Does your church or ministry use a business credit card?
If you're the bookkeeper and your ministry is using a debit card or credit card, I know you have your work cut out for you. Especially if its a MasterCard, Visa, American Express or Discover Card.
This is one of the most challenging areas in managing the finances. A number of my clients are using credit cards. Its a lot of extra work for the bookkeeper to manage. I'll admit a few tend to fall behind with their quarterly financial check-ups because they have to find the extra time to record the transactions. Here are a few tips to help you:
- Use the card for business use only. Make sure each cardholder knows they should not put personal charges on the company card.
- Request receipts. Establish a policy where receipts must be turned in within 3 days.
- Monitor credit card activity online. I know this is like micro-managing, but if you have certain people that are using the card that can't seem to keep up with receipts, its best to monitor the charges and request the receipts right away. If you wait till the statement comes in, they may not have it.
- Record transactions separately in your accounting system. QuickBooks has a credit card transaction entry screen. If you're using Peachtree, you can use the Tasks/Payments screen. With either system, you should have a credit card liability account on the books. Record each transaction as though you were making a cash purchase.
- By all means - don't set-up an expense account called "American Express", "Visa", "MasterCard", or "Discover" or Credit Card Purchases on the books. This is an accountant's nightmare! I've seen a new client's set of books with thousands of dollars of transactions coded to this one - dump all account. It's important to record each purchase to the correct expense account. Example: if you go to OfficeMax and buy office supplies, code the transaction to office supplies expense. If you dump it all into one expense account, how will anyone know what all that money was spent on? And if you hire me, I'm going to tell you to clean it up by splitting those transactions.
I really get into this in Lesson 4 of my Internal Controls course.