Cherie Trewavas, a BNZer who specialises in banking non-profit organisations, shares her insights on building the financial capabilities of NPOs as we approach Closed For Good - a day when BNZ closes stores across the country and staff head out into the community to lend a helping hand.
For non-profit organisations, financial literacy and the ability to make sound financial decisions is incredibly important. After all, the greater your understanding of how your non-profit’s finances work, the smoother and more efficiently things will run, which in turn means more money that can be put to good use achieving your goals.
In this series I’ll be talking about how non-profit organisations can build their financial capability through things like speeding up cash flow and the importance of keeping up to date and accurate books to ensure financial viability. But there are plenty of other internal processes that need to be straightened out in order to keep everything running efficiently, and one of the most common areas where non-profits can go wrong, is also one of the most basic — your bank accounts.
The importance of having the right bank accounts to suit your operation is easy to overlook — a bank account is a bank account…right? Here are seven tips to help get your banking on the right track.
1. The right accounts
As simple as it seems, having the right account to suit your business is one of the easiest things to get sorted, all it takes is a chat with your bank. Many banks actually offer non-profits accounts with reduced fees.
2. Put your money to work
Don’t let your money sit idly about in a non-interest bearing bank account. Ensure it’s working for you by sticking it in a savings account or, if you know you won’t need that cash until later, a term investment.
3. Stay on top with internet banking
Use every bit of technology your bank has to speed up reconciliation by using internet banking and mobile apps where available. Having up to date information at your fingertips can really speed up the flow of money through your accounts.
4. Plug in your accounting software
Use cash management software (Xero is a good example) that link with your bank account to speed up reconciliation – more on this in an upcoming blog. Many items can be pre-coded to automatically code debits and credits — something that’ll really help come end of year.
5. Reduce risks by requiring two to sign
It’s not a nice thing to imagine, but fraud can and does happen, so reduce the risk and ensure your bank accounts have at least two to sign.
6. Update those authorities
Staying on the topic of fraud, it’s vital that your non-profit organisation has up to date account operating authorities. We often find, particularly in the non-profit sector, that signatories are very out of date. Banks have strict rules they must follow when it comes to who has the power to operate the accounts, and it’s up to you to make sure the signatories are in order. At the very least this will help avoid frustration getting things done, and at worst, it can avoid fraud happening down the track. Also, don’t hand passwords and logins on to the next treasurer, have the new person coming in set up their own.
7. Make use of freebies
Make full use of any freebies on offer, in particular, use free providers of payroll processing when you can. Thank You Payroll will process all pay runs, PAYE, GST, Kiwisaver, payslips and more all at no cost (the IRD pay Thank You Payroll via a subsidy scheme). It’s designed for small to medium organisations with PAYE of less than $500,000 per annum and is a great way to make sure IRD payments are getting paid and the payroll is fully compliant.