How do I handle monies relating to weddings and funerals?
If your organisation is a church, and specifically a CofE church, you might need to account for monies relating to weddings and funerals. Whilst there are different options to handle this scenario, this help guide article covers the method used by many churches.
Overview
Typically, only the amount retained by the PCC appears as income in the church's accounts - this is the part of the overall amount received for weddings and funerals which the church keeps.
All other income is passed on and typically doesn't form part of the church's accounts - it goes to the Diocese, the florist, the organist, the choir, the verger etc. The money that is passed on is recorded as negative income rather than as expenditure (which then nets off against the original income). You can find out more about this within this separate help guide article.
Funds & Categories
Churches that invoice for weddings and funerals typically set up a separate 'weddings and funerals' fund, with different income categories for each of the different elements of money passing through relating to weddings and funerals e.g. 'flowers', 'verger', 'organist', 'Diocese fees'.
Note: this fund has no expenditure categories as outgoing money is recorded as negative income rather than as expenditure.
This enables easy tracking of the different monies the church holds that still need to be paid out:
- where money still needs to be paid out, the income category total will be greater than zero;
- where all money that has been received has been paid out, the income category total will be zero.
Top Tip: Some churches that have lots of weddings and funerals use the 'transaction group' feature within ExpensePlus, creating a transaction group per wedding or funeral. This enables transactions relating to a wedding or funeral to be tagged. Then within the financial reports, it's easy to filter by transaction group to spot where the money received for the organist, florist, verger etc. doesn't match the money paid out.
- Additionally, within the general fund, a single category called 'PCC fees retained' is added. Money that the church gets to keep is recorded to this category.
Creating Wedding and Funeral Invoices
When invoicing for a wedding or a funeral in the 'income allocation' section, a line will be entered for each relevant income element e.g. one line for the amount for flowers, one line for the amount for diocese fees etc., and one line for the PCC fees retained.
Note: the customer doesn't see this breakdown. They only see what is detailed in the Invoice Items section on the actual invoice.
The money retained by the PCC is allocated to the General fund to the relevant income category (typically named 'PCC fees retained').
The remainder of the money received is allocated to the relevant income categories within the weddings and funerals fund.
Note: whilst this money received will show as income initially, once this money has been paid out to the verger/florist/diocese etc. this will ultimately show as zero because the money being paid out is recorded as negative income, rather than as expenditure.
Recording Expenditure
To find out how to process outgoing payments for weddings and funerals as negative income (rather than as expenditure), follow the instructions in this separate help guide article.
Note: for organisations that create accounts on an accruals basis, if there are any timing issues e.g. income relating to a wedding in the next financial year, then within the adjustments module, you can add a deferred income adjustment.
To better understand the Bank Reconciliation module, please view the module overview video here.