We’ve talked about the need for budgeting and the dreaded cash flow, but what about when things are underway, when payments need to be made and fundraising cash starts to come in? How do you manage it all?
We had an excellent question sent in from a rather lovely chap called Jordan:
I would like you ask you the best way of managing finance for the prom, and the best place in the UK to get a Prom Bank Account that I can use, being 16 years of age. I would prefer to keep all funds separate to any of the school accounts, so I feel setting up a brand new account will be good. I understand it will need to be a business account?
This is an excellent question, and the next natural step for our prom finance advice.
A bank account is critical when managing prom finances
Jordan is absolutely right about the need for a bank account. Fundraising activities are likely to result in cash donations – and usually in multiple small amounts. Depending on the activity, you may end up with hundreds of pounds in coins at the end of a day, or trickles of small amounts as sponsorship promises are honoured.
Cash is cash, we all like it, but it simply isn’t practical when it comes to the other side of prom finances: paying out. You can’t go to a local prom photographer or prom venue and put down a deposit in pennies and pound coins. Well, you could, but they won’t be very pleased!
So, yes, get a bank account sorted out. You can pay the cash in, then pay the bills by cheques or electronically and everybody is happy. It also makes it easier to know how much is in the pot at any one time.
What kind of bank accounts suit prom finances?
So, the next question, as Jordan asks, is what kind of bank account do you need, and what do you do about the fact that you are likely to be anywhere between 15 – 18 years of age?
Keeping funds separate from other accounts is an absolute must. It’s so easy for things to get tangled up if you are using the main school account, and it also makes it nigh on impossible for you to be able to access as many details (such as the current balance) as and when you need to.
Your first point of call should be your school treasurer / head administrator / school head to ask about what facilities the school has. Some school bank accounts have the facility to create separate accounts for exactly this kind of activity. It may be that the account could be set up specifically for your current prom, without the need to start from scratch elsewhere. The person responsible for finance in your school will probably also have good advice, and would be a good person to be involved as signatory (we’ll get to that later).
But if your school bank account doesn’t have that facility, what do you do?
Looking for the right bank account for your prom
You need to start looking at the different banks and what they offer. Don’t be intimidated; they want your business.
Here is what you need to look for:
Most banks would classify the kind of account you need as a “clubs, societies and charities" account, which is usually a type of business account. These are generally better suited towards prom finances than a standard small business account, and the staff involved in managing your account will have much more experience with the potential issues you’ll face than those involved in small businesses.
To give you an idea of what these accounts are like, take a look at the one run by the HSBC and the one run by LloydsTSB. We’re not in a position to recommend either of these per se, but they do have useful and informative websites, and are friendly on the phone. Do take the time to hunt about with others, and if you have found out which bank your school already as an account with, that might be a good place to start.
So, once you have identified whether a bank has this sort of account, there are lots of details you need to consider. But first:
DON’T PANIC!
These kinds of questions and details can seem at best dull, at worst scary, but you just need to gather information first and then take it back to the prom committee, or the teacher appointed to help you decide which is best for you if you need support.
What you need to know to choose the best account for your prom finances
Minimum requirements
Okay, the most important thing to look at first is whether there is a minimum monthly amount required. For example, some banks will only offer free banking, or even the option to have this kind of account of you have a minimum of £4,000 pounds a month in the account. Eeep! I doubt many school prom finances run to these sorts of amounts every month.
Transaction fees
If there is no minimum amount requirement, next you need to look at fees applied to transactions. If they say you have “free banking” make sure you list what they include under that. Can you pay in easily, and then pay out with cheque or electronically without being charged?
Some banks charge very small amounts for certain transactions, these can really add up, especially for prom budget management as there will be smaller and more frequent amounts being paid out at certain points. If you can find an account that offers basic transactions for free, then put it on the shortlist.
Internet banking – good or bad?
Internet banking can be very useful, find out if you’ll be able to access the account online to check the balance, and whether you’ll be able to pay electronically. For a prom, having the facility to access the account online and pay bills from it is very convenient, but may in fact not be a good idea due to security and trust issues. We’ll get onto that in a moment when we talk about signatories. The bank may insist that only a teacher has access to online payment facilities.
Is there a local branch?
When you have hundreds of coins to deposit, you want a branch as close to you as possible. Look at the nearest branches to you and prioritise those banks above any others when you are making your choice. It can also be helpful if a problem comes up and you can just go and speak to a real person who’ll know how to help.
Don’t forget to check the opening hours too; not all banks, especially in small towns, open on a Saturday morning, so check they open late enough on weekdays to visit after school.
Then what?
When you have a shortlist, the best thing might be to phone them or go into the branch and talk it through with them. Ask if they have helped other prom treasurers in the past and what they recommend.
Security, trust and convincing the adults you can do this!
Jordan points out that at 16 years old, age may be an issue when dealing with banks. Whilst all of you and I know that you’re organised, responsible and probably more switched on than a lot of people over 18, it may be a barrier.
There is also a security issue, and this is faced by all clubs, societies and charities – but the solution to this may be the thing that can make your age irrelevant. The problem is this: if you have a treasurer with access to the big pot of money, how do you make sure they can’t pay for the odd personal thing here or there with the club account, or even worse, run off with all the money?
Clubs etc deal with this by having two (or sometimes more) signatories on an account. This means that if you want to pay for something by cheque, or withdraw a significant amount of money, you need two people to physically sign for it, instead of just the treasurer.
Yes, it makes things slower and a tad less convenient, but if you do this and one of the signatories is a teacher, or the head of school finances or someone else they’ll rate, then you’re more likely to be able to get the account and help you need, even at age 16.
Whoa. Can you summarise all that please?
Sure, there’s a lot here.
1. You do need a bank account dedicated to prom finances
2. Ask your school finance people about the school bank account and for advice
3. Focus on researching the “Clubs, societies and charities” business accounts offered by banks
4. Check out the minimum requirements, fees, account accessibility and whether there is a local branch
5. Interview the banks on your shortlist!
6. Decide who will be signatories on the account and follow your chosen bank’s instructions.
So there you have it. Advice on bank accounts for prom treasurers. I hope that helps Jordan, and if I have left anything out, or if anyone else has a question, drop us a line here. Who knows, you might get a whole post as an answer too!
