Financial Cluster:Money Flow

If you are reading this, you are probably interested in knowing some details about how the money flows through the Bike Kitchen. You're also probably have some interest in the Monthly Accounting Duties. This page describes the flow. The details presented here change from year to year as new income and expenses emerge and better systems are put in place. So, if you have any comments or suggestions on improving things, consider updating this document!

Income

Cash Register

This is money consists mostly of membership fees, day-use fees, and used parts sales, and special order sales. Occasionally, income from classes, donations, and fundraisers, appears in the register too. We close out the register and deposit to the checking account once per week. The register tape goes in the Accounting Inbox with a Register Report.

PayPal

The BK has a PayPal account. This account is primarily used for donations. Currently, we don't see much money coming in through this channel, but that is bound to change as we promote it for use with fundraisers, etc. Money in the PayPal account is transferred to the checking account manually. When the transfer is made, a suitable note should be placed in the Accounting Inbox.

Donations

Occasionally, the Bike Kitchen has a fundraising campaign, or receives single donations. These are typically deposited directly into the checking account. Larger donations (i.e., > $500) should be tracked for tax purposes. That is, we're supposed to keep a list of who made big 'unusual' donations.

Expenses

Debit Cards

A few people have debit cards. These are used for purchasing parts from vendors, buying pizza for volunteers, buying supplies from the hardware store, etc. Also, a few automatically paid bills including sonic.net DSL service are paid on various cards. Generally, anyone who makes a purchase on one of these cards should put the receipt in the Accounting Inbox with an explanation.

Checks

When bills arrive, the Financial Cluster Coordinator or some other check signer writes checks and sends them off. A note, often just scribbled on the bill, should be put in the Accounting Inbox specifying the check number, date, and amount. These bills generally include rent, pg&e, trash service, etc. They also include occasional reimbursements of expenses to BK staff. Requests for reimbursement are generally found in the Accounting Inbox and should always be accompanied by receipts.

Petty Cash

Often people will take some cash from the register to pay for things like soap, TP, etc. These expenses are reported on the Register Report.

Assets

Inventory

The Bike Kitchen maintains a very small inventory of new parts. When we purchase parts from our vendors, the inventory goes up. As we sell the parts, the entire sale is reported as parts income on the Register Report. At the end of each month, we just subtract off the cost of goods that we purchased that month. So at the end of each month it appears that our inventory is at zero, even though this is not technically the case. However, tracking inventory in our relatively chaotic environment has proven very difficult. Also, the total value of the inventory at any time is rarely more than a few hundred dollars. So we sustain this error. If we ever start maintaining a very large inventory, we'll have to revise this.

Special Order Receivables

One of the big perks of volunteering at the Bike Kitchen is access to our vendors at cost plus 15%. The orders are placed along with the shop needs (i.e., new inventory, tools, consumables, etc.) But special orders are tracked as receivables. This way, we can know at how much money in special orders are outstanding and collect it. In practice, after all special orders are paid for, the Special Order Receivables should be $0.

Special Funds

Occasionally, we get our hands on some ear marked money. For example, as 2008 Bike Bike hosts, Free Ride in PA transferred last year's Bike Bike surplus of $1000 to us. When we receive special fund money, it gets deposited in our checking account and balanced as equity. It is tracked as a sub-account of the checking account. When fund administrators, who must be trusted accountable Bike Kitchen volunteers, need money, we write them a check. That check gets balanced as a petty cash asset. Eventually the volunteers must submit an expense report, and possibly a refund of any unspent money. At that time, the spent petty cash asset becomes special expenses, and unspent money goes back in the relevant sub account. If the fund balance is transferred to somebody else, we write that somebody else a check and balance it against equity.

Savings

Currently, we have a savings account with a pathetic interest rate. We don't even use it. Eventually we should manage CDs, a money market account, or something a bit more inflation proof. But for now, we just have, all of the action pretty much happens in the checking account.

Liabilities

Sales Tax

Our parts sales are taxable. So for each register deposit, our sales tax liability increases. This is reported on the Register Report. Also, any stuff that we buy wholesale and use in the shop is also taxable. After 31 December, we file a sales tax return with the Board of Equalization and pay off this liability. There is much room for improvement in tracking our sales tax liability.