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A Church’s Guide to Simplifying Donor Giving Statements

A Church’s Guide to Simplifying Donor Giving Statements

For churches, the calendar year closes with exciting and reflective celebrations of Advent and Christmas. Church staff focuses on providing reflective, engaging opportunities to connect with one of the most meaningful seasons in the liturgical calendar. In the wake of the tinsel and pageants, advent calendars and carols is another milestone in the annual calendar: donor giving statements. Rather than inciting enthusiasm and joy, most church administrators and accounting volunteers cringe at the thought. These staff members could share stories of fighting with printers, chasing down missing data, and mail merging statements through all hours of the night. 

At System Six, we understand how complicated it can be to provide accurate, accessible donor information to your congregants. Every year you may find yourself thinking, “There has got to be a better way…” – there is! We have put together this comprehensive guide to help you streamline your giving throughout the year so that statements can be processed, sent, and reconciled in moments – rather than weeks. 

Four components affect church donor giving statements: 

1. How you collect donations 

2. How you track your spending 

3. How you store donor giving data 

4. How you send donor statements 

A crucial recommendation: the least number of tools needed to complete these steps, the better! Throughout this guide, we will highlight several of our favorite tools. Be sure to evaluate the tools you currently use to see if they can meet any of these needs throughout the year.

Looking for more help with Church Bookkeeping? Our team put together a helpful 3-part series: Helpful Tools, Program Spending, Budgeting.

Tried and Tested Remote Working Tools

Tried and Tested Remote Working Tools

We’ve all had to pivot this year in order to keep ourselves and our communities safe. While some companies, like System Six, have been working remotely for years, we recognize that the shift to completely digital platforms and processes can be overwhelming and daunting. The good news is that there are so many great options for online tools that will have your team working cohesively in no time. We know that nothing can quite replace the collaborative vibes of your office or the chit chat around the water cooler, but hopefully these tools will help you get on the same page while you can’t be in the same space. 

Microsoft Teams | Quick Chatting

We use Teams (and have used Slack in the past) primarily as a means to field casual conversation and quick questions. In order for this to work to its full potential, though, you  have to have strong buy-in from your team and commit to quick response times together so that it remains an effective means of communication.  Teams can be used for questions and updates that can be handled quickly and easily; it’s not for asking particularly heavy questions that require your colleague to completely stop what they are doing to help. Make sure to ask specific questions and avoid ambiguity. 

Karbon | Detailed task management

Karbon is our preferred tool for task management.  It is a tool that is specifically built for accounting firms but we’d highly recommend a tool like this (see Teamwork, Clickup, or Asana) for keeping track of tasks.  Email is not an ideal place to assign tasks because once the email has been sent there is no visibility of if/when the task got done and no way to see if the task is still in process. 

With Karbon, you can automate reminders, setup workflows, and ensure that there is visibility on the scope of a project for each team member.  

Calendly  | Quick meeting scheduling

With a remote team or clients who span multiple time zones, it can be such a simplifier to use a scheduling service. Save yourself the endless “reply-alls” and mishaps over who is on what time zone and invest in a service like Calendly for booking appointments.  Calendly updates your availability in real time so you can rest assured that you will never double book a meeting. It comes with features like custom reminder emails, cancellation notices, and calendar syncing. The free version works fine for most people though it is branded with “calendly” and you only have one meeting type as an option. 

Google Drive | Easy & sharable access to information

We can’t stress enough the importance of real time editing and updating of shared documents. Avoid sending various versions back and forth with Google Docs robust variety of cloud-hosted documents and spreadsheets. We especially love the Google Sheets features for collaboration around ideas, updating contacts, and sharing live content. We’ve been able to connect Google Sheet directly with Quickbooks Online to automatically pull key financial metrics directly into various meeting agendas which has been extremely valuable when reviewing our company performance as leaders on a weekly basis. You can review our meeting agenda template here!  

Fathom | Monthly Metric Review

Fathom is a reporting app that is especially focused on turning complex financial reports into beautiful, easy to read trends,  Fathom connects easily to QBO, and it presents financial information in an easy, understandable way.  Fathom puts accounting info into a visual, easier to understand form that is especially helpful for anyone who may not be especially numbers-minded.  Really, it is a communication tool as much as a financial tool.You want your numbers to communicate the story of what is happening in your business and be able to present this data to your key stakeholders (team members, investors, or your spouse).

Loom | Video Teaching Tool

Loom is a great tool to create a tutorial by sharing your screen and recording the session to send via URL. If you need to shoot off a quick explanation about how to use a feature, or want to show a client an element of a program or website, you can record a short video for them. This allows the information to be reviewed at someone’s convenience.. And if your client or colleague has to pause to go homeschool their third grader, then they can always come back to it later! 

While the focus of this post is the tools we use while working remotely, the theme is communication.  This is particularly essential when you aren’t just down the hall from someone, but you still need to be able to communicate quickly and clearly.  We want to make sure that the tools we do use are easy to use, intuitive, secure, and allow for quick and helpful communication.

C19 — Standing by to Help

Dear System Six Team, Clients, Friends, and Trusted Partners –

It’s been years since we blogged last, and given the current circumstances, we’re dusting the blog off and have written a message for our team and clients regarding the COVID-19 outbreak. Please see below. In challenging times like we are experiencing, our value of “Our Clients’ Success is Our Success” is our “North Star.” If there is anything we can do to help support your business, please reach out and let us know how we might be able to help.

Amid this spring’s COVID-19 outbreak, there’s an unprecedented level of turmoil that is creating a domino effect into our daily lives. Thankfully we have not received report of someone close to us being infected, yet there is undoubtedly a heightened level of anxiety and disruption to the normal day-to-day that is impossible to overlook, especially for our Seattle team and clients.

We are honored to be trusted as the bookkeeping and accounting back office for over 175 businesses and organizations around the country, and we are beginning to see real-life impacts to our team and clients. If you are affected and need extra support (without charge,) we’d be honored to look at some short-term strategies that might help you “weather the storm.” A few ways we might be able to help:

  • Short-term cash flow forecasting
  • Reviewing expenses and making recommendations for tightening-up spend
  • Talking through HR questions
  • Having a call to think and strategize together
  • Providing financials so you can move quickly to refinance a mortgage while rates are historically low
  • How severe the virus will be or how long the market turmoil will impact our businesses and lives is an unknown.

Where we can take action and help is by doubling-down on our commitment to staying focused on our mission, vision, and values and continuing to do excellent work in serving our clients and team.

Whether it is your business or organization, or someone else you know who might be struggling that could use our help, reach out and let us know there is a need. We’ll do our best to step-in quickly to assess the need and determine where we take action to hopefully provide some immediate support.

Thank for you the opportunity to continue to be of service,

Jeremy

p.s. This is a great 3 min read titled, “The Best Response to the Coronavirus? Altruism, Not Panic”. I hope you are inspired to stay strong and lead your business, your organization, and your community through this crisis. Let us know if we can help.

_______________________

Jeremy Allen | Founder
System Six Strategic Bookkeeping

Who Cares About Accounting (and Bookkeeping)?

Thanks to Seattle area CPA Barbara Schafer for permission to share this article with our clients and readers.  This article appeared in the October edition of the Washington State Bar Association publication, ‘Washington State Bar News.’

Who Cares About Accounting (and Bookkeeping)?  Hardly anybody (aside from accountants) really likes accounting. Outside the accounting department, it seems to be a bunch of jargon, rules, and requirements that take all the fun out of practicing law. Attorneys have to post their time, staff members have to get their payroll timesheets in, check requests and expense reports have to be submitted, and every month everybody has to “close.” What’s it all about? Why is there so much time and attention paid to accounting? Who cares?

Inside the firm, we need to know if the firm is profitable and what can be done to make it better. Can we hire more people or do we need to do a layoff? Should we buy new computers or lease them? Do we have enough cash to make a distribution to the partners? Outside the firm, there are a bunch of other guys who want to know how the firm is doing. The federal government wants to collect income taxes and the tax return has to be prepared. The city and the state want their excise taxes. The bank wants to know if the loan can be repaid. Vendors want to know if they will be paid. And then there are the auditors from the Department of Licensing, the Department of Labor, or the WSBA looking at a trust account. The accounting has to be right — for all of these compelling reasons.

What Is Accounting?

Where to begin? Accounting is a language, a way for people to communicate about money. It’s a way to compile and summarize information about what has already happened — a system that records, reviews, analyzes, and interprets information. But in the accounting department, we don’t just speak accounting — we also have to do accounting. Policies and procedures are necessary for consistency in reporting and for preventing fraud. All those outside authorities impose standards and reporting requirements, such as filing dates and specific account titles. It’s complicated. So we’ll keep this discussion limited to some basic accounting terms and reports, and why they are important.

Cash Basis or Accrual Basis?

In the legal industry, reporting is done usually on the cash basis, which means that what has been purchased, borrowed, earned, or spent is defined by what happens in the checking account. Income doesn’t count until the money is in the bank. Expenses aren’t included on reports until the check has been cut. Equipment purchases aren’t recorded until the price has been paid. There are a few significant exceptions, but that’s the main idea.

Large firms report on the accrual basis. Income is recorded when it is earned; when the work has been performed, the timesheets have been posted to the billing system, and the client has been billed, including the fee in accounts receivable. Expenses are reported when an invoice has been received and posted to accounts payable. Equipment is recorded at its price, regardless of whether the bill has been paid.

Some firms — but not many, due to the need for sophisticated systems — report internally on both the cash and the accrual basis. Both methods are correct, but generally the accrual basis results in earlier recognition of income, and therefore taxes must be paid sooner. Because taxes are paid with cash, firms prefer to report on the cash basis. The tax reporting method is determined by IRS regulations.

Basic Financial Statements

There are four basic financial statements:

  • balance sheet,
  • income statement,
  • statement of cash flows, and
  • statement of changes in owners’ equity.

All four statements can be prepared under both the cash basis and the accrual basis.

Assets = Liabilities + Owners’ Equity

Balance Sheet

The balance sheet is a list of the assets, liabilities, and owners’ equity of a firm. The balance sheet is always as of a certain date, such as “As of December 31, 2009.” Assets include cash, investments, furniture and equipment, artwork, and buildings or leasehold improvements. They are the things that the firm owns and uses to operate. Liabilities are things like employee payroll taxes that have been withheld but not yet deposited with the IRS; or debts, usually bank loans or notes from partners — what the firm owes. The difference between what is owned and what is owed is equity. It’s like a home mortgage; the difference between the value of your home and the balance you owe on your mortgage is your equity.

It is not a coincidence that the balance sheet balances. It’s a definition; Assets = Liabilities + Owners’ Equity. For example, when $5,000 is borrowed from the bank to buy new computers, both assets (computers) and liabilities (loans payable) increase by $5,000.

Except for the cash account, many law firm owners and managers have a limited interest in the balance sheet. Most are more interested in the “bottom line” found on the income statement (also called the “P&L,” short for “profit and loss”). Statements are prepared for each month and for year-to-date accumulations. Some reports may compare this year to last year or to budget. Income in a law firm is primarily from professional fees generated by lawyers and paralegals. There may also be income from cost recoveries and interest, rent from subtenants, or other sources.

On the expense side, the biggest line items are wages, taxes, and benefits. You’ll also see items like office supplies, rent, library and online research, taxes, employee education, and computer lease payments. Subtract the expenses from the income, and you get the bottom line — net income or net loss. It’s an important number that, over time, determines the continued existence of the firm. The income statement is always for a period of time, for example, “For the 12 months ending December 31, 2009.”

 

The Statement of Cash Flows

Another report that gets a lot of attention is the statement of cash flows. By monitoring the sources and uses of cash, managers can better understand how the change in the cash balance reflects the results of the operations of the firm, as opposed to its investing or financing activities. If the cash balance increased, was it because the firm was profitable or because the firm borrowed money from the bank? Did new partners buy in? If the cash balance decreased, was it because the partners got a distribution? Was new equipment purchased? Did a loan balance go down? These are clearly very important distinctions. Like the income statement, the statement of cash flows is dated for a specific period of time: “For the month ending December 31, 2009” or “For the 12 months ending December 31, 2009.”

The Statement of Changes in Owners’ Equity

The statement of changes in owners’ equity is the place to look for distributions to partners, contributions of capital from owners or shareholders, member capital accounts, or retained earnings. The account descriptions in this statement depend on the form of ownership of the firm. Is it an LLC, a partnership, a corporation, or a sole proprietorship? Forms of entity are a topic for another discussion.

Timekeeper Production Reports

That covers the basic financial statements. Other reports of great importance in the law firm are related to attorney and paralegal production — time and money. How many hours did each timekeeper work? Who billed for what amounts? Who collected, and how much? What remains in accounts receivable (A/R) or work in progress (WIP)? How old — and likely to be collected — are the A/R balances, and who is accumulating work in the WIP? Every attorney studies these reports — certainly their own numbers. They are at least as important as the financial statements, and like the bottom line, are indicators of the continued success of the firm.

Attorney Trust Accounts

Trust accounting is another critical activity of the law firm accounting department. Trust accounts are composed of funds held by a lawyer on behalf of a client or third person in connection with a representation. Such funds must be held separate from a lawyer’s own property in an interest-bearing trust account as specified in the Rules of Professional Conduct (RPC). The Bar has authority to randomly examine a lawyer’s trust account and to audit a trust account in connection with a disciplinary investigation. Because trust account mismanagement is a frequent basis for imposition of disciplinary sanctions, all lawyers should be thoroughly familiar with their obligations under RPC 1.15A (Safeguarding Property) and RPC 1.15B (Required Trust Account Records) and ensure that non-lawyer subordinates with accounting responsibilities are acting in accordance with the lawyer’s professional obligations. Helpful information about trust accounting can be found in the WSBA publication Managing Client Trust Accounts: Rules, Regulations, and Common Sense, available at www.wsba.org/media/publications/pamphlets/managing.htm.

Profitability Reports

One hotly debated topic in the legal world is the calculation of overhead. Income and expense can be divided up and spread out among timekeepers or departments to calculate profitability, based on various methods of allocation. Some law firms perform this calculation monthly; some never do it at all. A common practice is to do it annually as part of the attorney compensation analysis. Some firms include depreciation expense or equipment purchases in the calculation, some don’t. Some take into account associate bonuses or partner buy-outs, some don’t. What is the right way? There isn’t one. This is not a standardized report. It’s an internal report that is defined by what the owners agree to do, and what works for one firm may not work for another.

Conclusion

Internal reports can be defined by the firm, but reports for taxing authorities, tax return preparers, lenders, and regulatory agencies must follow accepted formats. We defined some terms, looked at the four basic financial statements, and discussed some topics that are important to law firms and their accounting departments. It seems a lot of people care about accounting. They all want it to be timely, relevant, and accurate — and in terms that meet their specific needs. Accounting is not an end unto itself, but it’s a great tool for business management, and a necessary component of the practice of law.

 

Barbara Schafer, CPA, CLM, is the author of this great article and has been a member of the Association of Legal Administrators for several years, and has served as the Seattle-area Puget Sound Chapter treasurer. Previously, she was the executive director at Ogden Murphy Wallace and the firm administrator at Bennett Bigelow & Leedom. She is now a consultant and sole proprietor of her CPA firm. She can be reached at consulting@barbaraschafer.com.

Strategic Bookkeeping 102: Downloads & Links

Today we hosted a roundtable workshop with eight small businesses owners and office managers from around Seattle. We shared several of our best practices from our small business bookkeeping system, and the discussion was lively and light-hearted, thanks to all the participants who attended. We promised links to the resources we shared today. Here they are:

 

PowerPoint Presentation and Bookkeeping Checklist:

PDF of PowerPoint presentation, Strategic Bookkeeping 102 : Best Practices to Implement Today

Excel Checklist – Monthly/Quarterly/Annual Bookkeeping Checklist Template

 

The Monthly and Annual Folder System:

Monthly Folders

Clear Pocket Inserts

Yearly Folders (12-month brown filing folders)

 

Other Links:

2GB Free Mozy.com Online Backup Service

Dr. George Huang, Freedompreneur Coaching and Consulting

Brevica Online Marketing, Creator of the System Six Website

Registration Form for discounted Do It Yourself 13-Week Course, Strategic Review, and Quickbooks Setup

 

We wish everyone that attended the best of success. Please let us know if you have questions, of if we can help you by sending an email to System Six.

Call us now!