Hi there,
We’re a small charity that has been using manager internally for a number of years now, and our basic company structure has meant that we got by utilising most of it’s features in their simplest forms. There are only two of us and neither of us are accountants but we have basic financial training allowing us to cope with our current setup.
However we now have an internal issue with the way pay transactions are conducted and logged in manager and we are looking for advice / proposed solutions for our organisation setup.
Up until recently our staff pay was funded by one large grant so in reality we have two physical bank accounts that we use that are replicated in Manager:
Current Account
Grant Account
We use the employee/payslip features of Manager to generate the pending employee pay liabilities which are then paid off when we make a transaction to the employee clearing account for that particular employee.
Our new issue is that we now have grant funding coming in from multiple funders and want to keep track of how much of each of the grants makes up someone’s pay.
We use groups and accounts in COA to label receipts and payments so that we have a clear view in reports etc as to what is being spent from where, but there’s no way of doing that across multiple physical accounts.
E.G.
Staff member 1 salary/payslip paid £1000 per month.
£500 comes from funder 1
£500 comes from funder 2
I can’t add multiple lines to a payment because they each reference the employee clearing account not a custom account like “Funder 1 exp / Funder 2 exp” - so how can I represent and log this in manager?
I hope i’m being clear, if there’s anything else you need from me to better understand, please let me know.
What if you enter the payment twice or as many times as you have fund that must contribute to the payment of the salary?
For instance the example above required you pay 500 from funder 1 and 500 from funder 2 to the same staff; then (1) make payment to the staff for the first 500 from funder 1 account, then (2) make another payment of 500 from funder 2 account.
This will still work even if there is need of bulk payment as you will only record the part from each salary that is paid from any one fund.
My suggestion
I appreciate the suggestion, but I’m thinking there must be a more elegant solution.
If we put all grants into one grant bank account - then physically we are only spending money from that account. It’s one payment out to the staff member in reality.
Ideally just like with any other receipt / payment, we’d be able to add multiple lines to make up the payment.
It’s confusing because in both situations the terminology is “Accounts” in manager.
Bank Accounts, have “Accounts” inside of them, whilst I prefer a term like “Labels”.
So essentially I would like the Grant Bank Account to be able to make up a payment that is labelled as Funder1 Expense & Funder2 Expense, but still clear the “Employee Clearing Account”
I think both suggestions address only part of the question. By far the easiest thing to do is create different payslip earnings items for different funders. These can be defined to post the employee’s earnings to different expense accounts for work on the different grants. They will still post the liability to Employee clearing account. This resolves keeping track of where the expense for employees is posted.
The second issue is paying the employee to clear the liability from Employee clearing account. If you are actually using separate bank accounts for different grants, you have no choice but to enter multiple payments, because Funder 1’s money is in one bank account and Funder 2’s in another. There are two ways around that, if you want to pay only a single payment each payroll period:
Open a payroll bank account. Transfer funds from the funders’ bank accounts to the payroll account each payroll period in the amount necessary. Many businesses have bank accounts used only for payroll, especially if they use an outside payroll processor. (You could also use your current bank account for this function—same thing.)
Deposit all your grants into a common account and make all payments from there. You would need to structure you chart of accounts to enable you to know how much of that account belonged to each funder. You might do this via equity accounts. I recommend consulting a qualified local accountant with expertise in charitable accounting, as rules vary from jurisdiction to jurisdiction.
In that case you may want to use control account/special account so that you can use individual funder account which will report in one bank account in stt of fin position.
Eg create a control Bank account, say, All Fund/Donations Bank Account.
Go to bank and create individual funder accounts linked to the control account.
You will still have to make the payment as I suggested earlier only that all fund transactions will report in one control account which can be drilled down to know the make up funder accounts, and each funder account can further be drilled down to know the payments it was used to make.
think both suggestions address only part of the question. By far the easiest thing to do is create different payslip earnings items for different funders. These can be defined to post the employee’s earnings to different expense accounts for work on the different grants. They will still post the liability to Employee clearing account . This resolves keeping track of where the expense for employees is posted.
I believe this is the best solution for us as it links with whatever expenditure account we assign it, which makes it much easier to see from a reporting point of view.
Investigating this has also shown up another issue however:
Initially the Funders deposited the money into our Current Account.
We then transferred the money into our Grant Account.
We accomplished this in manager by using the interaccount transfer option:
So:
Paid From Current Account Received In Grant Account
However we want to receive it so that it also shows as income for the Sub Account.
e.g.
Funder 1 deposits 1000 into Current Account
InterAccount Transfer Current → Grant Account
Received in Grant Account → Funder 1 Sub Account
Funder 1 Sub Account now has a balance of 1000 (income of 1000 on reports)
Is there a way of achieving this I’m missing without making a payment from one Physical account to another?
Thanks again for all of the replies, they are very informative.
Income (meaning revenue) is not reported in bank accounts, which are on the balance sheet. Income is reported on the profit and loss statement. The income (revenue) showed up as a credit to an income account when the grant was received (debited) into the current bank account. Moving the money around afterwards does not change the amount of income recorded. If you desire, you can create an income account specifically for a specific funder. But you can still receive their donations into any cash or bank account.
I am not sure what you are referring to. Bank accounts in Manager cannot have subaccounts. By default, bank accounts are subsidiary ledgers under the Cash at bank control account. Your statement suggests you may have something set up incorrectly, because you initially said you had replicated your two physical bank accounts in Manager, Current account and Grant account. If that is true, Grant account already is a subaccount of Cash at bank.
However, if you were only saying that is how you would like things to be, that is not possible exactly as you describe. You could, however, create another bank account for Funder 1’s contributions. This could, of course, match a physical account you open for the purpose at the bank. But you could also just split your existing Grant accountfor record-keeping only. Your existing physical account would continue to be used as it has been, but your Manager records would separate transactions in it according to funder. I warn you, though, that will almost inevitably lead to confusion in the future. And it will make it impossible to reconcile your accounts with bank statements or import bank statements without serious complications and duplication of effort—with accompanying risk of manual errors.
Sorry, I realised when reading it back that I’ve made a boob.
Everything you’ve said makes sense and we are already doing and I was so focussed on solving the employee clearing issue that I confused myself about the other.
Of course in the two only accounts that we have, if it was received under a label, then it’s already logged under that label and represented on the P&L statement, no matter which account we receive or spend under.
