payments and fees

Julie P. Brownell on

I am the treasurer of our club which is 14 years old and
just learned that I am probably using this software
incorrectly. Prior to 09, we used NAIC accounting software.
We are a small club of ten ladies. The only expenses we
have are our meeting room, annual software costs, and BI
member-ship/subscriptions. We each pay $60 for expenses per
year which is adequate and I recorded those as "fees". And
they did not receive units. The only equal allocation
expense that I indicate is our BI subscription. We request
a minimum of $25 for investment purposes but several members
pay more.

We have members with a wide range of tenure and ownership.
My question is it correct to "deposit" our expense money as
a payment instead of a fee in the "bank" as opposed to the
broker as I do wish to keep track of whether or not we are
exceeding our money set aside for expenses.

And I guess I need to go back and change all entries of fees
to payments? I have been pretty happy with the software so
far, but I do feel that this issue needs a lot of
clarification in the demo/help section, especially for
people using NAIC software.

Julie Brownell,

laurie on

Dear Julie,

You bring up a good point that this topic is one many people would like to understand better. We
are working on a webinar which we will be giving in the near future that we hope will help clarify
things further.

In the meantime, the answer to your specific question is this. For quite some time, everyone
involved with Club Accounting in the BetterInvesting community has recommended that club treasurers
record all member deposits as payments. This ensures everyones club ownership is credited
correctly. That is why we have limited the option to enter a "fee" to something that would only be
done in the rare case where a penalty is being assessed.

All funds tracked in club accounting are part of a single pool of club assets. It does not matter
whether you deposit them in your club bank or brokerage account. Any cash in either account is
available to be used for investing or expenses. All income and expenses recorded in your club
accounting software affect your clubs portfolio return. It does not matter which account they are
paid from. If keeping cash in a bank account helps you budget how much you are setting aside for
expenses that is fine. The biggest point of confusion seems to be that people think if they have
the cash in a separate account that it is not affecting their overall investment returns. This is
not correct. All the money that is deposited in your club becomes part of your investment assets.
All expenses that are recorded in your club accounting software affect your investment return.

At this point, I would not suggest you change any of your historical entries as this will change
ownership percentages and affect all of your club records and past taxes. If you have not had any
withdrawals this year, you should be able to update this years transactions without causing any
significant problems.

Thank you to you and anyone else that keeps asking questions to understand this topic better. It
has confused many of us over the years and the more we all talk it through, the more comfortable we
can be that we understand it.

Laurie Frederiksen
bivio Inc.

Roy Williams on

laurie@bivio.biz wrote:
> Dear Julie,
>
> You bring up a good point that this topic is one many people would like to understand better. We
> are working on a webinar which we will be giving in the near future that we hope will help clarify
> things further.
>
> In the meantime, the answer to your specific question is this. For quite some time, everyone
> involved with Club Accounting in the BetterInvesting community has recommended that club treasurers
> record all member deposits as payments. This ensures everyones club ownership is credited
> correctly. That is why we have limited the option to enter a "fee" to something that would only be
> done in the rare case where a penalty is being assessed.
>
> All funds tracked in club accounting are part of a single pool of club assets. It does not matter
> whether you deposit them in your club bank or brokerage account. Any cash in either account is
> available to be used for investing or expenses. All income and expenses recorded in your club
> accounting software affect your clubs portfolio return. It does not matter which account they are
> paid from. If keeping cash in a bank account helps you budget how much you are setting aside for
> expenses that is fine. The biggest point of confusion seems to be that people think if they have
> the cash in a separate account that it is not affecting their overall investment returns. This is
> not correct. All the money that is deposited in your club becomes part of your investment assets.
> All expenses that are recorded in your club accounting software affect your investment return.
>
> At this point, I would not suggest you change any of your historical entries as this will change
> ownership percentages and affect all of your club records and past taxes. If you have not had any
> withdrawals this year, you should be able to update this years transactions without causing any
> significant problems.
>
> Thank you to you and anyone else that keeps asking questions to understand this topic better. It
> has confused many of us over the years and the more we all talk it through, the more comfortable we
> can be that we understand it.
>
> Laurie Frederiksen
> bivio Inc.

To Laurie Frederiksen

Please don't submerge the "fees" option too much. I suspect
it is used more often than you may realize. One of the
advantages of the bivio software is some of it's
flexability. In my earlier post, I mention we use "fees"
instead of "dues" because of the way our club has worked for
40 years. For clubs that have regular monthly "dues" or
"fees", I have not found a convenient way to track
individual members payment history vs what they owe. When I
tried to set up individual accounts for each member, the
number of transactions exceeded the bivio limit. This did
not seem reason enough to upgrade to a more expensive option
so I have a separate spreadsheet for this part of the
accounting. Would like to see something done here.

Anyway, bivio is a good software for clubs and certainly
earns it's way at tax time.

Roy Williams
NAM Treasurer

Jim Thomas on

> Please don't submerge the "fees" option too much.
> I suspect it is used more often than you may realize.

I recommended that bivio (and ICLUBcentral) change how the fees option was
presented *because* it is used so often and nearly always for the wrong
purpose.

> For clubs that have regular monthly "dues" or "fees",
> I have not found a convenient way to track
> individual members payment history vs what they owe.

Why would you bother tracking what people have paid vs. what they "owe". I
think the club treasurer's time is better spent on other things. I am aware
of no accounting reason to insist that club members contribute any
particular amounts on any particular schedule for any particular purpose.
All club members share the club expenses, regardless of how much money they
contribute to the club or when they contribute it.

-Jim Thomas

Laurie Frederiksen on

Dear Roy,

Thank you for continuing to provide input on the way your club functions and the way you'd like to
track things. Thank you also for your kind words about bivio.

The problem is not that we want to change the way your club operates, the problem was that having
the Fees button was misleading clubs into thinking they had something they really didn't have.

Fees have never been kept separate from investment assets and even though they didn't purchase
units, they were still affecting member ownership. Usually differently than people realized.

Your desire to have a way to track what members owe is certainly something that would be interesting
to discuss and a feature other clubs might like to have.

If you'd like to email me at support@bivio.com I'd be very interested in reviewing your club
records with you and helping you figure out the best way for you to accomplish what you'd like to.

I would also encourage any other clubs who have been using fees and would like some personalized
input to email us.

Please do not hesitate to ask.

The more specific input we have on what you'd like to be able to do with club accounting software,
the easier it is for us to prioritize work on improvements.

Laurie Frederiksen
bivio Inc.

Rip West on

Roy,

Please don't submerge the "fees" option too much. I suspect it is used more often than you may realize.

It is only used 'more' by people that are trying to circumvent the system. bivio is making an effort to have their customers user fees for the purpose for which it was intended, an effort which I applaud.

One of the advantages of the bivio software is some of it's flexability. In my earlier post, I mention we use "fees" instead of "dues" because of the way our club has worked for 40 years.

I remember from your earlier posts that you are trying to 'shield' your members from doing things differently than they have for the last 40 years. I tried to convey to you that this was not really necessary. Since you are going to the work of having your members contribute amounts in the ratio of their ownership, you can process these contributions as regular payments. Yes, they will purchase units, but the members worth, after processing the payments, will stay in the same ownership ratio. You will get the same result by processing these amounts as payments. If there is something I don't understand here, let me know.

Rip West
Saint Paul, MN

Audie Brewton on

Hello all,
A hearty thanks to all that have participated. I believe
that now I completely understand all the elements of this
specific topic. The additional questions, answers, and
other information have cleared up the matter for me.

Jim Thomas was a contributor to this thread and I believe he
is with the Puget Sound Ch. They produced a piece called
"Investment Club Accounting Concepts" 01/13/09. pp. 11-12
and 25-26. The two sections are just perfect extended
explanations and might resolve this matter for all time. If
these 4 pages could be posted here I'm sure those that might
have remaining uncertainties would be interested.

A most enjoyable experience. Audie Brewton, Chicago

Rip West on

When did that terminology replace the more accurate and more descriptive 'allocate equally'. I have no idea what it means.

Rip West
Saint Paul, MN

Jim Thomas on

> Jim Thomas was a contributor to this thread and I believe he
> is with the Puget Sound Ch. They produced a piece called
> "Investment Club Accounting Concepts" 01/13/09.
> pp. 11-12 and 25-26. The two sections are just perfect extended
> explanations and might resolve this matter for all time. If
> these 4 pages could be posted here I'm sure those that might
> have remaining uncertainties would be interested.

Thanks for the kind words. The document you refer to is available here ...
http://www.bivio.com/pugetsoundbi/files/ClubAccounting/Club%20Accounting%20Concepts.pdf

There is a link to it at http://biwiki.editme.com/ClubTreasurers

-Jim Thomas
Puget Sound Chapter

Mail