STUDENT GROUP FINANCE TRAINING 201617 Financial Management Types

STUDENT GROUP FINANCE TRAINING 2016/17

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

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 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 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 7 th 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 28 th 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.

Student Group Grants & VAT All grants are to be sent to dsu. engagement@durham. ac. uk 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.

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.

Sponsorship, Donations & VAT 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 dsu. governance@durham. ac. uk and make the total amount clear including VAT. 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.

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 £ 100 Ticket Sales (Fundraising Event) £ 120 Grants £ 120 Sponsorship £ 100 Donation £ 120

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.

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.

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 Purchases from Tesco for society event (vatable) Purchases from Tesco for society event (non-vatable) Source of Funds Ticket Sales (Non Fundraising Event) Net Value VAT Total 62005 -General Purchases Ledger Code Quantity Unit Cost 1 6. 50 no 6. 50 62005 -General Purchases 1 1. 80 1. 50 yes 1. 80 Totals 8. 00 8. 30

Expense 365 App The Expense 365 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.

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. 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).

Supplier Invoice Example 1 1 2 2 3 3

Student Group Pay-in Form 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 20 p coins, put ‘ 1’ rather than ‘ 5’ in the 20 p box. 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. 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.

Student Group Invoice Request Form Invoices will be sent either by e-mail or by post. In order to do this we need the company’s address and an e-mail 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.

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 20 p coins, put ‘ 1’ rather than ‘ 5’ in the 20 p 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 any queries later.

Forms & Processes Transaction Process Purchases Submit invoice along with supplier authorisation form. Claim expenses Time scale Forms submitted by 17: 00 on a Monday will be paid the same week and the money will be in the relevant Submit receipt along with bank account by the Friday. 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.

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.

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.

Transaction Reports & Budgeting This is an example of a society finance transaction report. These should be sent automatically to the society e-mail address. It is important that we have a generic Durham e-mail address for each society as it will remain consistent over the years as exec members change.

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 Get receipts for cash paid out

Our Financial Controls Expense claims cannot by authorised by the person claiming the money. Groups should not be taking cash from students 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.

Contacts Finance Department – dsu. accounts@durham. ac. uk Reception – 0191 3341777 or dsu. reception@durham. ac. uk Engagement Facilitators – dsu. engagement@durham. ac. uk