they cost? What income do you need to cover these activities? Think regular activities and one off activities? Think longer term not just short term – some memberships cover multiple years? Minimum membership for student groups is £1 so that the society will always generate some income. Even if this is only a small amount of it is a good idea to have as contingency money. Registration and payment is done via the union website – membership should not be taken any other way (risks with cash) Student group secretary has administration rights to the website and can run membership reports to cross reference income. In order to become an admin firstly you need to sign up and become a member and then contact and you will be granted access to the society’s web page on the SU website.

4 Membership Income & VAT
Societies are split into a few categories but the only relevant distinction for VAT is whether or not they are an ‘active’ society. This is defined as a society who’s aims and objectives involve physical activity. Membership fee income for an ‘active’ student group is non-vatable (exempt), so therefore credited to the account gross whereas membership for ‘non-active’ student groups is vatable so the income is credited to the account net. VAT The Union is registered for VAT with HMRC, and therefore student groups registered with us form part of our VAT entity. We must therefore ensure that all student group income and expenditure is accounted for correctly and in line with HMRC rules and regulations. The treatment of membership fees from a VAT perspective depends if the student group charging the fee is considered to be an ‘active’ or ‘non-active’ group. An active group is one that engages in a sport or physical education activity. Membership fee income for an ‘active’ student group is non-vatable (exempt), so therefore credited to your account gross. Example – you charge a £20 membership fee so £20 is credited to your account for each member signed up Membership fee income for a ‘non-active’ student group is vatable (20%) so therefore credited to your account net. Example you charge a £20 membership fee so £16.67 is credited to your account and £3.33 is paid over to HMRC.

5 The 4 Student Group Grants
Start-up Grant Up to £200 Within 3 months of being ratified For equipment and event to get students engaged Special Grant Up to £1000 in total with any other grants For unforeseen circumstances Anytime throughout the year until 7th June 2017 Ordinary Grant Up to £1000 in total with any other grants Once a year For equipment and one-off events Not for food and drinks or regular events Deadline is 28th October Equipment Grant For purchases over £200 The equipment will be owned by the SU and rented to the student groups that need it. More than one student group can use the same equipment. Anytime throughout the year. There are 4 different types of student group grants: Start up grant is for new societies and can be applied for within 3 months of being ratified. This can be up to £200 and is decided between the Activities Officer and an Engagement Facilitator. This is for equipment and items necessary to fulfil the objectives of the group. Ordinary Grants are allocated in Michaelmas term and have to be applied for by 28th October These are for up to £1000 and are for equipment and one off events but cannot be used to fund events that are regular or self-funding. Before applying for an ordinary grant societies need to budget for the coming year so they no exactly how much they need to apply for. Special Grants can be applied for at any time throughout the year until 7th June 2017 and are for unforeseen circumstances such as getting further in a competition than anticipated. These are also limited to £1000 depending on whether the society has already had an ordinary grant (the two grants cannot exceed £1000 in total). Equipment Grant is for equipment that the society need to function and can be applied for at any point throughout the year. This is usually for more expensive pieces of equipment and the union will buy and own them and the society hires it from us as this is cheaper than buying it themselves.

6 Student Group Grants & VAT
All grants are to be sent to and the form is on the website. There is one form for all and you tick which grant you are applying for. A grant will be given if it fulfils the objectives of a society. Income A Union grant allocation given to a student group is treated as outside the scope for VAT purposes and your account will be credited with the full amount of the grant allocation. Expenditure Any corresponding expenditure is therefore treated as exempt of VAT and so the full amount of money will be debited from the society’s account. All grants are to be sent to and the form is on the website. There is one form for all and you tick which grant you are applying for. A grant will be given if it fulfils the objectives of a society. Income A Union grant allocation given to a student group is treated as outside the scope for VAT purposes and your account will be credited with the full amount of the grant allocation. Expenditure Any corresponding expenditure is therefore treated as exempt of VAT and so the full amount of money will be debited from the society’s account. All societies have a 4 letter code given to them when they receive grant funding. When spending this money the code must be quoted on any associated paperwork so that we can clearly see that the grant money has been spent. Any unspent grant money will be taken from the society’s account at the end of the year if the expenditure hasn’t been sufficiently coded.

7 Events & VAT Events are either fundraising or non-fundraising events. The main issue here is the treatment of VAT and how this will affect budgeting for the event. Ticket Sales Income & Expenditure (Fundraising Event) In general, ticket sales for qualifying fundraising events are non-vatable (exempt) and income will be credited gross. The event must be publicised as a fundraising event in order for the exemption to be applied. This means that any expenditure associated with this exempt activity will also be charged to your account gross (including VAT). Ticket Sales Income (Non-Fundraising Event) In general, the sale of tickets for a non-fundraising event is a taxable activity (20%) and income will be credited to your account net of VAT. This does mean that any expenditure associated with this taxable activity will also be charged to your account net of VAT. Events are either fundraising or non-fundraising events. The main issue here is the treatment of VAT and how this will affect budgeting for the event. Ticket Sales Income & Expenditure (Fundraising Event) In general, ticket sales for qualifying fundraising events are non-vatable (exempt) and income will be credited gross. The event must be publicised as a fundraising event in order for the exemption to be applied. This means that any expenditure associated with this exempt activity will also be charged to your account gross (including VAT). Ticket Sales Income (Non-Fundraising Event) In general, the sale of tickets for a non-fundraising event is a taxable activity (20%) and income will be credited to your account net of VAT. This does mean that any expenditure associated with this taxable activity will also be charged to your account net of VAT.

8 Sponsorship, Donations & VAT
Sponsorship Sponsorship is vatable (standard rated – currently 20%) so is therefore credited to your account as the net amount. Any expenditure funded directly from sponsorship is therefore a vatable activity and the total charged to your account will be the net amount excluding VAT. You will receive a contract from the sponsor which is an agreement stating what they will receive in return for giving you the money. The Union needs to check over any sponsorship contracts and sign them off. Please send them to and make the total amount clear including VAT. Donations Donations given freely are treated as outside the scope for VAT purposes and will be credited to your account gross. Any of this money that is spent is therefore exempt of VAT and so the full amount will be charged to the account. Sponsorship Sponsorship is vatable (standard rated – currently 20%) so is therefore credited to your account as the net amount. Any expenditure funded directly from sponsorship is therefore a vatable activity and the total charged to your account will be the net amount excluding VAT. You will receive a contract from the sponsor which is an agreement stating what they will receive in return for giving you the money. The Union needs to check over any sponsorship contracts and sign them off. Please send them to and make the total amount clear including VAT. Donations Donations given freely are treated as outside the scope for VAT purposes and will be credited to your account gross. Any of this money that is spent is therefore exempt of VAT and so the dull amount will be charged to the account.

9 Ticket Sales (Fundraising Event)
Handling VAT for Societies As an example let’s say the total income for each type is £120. This shows how much will be credited to the society’s account in each instance. TYPE OF INCOME ACTIVE SOCIETY NON-ACTIVE SOCIETY VATABLE? AMOUT CREDITED Membership £120 £100 Tickets Sales Ticket Sales (Fundraising Event) Grants Sponsorship Donation The gross amount in these cases is £120 and as VAT is calculated on the net amount this can be thought of as NET + VAT (20%) which means the gross amount is 120% of the net amount. Therefore the net amount can be calculated as the gross amount divided by 1.2. It is important to remember that whether or not a society can claim VAT back on its purchases is dependant on whether the income it is associated with was vatable or not (i.e. if an active society spends money related to membership income, then they cannot claim VAT back but a non-active society would be able to).

10 Forms & Processes Financial Processes Purchase Something
Claim back expenses Pay in cash or cheques at reception Send out an invoice for income Request a Float Sell tickets on the Union website Some of these processes require a relevant finance form to be completed. Forms are required for most of the different types of transactions that a society can perform. Each different form requires slightly different information depending on the type of transaction. Forms can be filled in either electronically and then ed or physically and handed in at reception. When paying a supplier, a purchase order form should be completed and then attached to the relevant invoice. When claiming expenses, an expense claim form should be submitted along with the relevant receipts. There are other forms for requesting floats, paying in income and to invoice companies for income (e.g. sponsorship). The deadline for processing finance forms is 5pm on a Monday and any payments will be in the relevant bank accounts by the same Friday. Invoices we send out have payment terms of 30 days.

11 Student Group Expense Form
These details should be either of the person claiming expenses. This is the method by which the funds were generated. This directly effects whether or not you can claim VAT back or not. This has to be a member of the exec but cannot be the person claiming the expenses. If the claim relates directly to something that was funded by a grant from the Students’ Union, you must include your 4 letter grant code. If the receipts include a VAT breakdown or some items are starred (*) then yes should be selected If a claim includes VAT then it is the net value that will be debited from the societies account. This form should be used for members of a society claiming back expenses from the society’s account. These details should be either of the person claiming expenses. This is the method by which the funds were generated. This directly effects whether or not you can claim VAT back or not. This has to be a member of the exec but cannot be the person claiming the expenses. If the claim relates directly to something that was funded by a grant from the Students’ Union, you must include your 4 letter grant code. If the receipts include a VAT breakdown or some items are starred (*) then yes should be selected If a claim includes VAT then it is the net value that will be debited from the societies account.

12 Ticket Sales (Non Fundraising Event)
Expense Claim Example All amounts are gross but amounts with a star include VAT. This means that although the claimant will be paid the full £8.30, the society will only be charged £1.50 for the hand wash as the union can claim back VAT on this item and so will only pay £8.00 in total. £1.80 / 1.2 = £1.50 Product Name/Description Source of Funds Ledger Code Quantity Unit Cost Net Value VAT Total Purchases from Tesco for society event (vatable) Ticket Sales (Non Fundraising Event) 62005-General Purchases 1 6.50 no Purchases from Tesco for society event (non-vatable) 1.80 1.50 yes Totals 8.00 8.30 This is an example of a receipt being used for an expense claim, The star on the receipt indicates that that amount includes VAT which means that the society will be able to claim back a certain amount of money. As a result, in this case the society would only be charged £8.00 even though the person claiming the expenses would receive the full £8.30. Obviously in most cases the VAT would be a more significant amount of money and so it is a good idea if societies understand it clearly.

13 Expense365 App The Expense365 App will potentially replace expense forms as an easier and more efficient way for students to claim back expenses from society accounts. Members of society execs should make sure they have a current account with the Union website and download the app. For now you will be able to have a look at the app and test it without any of the transactions being processed. We are however hoping for it to go live soon and you will be informed when you can start using the app to process expense claims. The app can be found and downloaded on the Union website which also includes a user guide.

14 Student Group Supplier Authorisation Form
This is the method by which the funds were generated. This directly effects whether or not you can claim VAT back or not. If the claim relates directly to something that was funded by a grant from the Students’ Union, you must include your 4 letter grant code. Payment of invoices can only be authorised by a member of the society exec. The total amount should be the gross amount on the invoice (including any VAT). This form should be used to pay a company using the society's money. This is preferable to a member of the society buying something themselves and claiming back the expenses. This is the method by which the funds were generated. This directly effects whether or not you can claim VAT back or not. Payment of invoices can only be authorised by a member of the society exec. If the claim relates directly to something that was funded by a grant from the Students’ Union, you must include your 4 letter grant code. The total amount should be the gross amount on the invoice (including any VAT).

15 Supplier Invoice Example
1 2 3 This is an example of an invoice that we might receive from a supplier. These are the main things that should be included on the invoice in order for us to pay it. Invoices should be addressed to the Students’ Union rather than the society. If it says the name of the society first that’s fine but it should have the Union’s address on. We need bank details to pay the invoice. Most invoices will include these but if not then we wont be able to pay until the company is chased for bank details. There should be a VAT breakdown included in the total due section of the invoice. Even if there is no VAT then this should be made clear. Id there is no VAT breakdown on the invoice then the society will not be able to claim VAT back from HMRC and so will be charged the full amount of the invoice. If the invoice is in the possession of the society, please make sure that all these things are present and correct before sending it to us.

16 Student Group Pay-in Form
If the income you are paying in includes VAT, then yes should be selected here. This is the case for most income as already discussed. When inputting these amounts, fill in the amount of money in each denomination rather than the amount of coins/notes. For example, if paying in 5 x 20p coins, put ‘1’ rather than ‘5’ in the 20p box. The Net Total is the total amount of money being paid in less any VAT that is to be paid over. This is the amount that will be credited to the society’s account. This is the receipt that you will get when you pay in money at reception. It is important for you to keep hold of this until the money has shown in the society account so that you can prove it was paid in. This is the total amount of money being paid in but not necessarily the amount that will be shown in the society’s account. This form should be used to pay in cash or cheques at the Students’ Union as a form of society income. When inputting these amounts, fill in the amount of money in each denomination rather than the amount of coins/notes. For example, if paying in 5 x 20p coins, put ‘1’ rather than ‘5’ in the 20p box. If the income you are paying in includes VAT, then yes should be selected here. This is the case for most income as already discussed. The Net Total is the total amount of money being paid in less any VAT that is to be paid over. This is the amount that will be credited to the society’s account. This is the total amount of money being paid in but not necessarily the amount that will be shown in the society’s account. This is the receipt that you will get when you pay in money at reception. It is important for you to keep hold of this until the money has shown in the society account so that you can prove it was paid in.

17 Student Group Invoice Request Form
Invoices will be sent either by or by post. In order to do this we need the company’s address and an address of someone that will process the payment of the invoice. Any invoice you want to be sent to a company will have VAT added to it so that the amount you fill in on the form will be credited to your account. If you know that VAT should not be added to the amount (for example it is a donation) then please state in the Terms and Conditions. It is important that the total amount of money that the company will be paying is in the ‘Gross Total’ box. This form should be used to request that we invoice a company on behalf of the society. The terms of our invoices are 30 days so take that into consideration if you need the money for a specific reason. Invoices will be sent either by or by post. In order to do this we need the company’s address and an address of someone that will process the payment of the invoice. Any invoice you want to be sent to a company will have VAT added to it so that the amount you fill in on the form will be credited to your account. If you know that VAT should not be added to the amount (for example it is a donation) then please state in the Terms and Conditions. It is important that the total amount of money that the company will be paying is in the ‘Gross Total’ box.

18 Student Group Float Request Form
When inputting these amounts, fill in the amount of money in each denomination rather than the amount of coins/notes. For example, if you want 5 x 20p coins, put ‘1’ rather than ‘5’ in the 20p box. This is the receipt that you will get when you return the float to reception. This will be your proof that you returned the float if there are any queries later.

19 Forms & Processes Transaction Process Time scale Purchases
Submit invoice along with supplier authorisation form. Forms submitted by 17:00 on a Monday will be paid the same week and the money will be in the relevant bank account by the Friday. Claim expenses Submit receipt along with expenses form. Invoice requests Submit invoice request form along with agreement (if available). Invoice will be sent within two days of receiving the relevant documentation. We have terms of 30 days for invoices. Pay in cash/cheques Pay in cash at reception and complete pay in form. The money will be banked and appear in the society’s account by the end of the week. Float requests Submit a float request form. Floats can be distributed within 24 working hours.

20 Budgeting & Forecasting
A budget is a concrete, organised and easily understood breakdown of how much money is coming in and going out. Budgets are an invaluable management tool, when monitored and managed correctly they can provide early warnings of potential financial difficulties. Budgets are typically fixed at the start of a financial period and provide the ability to identify how and more importantly why actual results may differ from those originally expected. Whilst budgets are fixed, forecasts need to be updated on a regular basis to provide up to date and realistic projections of income an expenditure for the period. It is the budget that allows societies to set prices for membership and ticketed events and know how much funding they may need in the form of grants. Look at your track record of meeting budgets and consider if your projections are realistic and achievable If past performance demonstrates evidence of poor or over enthusiastic assumptions, take note of these and make sensible adjustments Ensure you regularly review your budgets and forecasts against your actual results. If variances arise, analyse them and understand the impacts for the remaining period

21 Budgeting & Forecasting
This is an example of a potential society budget. This example keeps track of how much money is expected to pass through the account and how much actually has. Any variance in these figures are shown which allows you to asses the quality of the budget and can help you make any adjustments that may be necessary for the coming month/year. The red figures represent negative numbers or an adverse variance. You can see here that assuming the remaining budgeted figures are accurate the society will finish with a balance of £850 (£125 less than budgeted). This is an example of a potential society budget. This example keeps track of how much money is expected to pass through the account and how much actually has. Any variance in these figures are shown which allows you to asses the quality of the budget and can help you make any adjustments that may be necessary for the coming month/year.

22 Transaction Reports & Budgeting
This is an example of a society finance transaction report. These should be sent automatically to the society address. It is important that we have a generic Durham address for each society as it will remain consistent over the years as exec members change. The description on each line is directly related to the GL Code that is selected on the form that is submitted for the transaction. The narrative is the description that is written on the form when it is submitted. You should be able to reconcile your transaction reports with the your budget for the year and identify any discrepancies. This is an example of a society finance transaction report. These should be sent automatically to the society address. It is important that we have a generic Durham address for each society as it will remain consistent over the years as exec members change.

23 Financial Controls Keep cash in a secure location Do regular checks
Where possible get two people to check cash deposits or balances Record all your transactions Issue receipts for cash received When looking after society finances it is a good idea to have a few financial controls. These help societies keep track of their money and safeguard against losing it. These are some good financial controls that a society could exercise… Get receipts for cash paid out

24 Our Financial Controls
Expense claims cannot by authorised by the person claiming the money. Transactions must be authorised by a member of the exec. Groups should not deduct any payments/pay for items from the cash and then pay in net balances. Groups should not be taking cash from students We also exercise controls which regulate the way societies can conduct their financial activity. These are in place to help monitor the movement of society money and make sure any payments made are legitimate.

25 Contacts Finance Department – Reception – or Engagement Facilitators – All forms to be submitted should be sent the reception address but any direct queries can be sent to the accounts or engagement addresses.


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