Feb 1, 2010

5 Easy Ways to Keep Your Chapter Out of Debt

Chapter Finances GHQ Staff Blogger
5 Easy Ways to Keep Your Chapter Out of Debt

By Jacob Kingdon – Director of Chapter Services

In my position I get emails and phone calls every week from chapters who are behind on their bills and just can’t seem to catch up. Over time, I have noticed that there are some trends among these chapters that are keeping them in debt. Below are five simple ways to keep your chapter out of debt.

1. Set up a Finance Committee – This committee’s sole purpose should be to create and manage a budget for the chapter. Make sure to include anyone on this committee who will be spending money as an officer of the chapter. Generally the Social Chairman, Philanthropy/Community Service Chairman,  Recruitment Chairman, IFC Representative, President, and Treasurer will sit on this committee. If there are other officers that generally spend money, such as the Intramurals Chairman, House Manager, or Steward, feel free to include them as well. The finance committee should first look at fixed expenses such as rent, utilities, member dues, insurance, etc. and build that into the budget. Next, look at variable expenses such as social events, philanthropy events, food, house renovations, and any other optional expenses. Have each officer submit a budget proposal to the committee, detailing the events that they would like to have this year and the approximate cost of each event. It will then be up to the committee to determine how much money to budget for each officer. Once all of your chapter’s expenses are determined, split the cost among your members and determine how much dues will be per person. If it is too high, you may need to adjust some of your budget items. Make sure to meet a couple times a month to review the budget, make changes if needed, and keep tabs on chapter funds.

2. Control your cash flow –  As a chapter treasurer, how many times has one of your brothers come up to you with a receipt for $100 worth of pizza from the recruitment event the night before for which he would now like reimbursement? You may argue that twenty Little Caesar’s pizzas for fifteen of your chapter brothers and five of their friends isn’t a recruitment event, but you give in because that’s what your brothers have come to expect. While one or two of these instances may not break the bank, imagine the thousands of dollars worth of unbudgeted money being spent if this were to happen once per week for the entire school year. Some chapters have bylaws that force the treasurer to reimburse anyone for chapter related purchases under $100.00. This is very dangerous. Instead, implement a request form where brothers can request funds ahead of time out of a particular budget (i.e. Social, Philanthropy, etc). If the budget request is approved by the treasurer and chairman responsible for that particular budget, the brother may be reimbursed. By doing this, you will be able to better control where the chapter’s money is spent and you will be able to deny someone a reimbursement if it has not been approved ahead of time.

3. Beware of Credit Cards and Debit Cards – Some chapters will get a chapter credit card or individual debit cards for their officers. In my opinion, this is a recipe for disaster. There is absolutely no reason why a chapter should be using a credit card. If the chapter can’t cover a purchase with cash, there is no need to buy it. Credit cards not only encourage the chapter to spend money that they don’t have, but finance charges can add up fast and make it very difficult to pay the balance off in a timely manner. Having a debit card that the treasurer can use for online payments or emergencies is fine, but giving multiple people open access to the chapter’s checking account is a financial nightmare. When possible, the chapter should use double-signed checks to maintain an organized checking account.

4. Don’t rob Peter to pay Paul –  In other words, don’t borrow money from one budget line to pay off bills in another budget line. This most commonly relates to the payment of initiation dues, Phikeia dues, and member dues to the General Headquarters. As outlined in The Code it specifically states that every Phikeia shall pay $60 within 10 days of Phikeia Induction and every new member shall pay $225 within 10 days of initiation, with all members paying $95 once per year for annual member dues. When looking at past due accounts, these always seem to be the three items that cause chapters the most trouble, but why? Often times, when chapters run into trouble, it is because they use this money to pay for other things, rather than paying off the dues the minute the money is collected. A good treasurer will set all of the dues aside and deposit them into the account just in time to write a check for the full amount to headquarters. A bad treasurer will collect initiation dues to pay for an upcoming formal. My suggestion: Don’t let anyone come to the Phikeia induction ceremony without a check for Phikeia dues and don’t let anyone come to initiation without a check for initiation dues. If they don’t have the money, then they are going to have to wait. By doing this, the treasurer can deposit all of the checks in the bank the next day, report all of the new members online, and send in the check for the exact amount that is due. The same thing goes for member dues in the winter; think of a good incentive to get your members to pay these dues on time (e.g. give them a percentage off their social dues for the next semester, anyone who doesn’t pay cannot attend the spring formal, etc). By doing this, no money will ever need to come out of the chapter’s social dues to pay for GHQ bills.

5. Be a brother, not a friend –  “I’m not going to punish him for not paying his dues, he’s my brother.” How many of you have heard this before? Or worse, how many of you have said this before? There is a difference between being a brother and being a friend. A brother doesn’t let his brother get so far into debt that he can’t possibly pay it back. A brother doesn’t let one person’s financial delinquency ruin the experience for the rest of his brothers. A brother doesn’t teach his brothers that they will not be held accountable for backing out on their commitments. By allowing your brothers to make excuses for their financial delinquency, you are not doing them or the rest of your chapter any favors. It is your job to ensure that your brothers are prepared to enter the real world after graduation. When one of your brothers buys a car or a house and then decides that they would rather not make the payments, the bank isn’t going to say, “Oh, that’s alright. Just pay them next year when you have a chance.” One way to help manage your accounts receivables is to use an online Greek billing service such as Omega Financial, Greek Bill, or Bill Highway. Over forty Phi Delta Theta chapters use Omega Financial and have seen drastic increases in collection rates. While these services charge a fee, you will more than make up the difference in collection rates. Also, consider implementing incentives for paying dues on time and don’t hesitate to discipline members who are financially delinquent.

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