Working out a budget
A budget is an estimate of income and expenditures for the next year, broken down into headings such as office expenses, cost of sales (if you sell food), staff costs, premises, transport, marketing. You need to do this having planned your activities for the year.
It is also helpful to work out a ‘cashflow’ of when money is coming in and when it is being paid out. This will help you to identify when you might run out of money and to plan accordingly.
Books and accounts
It is essential for an organisation to keep good financial records or ‘books’. These can be actual books written by hand (available from a stationers), a computer spreadsheet or book-keeping/accounting package. You also need to file cash receipts, invoices and other paperwork associated with a transaction. If you are handling cash, you need to work out procedures for this.
Your books will be used to create your end of financial year accounts and other financial reports throughout the year. Charities and limited companies are legally obliged to submit accounts to their regulators. Unless your accounts are simple, it is worthwhile employing an accountant to do them for you.
If you are handling money you will need a bank account. Most banks have services for the not-for-profit sector (e.g. Bank of Scotland, The Co-operative Bank) and some specialise in it (e.g. Unity Trust, Triodos, Charity Bank).
- Good Practice Guide for Community Food Initiatives: 'Managing finances' pages 40-43, includes some info on cash handling (Healthy Food for All, Ireland)
- Community Accountancy Self Help (CASH): a useful website with factsheets covering a wide range of financial matters, including budgets
- CAPlus Community Accounting: also has a lot of useful information about managing your finances, including a section for small groups with a simple accounts template.
- Charity Accounting (Office of the Scottish Charity Regulator (OSCR))
- Company and accounting records (www.gov.uk)