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    TO: Interested Onliners                                                                                                       FROM: Jim Bramer, Ret CPA-Auditor 
                                                                                                                                                       FILE: 0189-01/all   

    RE: The SWEEP and BREC System                                                                                Originated:  June 2009                         

                                                                 - - - - - An existing Bank Automatic “SWEEP” system - - - - -      

            At some Banks you can make arrangements for an automatic “SWEEP” system whereby when the “Checking” account balance reaches something like $10,000 the Bank automatically moves the excess amount into the “Savings”  account.  Of course, this process goes back and forth between the “Checking” and the “Savings”  account depending on the current balance. 

            Obviously, the intent of the automatic “SWEEP” process is for the Ministry to earn more “Interest Income”  --  but this automatic process needs to be measured against what the Bank charges for this service.   If your "Checking" and "Savings" account balance is temporarily overdraft (you goofed and should not have released a check), then you can temporarily borrow using your "Line of Credit - LOC"  loan resource.

            But see below how you can potentially earn even more “Interest Income.”

                                                        - - - - - The Manual weekly Bank Reconciliation  "SWEEP"  System - - - - -

            We reference this as the “BREC-SWEEP” system as you combine your Bank Reconciliation (BREC) effort and the “SWEEP” process.    Of course,  the objective is to earn even more “Interest Income” on the liquid “daily balance” than what the above automated  “SWEEP” process might provide.    Plus, of course, there is little Bank Charges.  Please note below my view of the following  "Typesof accounts at a financial institution  (preferable a Credit Union, like  ECCU )  as you are able to use the Internet to go Online and instantly move money from one account to account.

>> Type #1 ---- You have a Checking Account where your checks and the like are honored; you keep a minimum balance in this account since it bears little, if any, Interest Income.

>> Type #2 ---- You have a Savings Account that bears daily interest Income (the amount of interest Income is computed based on the daily account balance, etc.) that can be readily updated daily as you go Online and easily move money in and out.  You preferably make all of your deposits to this Type #2 account and you regularly move money needed to cover the activity in Type #1.   Obviously you appropriately fund Type #3 accounts below from amounts available from this Type #2 account.

>> Type #3 ---- There are often more than one of these type of accounts whereby you have static liquid Investments (they go by a variety of names) that start and mature at a specific date in time; they usually bear a higher rate of interest that what the Type #2 has to offer.   You often pay a penalty if you have to cash them before their maturity date.  Please be sure you understand the desirability of making investments of this Type #3 monies into what I call appropriate REPLICATING  entities -- please GO HERE for information about an example..

>> Type #4 ---- This is a Line of Credit loan arrangement to temporarily facilitate any poor timing or overdraft of your Type #1 or Type #2  accounts.

        A vital part of this  “BREC-SWEEP process involves you regularly projecting the timing of the "Cash Outflow"  so that you do "not"  inadvertently tie up sums of money or use your Type #4  account that will be needed for larger outflow purposes.
        The weekly
“BREC-SWEEPprocess involves only the  Type #1 and #2   accounts as defined above.

        You manually make the transfer when the amount in is something like $1,000 per your weekly Bank Reconciled  “BREC” records and not the  aforementioned  automatic $10,000 as shown by the Bank.  Or you have the minimum amount of money in the "Type #1Checking” account and the maximum amount in the  "Type #2"  “Savings” account as your earn even more daily "Interest Income." This involves steps like the following:

  1.     With the "Daily Interest Bearing Savings  - DIBS”  concept in mind, you  ideally place your deposit directly into the “Savings” bank "Type #2" account ---- but making the deposit  to the “Checking”  "Type #1" account  is OK.   I will suppose that you are using the QuickBooks (QBs) Pro software as your accounting system and, of course, you record such deposit within its “Checking”  "Type #1"  account.  

  2.     You use the QBs system to write your checks as these bank transaction entries appear in the “Checking”  account.  Ask about the ATF system that accommodates you electronically paying as many of your  checks as possible and you hand write that remaining checks, etc.

  3.     You go Online and make a hard copy of your current “Bank Statement” weekly - or you do not wait until this arrives each month, etc. This, of course, shows the running bank balance plus the latest deposit and checks (or equivalent) transactions that have cleared the Bank. 

  4.     Working from this weekly “Bank Statement” transaction information, like any such Bank reconciliation process, you identify within QBs the transactions that have cleared the Bank

  5.     All entered checks or deposits that have NOT yet cleared the bank are re-dated within QBs to the next day following the date of this online “Bank Statement.”

  6.     So that as of the Online “Bank Statement” date. your Online “Bank Statement” balance will be the exact same amount as per your QBs running Bank balance.  You have a BREC proof.

  7.     Plus you are now aware of exactly which of your entered checks or deposits into QBs that have NOT yet cleared the Bank.  You keep this “Outstanding check” information current each week (you place the check’s original date in the QB memo area) so that you can either timely replace or remove them as you follow your written finance policy on this uncleared check replacement issue.

  8.     You now obtain from your QBs system a detailed report (when you begin this  BREC-SWEEP  System I suggest that you print out this list )  showing all known "Outstanding Checks" and "Deposits in Transit" that have not yet cleared the bank.

  9.     Then you "guesstimate" from this information when these checks (along with 'checks you have yet to write -- like your outsourced payroll next week, etc.)  will hit the “Checking” account at the Bank during the upcoming week

  10.     Then you go back Online each week and  move money to or from the “Checking” or “Savings”  accounts so that,  after you post the amount of money you have just moved to/from the QBs,   the “Checking” account will then show a balance of as little as $1,000.   And the “Savings” account has as much money as possible since all of the pooled money except $1,000 is earning daily interest at the prevailing interest rate.

  11.     If you goof up and do not move enough from the "Savings"  account to the "Checking" account to cover all of the checks,  then the Bank will honor the checks and automatically transfer money from your "Savings" account (or via your "Line of Credit - LOC") and accordingly charge you a transfer fee.  Of course, you manage this “BREC-SWEEP”  process carefully so this does NOT happen.

  12.     Please access this  WebBOOK entitled:  "Investment of the Pool (POOL VEST)  and learn more about this overall topic.

             We are convinced that this “BREC-SWEEP” system can be a real blessing.  

             Please contact us by Email at JIm@bcidot.org if you have any questions.

      This publication originated in June 2009 and was  UPTD: March 16, 2013 -- Contact:  Jim@bcidot.org