Top tips for Treasurers

The position of Treasurer in an amateur music group is an important one – they are the person who receives money and makes payment on behalf of the group, and keeps an eye on the bank balance to make sure that the group remains solvent.

Although it is a responsible position, it’s not as daunting as it may at first appear, and anyone can be a Treasurer regardless of their accounting experience. The key qualities required are good organisation and good record-keeping skills. You can also use our template accounts spreadsheet.

Contents

  1. Responsibilities
  2. Keeping records
  3. Reporting and auditing
  4. Long term planning and legacy

1. Responsibilities

What does a Treasurer do?

The tasks and responsibilities of a Treasurer will be slightly different in every group, but the most common tasks are:

  • Ensure that all incoming invoices and/or payment requests are processed and paid in a timely fashion
  • Promptly issue invoices and/or payment requests on behalf of the group and make sure payments are received
  • Ensure members subscriptions are received promptly, keep records of who has/hasn’t paid and chase those who have not
  • If appropriate, receive, manage and return deposits in respect of music hire
  • Be responsible for additional monies and petty cash, including providing floats where appropriate
  • Act as the main contact for the bank in respect of the group’s bank account
  • Maintain a record of all payments in and out of the group’s bank account and reconcile these
  • Establish financial procedures – such as how payments are authorised
  •  On an annual basis, provide a summary of the year’s financial activity at the group’s Annual General Meeting (AGM)
  • On an annual basis, prepare a budget for the committee to work to in the coming  year
  • If required, arrange for the group’s accounts to be examined or audited on an annual basis
  • If the group is a registered charity, prepare accounts for annual submission to the Charity Commission
  • Prepare and submit any Gift Aid claims on behalf of the group
  • If required, input into and/or submit any funding applications on behalf of the group, for example prepare a specific budget for the application

Many groups could probably add more to this list, but these are the key elements of the role.

Additionally, the Treasurer will almost always be a committee member and in most cases will also act as a Trustee of the group. There are extra responsibilities around these requirements which are summarised in some of our other resources:

Finally, the Treasurer is the person Making Music will contact when your group’s membership and insurance are due for renewal (in November each year).

Bank accounts

Every group needs a bank account – it’s almost impossible to function without one these days. Your group probably already has an account set up but if you are starting a new group or considering switching bank accounts then it pays to shop around. The majority of high street banks and building societies will offer accounts specifically for small charities, community groups and not for profit organisations (nfpos) and we have a guidance resource comparing some of these.  Be sure to tell the bank about your organisation and its structure so that they can offer you the correct product for your needs. There are some good options that are not on the high street – the Charities Aid Foundation (CAF) bank specialise in banking for charities and nfpos.

It is good practice to specify that transactions on your bank account require two signatures – this means that the responsibility for the finances don’t rest solely on one person in the group, and also helps to protect your organisation from potential fraud. This means that every cheque you write will need two signatures, and if you are making payments electronically one person will need to create the transaction and the second person will need to authorise the transaction in order to release the money. For this reason, we recommend that you have three or four people authorised as signatories on your bank account – if you only have two signatories and one of them is incapacitated, it will have implications on your group’s ability to make prompt payments.

Some online bank accounts don’t have the facility for a second person authorising a payment. In this case, it is still good practice to have an internal authorisation  – this could be as simple as the Treasurer emailing another signatory a list of payments to be made for their approval.   

You will need to notify your bank of any changes of signatory by using an appropriate form (supplied by the bank). Usually at least two and sometimes all of the existing signatories must sign the form to authorise the changes. If you are adding a new signatory, they will be subjected to a credit check by the bank just as they would when opening a personal bank account.

2. Keeping records

The main part of the Treasurer’s role is the keeping of accurate and up-to-date records. There are two key decisions to make here: what format will you use and what type of accounting method. The two main options are a spreadsheet, or accounting software.

Spreadsheet: this is by far the most popular choice. In its most basic format, you can simply list all the transactions in date order and reconcile this against your bank account. 

You can take things further by having different columns for different types of income and expenditure,. For example, one column (the first or the last) is used for the total of each payment or receipt and then other columns are used to analyse each of these entries according to their nature. The headings of the columns should be chosen to correspond with the items to be shown in the annual accounts. You can also use formulas to calculate totals and subtotals, to break down your spend per term or to compare actual transactions against budgeted transactions. 

See our accounts template

Accounting Software: Use of accounting software is a more comprehensive way of handling the accounting process, especially where there are numerous bank accounts, special projects or funds. Reporting is also easier than most spreadsheet or manual systems.

There are different accounting packages in use in business and we are not in a position to comment on them all. For example, QuickBooks Accounting is one of the most popular packages. It is commonly used in small charities. QuickBooks is designed for non-accounting users and a not-for-profit version is available. It is cheaper but prices vary according to requirements.

Both options have their merits. For smaller groups with lower incomes accounting software is probably more sophisticated than necessary. In our experience a spreadsheet is fine for the majority of our members.

Accounting methods

  • Cash accounting (or receipt and payment): this is where you only record the transactions that have gone in or out of your bank account on the date that the bank transaction occurred. Any monies that have not been paid or received will not be recorded in this method, but your records will match your bank account
  • Accrual accounting: this is where you record transactions on the date that payment was agreed or issued. Your own records will show unpaid invoices and monies not yet received. You will get a truer picture of your financial situation, but your records will not match your bank account

As with the format, the accounting method you choose will often depend on the size of your group. For smaller groups (and the majority of our members) cash accounting is normally the best option. However, Registered charities with an income over £250,000 must use accrual accounting.

"BACS the way, ah-ha, ah-ha, I like it ..."

We suggest that you have as many of your bank transactions as possible made through the BACS system. In addition to avoiding the potential problem of cheques going missing or not being paid in, this helps to make your bank statements really clear as each transaction will have a name next to it rather than a cheque number or paying in reference. This also makes it easier to reconcile your bank account with your own financial records. Try to pay your invoices by BACS wherever possible, and ask your members to pay their subs by bank transfer or standing order.

Keep it simple, clear and transparent

It is important for the purpose of clear and transparent records that you don’t combine an income transaction with expenditure - for example, if your marketing officer pays to have some flyers printed and then deducts the cost from her next subs payment. It is much better practice to have each transaction processed separately, so that it is easier to match your records with your bank account. In this example, you would also not be able to claim Gift Aid on the full amount of the subscription, because you can only claim on the amount that has been paid. This makes it doubly important that all transactions are handled individually and not offset against each other.

It is still permissible to pay in several transactions together, for example, if 10 members have paid their subs to you in cash: you can bank all 10 payments together, as long as you keep a separate record of whose payments were included in that transaction.

Invoices and payment requests

The main attribute of good record-keeping is a clear paper trail. Essentially, every transaction going in or out of your bank account should have a piece of paper or an email that shows the details of the payment. The key facts required are:

  • The date of the transaction
  • The name of the person or group paying the money
  • The name of the person or group receiving the money
  • What the money is for
  • The sum of money being paid/received

In most cases, these details can be provided in the form of an invoice, but you may also have other forms of recording transactions such as paying in books, petty cash slips, cheque stubs or an email paper trail that agrees these details. However it is good practice to have some form of detailed record for every transaction that you make, and to store these safely in a folder (either physical or electronic).

Membership subscriptions

In the majority of groups, membership subscriptions are the transactions you are least likely to be able to keep a paper trail for – if your members are paying subs 3 times a year, and there are 40 members, that’s a lot of paper!

Best practice here is to ask every member to sign a membership form when they join, committing to paying their subscriptions on a regular basis, and keep a record of these forms which serve as their agreement to pay. Then they can simply make their payments without the additional burden of a paper trail each time.

Gift Aid

For the purposes of claiming Gift Aid, it is useful to keep a separate record of subscriptions in addition to your main records, so that you can effectively track who has paid their subs and when. Not only will this help you to keep tabs on the non-payers on a regular basis without trawling through lots of  transactions, if you record appropriate information when payment is made it will make putting together a Gift Aid claim a much quicker process.

For Gift Aid claims, the following information is required:

  • Name of donor
  • Donor’s address with postcode
  • Total amount donor paid to you during the period you are claiming for
  • Dates of the first and last transactions made by the donor during the period you are claiming for

Further information about claiming Gift Aid can be found in the following resources:

3. Reporting and auditing

Preparing your accounts

Every year at your group’s AGM, you should present to the membership a summary of the group’s finances for the year just completed. You don’t need to show them a record of every single transaction, but you need to summarise how much you have spent or received in each category. For example, you might divide your expenditure into the following categories: rehearsal venue costs, music purchases, soloists’ fees, concert venue costs, marketing and printing, insurance, website hosting, miscellaneous.

When your final accounts are ready, compare them to the budget you put together at the start of the year. Have you over or under spent in any areas? Have you exceeded or failed to meet your income targets? Investigate any areas of discrepancy thoroughly and have explanations prepared – you will need to go through these when you present your accounts at the AGM, and be prepared to answer any questions from the members about any significant differences. You may also wish to discuss with your committee any measures you could put in place to address these in the coming year.

Preparing your budget

You should also prepare a budget, showing how much you think you will spend in each of those categories in the coming year. Some of these will be easy to predict – for example, you know how many members you have and what the subscription fee is, so you should be able to make a reasonable estimate of income from membership subscriptions. But for other items you may need to set targets such as number of tickets to sell for a concert, or you may need to obtain quotes for specific items that you wish to purchase, in order to make your budget as realistic as possible. You can also look at your accounts from previous years and use those figures to make an estimate.

Audit and reporting requirements

You may also need to have your accounts examined or audited depending on the requirements of your constitution and the Charity Commission. Check what your constitution requires you to do, and when you are required to do it in relation to your AGM. The legal requirements for your accounts are:

  • Gross annual income up to £25,000: no formal external scrutiny is required by legislation. However, accounts should be scrutinised by someone independent of the committee. This does not have to be an accountant but should ideally be someone with some financial knowledge and experience. It could be someone from the wider membership or someone a member knows, or you could find another local music group and arrange to swap accounts.
  • Gross annual income above £25,000 and up to £500,000 and gross assets up to £3.26m: external scrutiny is required by legislation. This can be an Independent Examination of accounts by an approved person or a full audit. If you require an Independent Examination the best thing to do is contact a local charity accountant.
  • Either gross income above £500,000 or gross assets above £3.26m (and income above £250,000): a full audit is required.

You can find out more about accounting in the Charity Commission Guidance: Charity reporting and accounting: the essentials (CC15b).

If you are a registered charity you can also check the requirements for your Annual Return by visiting the Charity Commission's website.

4. Long term planning and legacy

Potential issues and contingency plans

The main issues that a Treasurer might experience are:

  1. The group is running out of money

    If your group is running out of money, then it is vital that you alert your committee and sit down with them at the first opportunity to discuss a plan of action. Consider where you can cut costs, and where you can increase income. You might need to make some drastic decisions, and you might even decide you need to close the group down. It is important to fully discuss every option with your committee before making a decision, and to make the decision together. You may also like to seek some independent professional advice (though bear in mind the cost implication of this).
     

  2. The Treasurer becomes suddenly unavailable and no-one else can access the accounts or authorise payments

    It is important that someone else on the committee is always ‘in the know’ about the Treasurers role and can access the necessary records if required. It can happen that for whatever reason, a Treasurer is suddenly unavailable to carry out their duties, and someone else needs to take them over to ensure that the group can keep running smoothly. Think carefully about what would happen to your group if your Treasurer became indisposed – how would you authorise payments? Who would issue invoices and chase missing subs? Who would provide petty cash and floats when required? How could other committee members access the group’s accounts? It is recommended that you have a contingency plan for this which should include allowing at least one other committee member access to all relevant records.
     

  3. The group is subjected to an audit by the Charity Commission, HMRC or other body

    From time to time, an organisation such as the Charity Commission or HMRC will let you know that you are going to be audited. It is very rare that this happens to amateur music groups, but it’s not impossible that it will happen to you. The auditors will tell you which particular years they would like to see financial records for. You will need to show them your bank statements, your records and all your back up paperwork, and you will need to answer any questions they may have about these. If you have managed your accounts in an efficient and transparent fashion, this should be a relatively simple and painless process for you.

Finding and handing over to a new Treasurer

Your time as Treasurer of your group can be as long or as short as you desire and your group’s constitution allows. However there will come a time when you decide to step down from the role and someone else takes over.

If you have organised and robust systems in place, then handing over should be relatively easy. Do however allow plenty of time for completing the change of signatory forms that will be required by your bank and also by HMRC if you are claiming Gift Aid – these forms can be complicated and can take some time to be processed so that the desired changes can take effect. The outgoing Treasurer will need to continue authorising any payments until the changes have been completed.

If you already know when you plan to stand down from the role, it may be useful to identify some potential successors and start to talk to them about the role a few months in advance. Members of your group are likely to feel some trepidation about taking on the role: remember how you felt when you first started and don't put too much pressure on people if they are feeling uncomfortable.

If you do find someone who could be interested, start the handover early – a little at a time is less daunting than everything at once, and working side by side for a while will ensure a smoother handover. Encourage the rest of your committee to be supportive of any potential Treasurer. When the date for handover arrives, you should be able to give everything over to your successor with minimum disruption. Although you may feel this is the time you can finally close the door on the role, try to be available to answer any questions that may still be necessary for the next couple of months, but don’t feel obliged to take back any of the tasks you have now handed over.


We hope you find this Making Music resource useful. If you have any comments or suggestions about the guidance please contact us. Whilst every effort is made to ensure that the content of this guidance is accurate and up to date, Making Music do not warrant, nor accept any liability or responsibility for the completeness or accuracy of the content, or for any loss which may arise from reliance on the information contained in it.