Third Month of the Journey  - - - - -- - -   Folder 03                                                                             

                                                                          T O P I C S   C O V E R E D
 

>>   The POOL-VEST SYSTEM
>> 
 CHECKING   ACCOUNT  
>> 
 DIBS - DAILY INTEREST BEARING SAVINGS ACCOUNT    
>>  
TIBS - TERM INTEREST BEARING SAVINGS ACCOUNT -  
>> 
 REPLICATING INVESTMENT GROUPS -
>>
   SWEEP  SYSTEMS
>>
   MANUAL  BREC - SWEEP  PROCESS  


                                                                                     The POOL-VEST SYSTEM

From Brad

            I want to interact with you,  Bex,  on the general topic of what I call  �POOL-VEST�  matters and how it should apply to  "D & D".   Of course, you will want to share with other Ministry Finance Team members and conclude how it best might apply to you.

From Bex

     OK,  Brad, but I will have to join other Onliners that you interact with who sometimes say:  �What in the world are you talking about now ---- what does POOL-VEST mean?�

From Brad

            Well, again, Bex, we use an abbreviated expression to hopefully get across some Ministry Finance principles and actions that I believe need to be addressed

            When Go Here you will find that POOL-VEST  has to do with a Christian Entity (either a Ministry or a Family unit) using the appropriate Online methods of pooling their money on deposit (sometimes called �liquid funds�) so that it is prudently invested in Savings Accounts and earns as much �Interest Income� as possible. 

From Bex

     Yes, I remember that our Finance Policies should include a statement that says something like the following:

          The Ministry's written Finance Policies  make it clear that they do not  allow separate Checking/Savings Bank Accounts for any part of the Ministry or Fund Group. Too often Ministries leave unproductive deposits in certain Bank Accounts (especially those checking accounts who bear low interest rates - if any at all) because it was married up to a certain Ministry or Fund Group, A righteous objective is to "manage your Money" and obtain the maximum yield from all Bank deposits. This is very difficult when you have multiple Checking and/or Savings bank accounts.  
            Therefore it is our policy to �pool� all monies and NOT have separate bank accounts  We have a single
General Purpose Fund (GPFund) and a variety of Special Purpose Funds (SPFunds) who are not allowed to have their own checking accounts.  Such  �pooling� contributes to our overall "Unified accounting and reporting system.� The amount of money available for these various Ministry endeavors should (as set forth HERE) have a �why� and not �where� accounting thrust or emphasis. All interest earned from this process will go into the GPFund.  


        From Brad

       Thank you, Bex, for picking up on all of this as it is the foundation on which I build this POOL-VEST  topic.  These features of Money Management is essential to good fiscal stewardship.

         Let me begin by sharing below some finance information of a hypothetical Ministry at a point in time (Photo):

       >>     The total pooled amount of available Bank balances is $50,000;  see
                 POOL-VEST
issues discussed below.
       >>      Non-Cash assets amount to $5,000
       >>     There is $7,000 owed to outsiders (liabilities) which leaves
       >>      An Equity, or net investment, of $48,000 as divided up between
       >>     The GPFund of $8,000 and
       >>     Ten SPFunds that total $40,000

            Further, the balances of these SPFunds indicate that:

       >>    There is $25,000 for ongoing activities or events , with the
       >>     Remaining $15,000 held in reserve or for some unknown emergency.  Please
              note the TIBS investment matters below.

            From Bex

        Of course, this is significantly different than what "D & D's" (Photo) may look like, but I believe I can follow you from these examples.

From Brad

            OK, what I want to talk about now is the composition of the above $50,000 on hand.    Again,  any Christian Entity does NOT want a number of different Checking Accounts.   As necessary, discuss with me the possible use of an Imprest Checking Account mentioned HERE.

            As described below, let me introduce you to the following types of Bank Accounts:

CHECKING   ACCOUNT  

   Features of a CHECKING ACCOUNT:
 

    >>    It, of course, honors or cashes checks written by the Ministry, or it is used to pay bills
           in the most efficient manner possible.
   >>    The Ministry, of course, will want to make maximum use of Online Payments and other
           electronic transfer facilities. 
     >>   It will be usually be subject to Bank processing charges.  
    >>    The only deposits to this Bank Account comes from the DIBS account below as needed
           to cover just the checks honored by the Bank. 
    >>     A certain amount, or float, could remain in this CHECKING ACCOUNT to cover any
          payments that might happen in between the periodic deposit transfers from the DIBS
          account  to the CHECKING   ACCOUNT as described below
 

DIBS - DAILY INTEREST BEARING SAVINGS ACCOUNT  

   Features of a DIBS ACCOUNT:
 

    >>     It permits the Ministry to earn interest at the highest possible rate on the daily account
           balance - not on balance averages or any other type of determination, etc.  
    >>     ESSENCE:   you get all of your available money to the DIBS accounts ASAP. 
    >>     Or  the Ministry DOES NOT make its operating deposits to the CHECKING ACCOUNT. 

    >>     And then you leave money within the DIBS account as long as possible.
   >>      You use the Online Banking features of the Internet to electronically move money from
            your DIBS account to your CHECKING ACCOUNT only as needed to cover checks that
            will be honored, etc.  

 

TIBS - TERM INTEREST BEARING SAVINGS ACCOUNT  

   Features of a TIBS ACCOUNT

 

    >>     The Ministry believes that a portion of their money will not be used for quite a while.  
           
An example is the $15,000 mentioned above that is held in reserve or for some unknown
            emergency.

    >>     So it invests such �term� money for a minimum of three months.
    >>     In doing so the Ministry gets a significant higher rate of Interest Income.
    >>     Of course, you also use the  Online Banking features of the Internet to electronically
            move money around for this purpose.

 



                                                              REPLICATING INVESTMENT GROUPS


        I personally am very impressed with what I call "Replicating  Investment Groups" whereby you invest money with them at higher rates and they turn around and loan it to other Christian Ministries.  Please Go Here  and  Here  for some more info on this topic.  Please also Go Here  for information about such an entity known as the Ministry Partners Investment Company, LLC.
 


 

   REMINDER ...... the overall objective of the POOL-VEST  system is to leave the maximum amount possible in the highest yielding Bank Savings accounts for the longest period of time.

 

From Bex

        This makes a lot of "Good Cents", Brad.  OK,  please share with me your recommendations as to the financial institutions who can accommodate such POOL-VEST   activity. 

From Brad 

        To my knowledge, most financial institutions offer such services, but a place for such actions is at your Credit Union. who can serve you remotely,  Bex.  As indicated when you Go Here, we are biased along these lines since Jim Bee at one time was the Treasurer at this �Evangelical Christian Credit Union, 'ECCU' .  

         Be sure we talk about you making deposits of checks at the Ministry without you having to take them to a Bank as described HERE.   My experience is that a local �Bank of America� bank can be the medium of moving physical deposits to   'ECCU '.

         But, within context of this overall  POOL-VEST  system, I now need to dialog with you about the following:
 


 

                                                         S W E E P    S Y S T E M S

            A SWEEP arrangement at a financial institution like ECCU involves the above CHECKING ACCOUNT  and your  DIBS  Bank Account. At the end of the business day, the financial institution honors all of your checks or charges, and automatically moves the necessary coverage amount to/from the DIBS Account so that the CHECKING ACCOUNTS  balance has a certain agreed amount (like $10,000) at the end of the Bank's business day.  If nothing was in the DIBS for such CHECKING ACCOUNTS  coverage purposes, then the SWEEP system gets what is needed from the pre-arranged Line of Credit (LOC) Bank  loan account � or the Ministry borrows money from ECCU, etc.

            The obvious "plus" for the Ministry is that it does not  have to carefully manage (or 'guess')  how long it takes to honor checks written and then manually move balances to/from the DIBS Account for CHECKING ACCOUNTS coverage, etc.   The obvious �minus� is that you have to pay for such services.

                                                              M A N U A L   B R E C - S W E E P   P R O C E S S  

        Therefore, I recommend that a Ministry includes in its POOL-INVEST endeavor the following manual way to do what I call a BREC-SWEEP process as it:
 

     >>  Combines the desirable POOL-INVEST and SWEEP effort as discussed herein.
     >>  Must  reconcile on a regular basis to insure that your records jibe with that of the Bank, etc.  
            We call this a Bank Reconciliation or BREC process.
     >>  Makes full use of the Online resources that enable the Ministry to in essence have access at
            any time to its Online Bank Statement
     >>  You go Online and move money from/to your Bank accounts mentioned in the
            POOL-VEST section above.

 

From Bex

        I think I get the general idea, Brad.  But please set forth within this EXCH  the steps that I would take to accomplish this manual effort. 

From Brad 

     This is very doable at  "D & D"  Bex, because your Church already deals with ECCU as its Bank and it uses the QuickBooks Pro (QBs)  software.  If a Ministry is not using these resources, then it would need to make sure that their financial institution and/or their accounting software is compatible.

      I will need to walk you through most of this in person, but it involves such steps as the following. 

Set up Process: 

 

   <<     At ECCU and within your QBs you set up the above three Bank Accounts: 
        
1> Checking Account; 2> DIBS Account and the  3>  TIBS account

   <<     You begin with the hypothetical PHOTO information that I mentioned above; 
           i.e., the total pool is $50,000 and $15,000 is in an Emergency Fund.

   <<     You already have the $50,000 in the Checking Account at ECCU, and you should
          now have the above mentioned DIBS and TIBS accounts within ECCU and QBs.

   <<     You go Online and move from your �Checking Account� the amount of $34,000 to
          the DIBS account and $15,000 to the TIBS account.  This leaves $1,000 in the
          Checking Account. 

Activity during Monday of a week:


    <<    The counters do their weekly job on Monday and continue to go to the local �Bank of
             America
� branch and make a deposit of lets say $5,000.

    <<   But they deposit it to your "DIBS" account at ECCU and NOT to the "Checking Account"
            at ECCU as they have done in the past.  

    <<   Since you utilize the ATF (After the Fact) features of the eFinFax system
    <<   You go Online and verify that the DIBS account at ECCU now has $39,000 ($34,000
             plus the weekly deposit of $5,000)
    <<   And you also note that you need to place into the QB system some ATF transaction
            data showing up within the Online Bank Statement

    <<  So you take the following steps: a)   You make a hard copy of the Online Bank Statement
          and you go to the supporting documents (e.g., duplicate copy of checks that have the
          attached check request and/or invoices, etc.) and
b) attach them to this hard copy print
          out.
c)  then working from this information you post it into QBs from said ATF deposit and
          checks info.  Of course, you distribute transactions to the appropriate QBs accounts.
    <<   The checks above totaled $600 and of course reduced the aforementioned $1,000 in
             the Checking Account to $400.  
    <<   So you need to go back Online and move $600 from the DIBS Account to the Checking
            Account so that you again have the float amount of $1,000.

 

Activity during the remainder of a week:

 

    <<  Daily you go Online and discover what Online payments have taken place.
    <<  Periodically during the week you manually write checks as much as possible and release
           them in light of the $1,000 threshold balance in the Checking Account.  Be sure and discuss
           with me the process if you find it desirable to use QBs to write checks, etc.
    <<   You make a hard copy of the Online Bank Statement and attached supporting documents thereto.
    <<    If you goof up and do not go Online and move enough from the DIBS account to the Checking
           Account then --

    <<  ECCU uses your Line of Credit (LOC) to insure that checks are honored, etc.  Of course, there
           are Bank Fees involved, so you do your best to not let this happen.

 

More Activity during the remainder of the week:

 

   <<   Each week on Thursday you go Online and pay off plastic or Credit Card Balances
   << 
Of course,  there is no need to do this if you use the preferable Debit Card plastic process since
          it functions via plastic as if you were writing a check.
   <<  You also make a hard copy of the Online Credit Card Statement and attach supporting documents
          thereto  
   <<  You use information from this source to distribute to the appropriate QB operating accounts.

 

  COMMENT:  Via the eFinFax and the integrated  ATF system you make sure each week that the balances shown by the Online Bank Statements and the said balances within the QBs system are the same.  In essence, you do this in lieu of the usual Bank Reconciliation process each week.
 


From Bex
 

        Thanx, Brad.  I look forward to pursuing these �POOL-VEST�   and   MANUAL   BREC - SWEEP    matters with you.


        B I B L E    A D M O N I T I O N:

You say : "I can't go on" -----   The Lord says:  "My grace is sufficient�       (II Corinthians 12:9)
 
 



                    List of  "Christian Ministry Finance" TRUISMS (Principles)

 
                     GLOSSARY  of "Christian Ministry Finance" Terms
 

 
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ORIGINATED  February 2010                                                                                                 UPTDMarch 09, 2012
Month 03 Matters following 06-08-10