Cash Flow Practices

[Chad Stearns]

Hey guys,

I want to talk about the physical cash flow practices of the lab. Now that Marita and I are co-treasurers we have had some opportunities to look at how physical cash is held in the space and how revenue is recorded. We are a little worried about how things have been done and would like to formalize some procedures for cash flow in the space. But rather than just coming up with a practice, I figure we could talk about it and throw ideas around.

Historically this is how things have been done: Money is donated into the donation and drink jar. When enough of it builds up it goes to our money dropbox (Austin recently donated a real safe/dropbox. Big thanks to him for that!). We also collect checks from people paying their memberships, or donations, or really any physical financially relevant material. After some point the money is taken to the bank. At some point along this operation the money is recorded. At the same time using square we can electronically charge credit cards.

The real concerns, I believe, that have existed is with the record keeping of this money. At certain points in time I have checked the money box and just found cash with no label or note explaining where it came from. Thats bad. It could have been logged electronically on square, BUT, it might not have. When things are getting logged physically and electronically arbitrarily its hard to identify what is properly logged and what isnt. Or it might have been logged in square and then left with a label, in which case it might get double counted when deposited in the bank. Who knows. I am not saying I think problems have arisen because of this. But its vague, and since its money it really shouldnt be.

So, now I want to open up to you guys, is this a problem? What should we do?

Here is what I want to do, and feel free to critique it:

1. Get some envelopes and notes set up by the safe/dropbox so that if anyone has a need to drop money. That way when money is dropped in it has to be physically labelled with who is dropping it in, why its being dropped it, when it was dropped in etc.

2. Standardize the point in time in which money is recorded. Do we record it when its collected? When its deposited in the drop box? When its deposited in the bank? When? If the moment isnt standardized then the possibility of missing/double counted money arises. 

-ChadCS

[Ben Humpherys]

First off, why has cash been accounted through square? It seems to me that cash and credit cards/paypal etc. should be kept seperate, and only combined when logging those transactions into our actual accounting software.

Envelopes with little forms is a simple and elegant solution. Periodically cash from like the soda tip jar or other such jars can be added via envelope, along with specific donations. This should only be for cash, however. Electronic payments should be tracked through their respective systems. Then record the money when it is removed from the box and taken to the bank.

[Jerry Davis]

Agree with 1.
2. Count only when depositing

Jerry

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[Chad Stearns]

I only recently got square, so I am not sure exactly its full capacity. I have access to the square logs however and I can see what has been logged when. To my understanding, square, through the square reader can take credit card payments. But, you can also record the receipt of physical cash in the same system. I think the only people with access to square have been board members.

What I dont know (yet) is how exactly square, our bank, and our quickbooks accounts all communicate. I think square deposits into the bank every night.

-ChadCS

[Chad Stearns]

Depositing into the bank? Or the dropbox?

-ChadCS

[Ben Humpherys]

Record the cash when it is removed from the box, which will probably always be when it goes to the bank.

From what I know, quickbooks can import bank transactions from most banks directly. Most financial software can. It does look like square can be used as well to track cash. Actually, it looks to me like you could use just square, logging the cash deposits into square before depositing in the bank. That would make for one less piece of software to be concerned about. I would try to keep track of everything in one system if possible.

[Will Bradley]

Yeah, square is basically a rudimentary POS system, it's been our primary method of logging cash and credit cards. I'm not sure how/why the sticky note situation got started, probably people who can't / don't want to / didn't realize we were using Square for logging cash. The current system should be, log it in Square before putting it upstairs.

I'd kinda like an iPod Touch or smartphone with Square installed and left upstairs with a sign saying LOG YOUR SHIT IN SQUARE BEFORE PUTTING IN BOX, but I understand the desire to use paper. It just makes me cringe, as a technologist :) it also puts further accounting work on to our treasurers instead of each member, which I'd like to reduce as much as possible.

On Tue, Oct 30, 2012 at 10:54 PM, Ben Humpherys <moog...@gmail.com> wrote:

Record the cash when it is removed from the box, which will probably always be when it goes to the bank.

From what I know, quickbooks can import bank transactions from most banks directly. Most financial software can. It does look like square can be used as well to track cash. Actually, it looks to me like you could use just square, logging the cash deposits into square before depositing in the bank. That would make for one less piece of software to be concerned about. I would try to keep track of everything in one system if possible.

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[Nate Plamondon]

That would be great. There have been a few times that i was unable or uncomfortable dealing with hsl money because i didn't have square access. If we had a device available for that, it would be helpful.

Don't we have a couple phones/tablets lying around?

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Nate Plamondon
Sent from a tiny on-screen keyboard

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[Ben Humpherys]

A spare tablet or phone dedicated to accepting payments and donations for the lab would be perfect. I'm sure there is a way to control permissions. Then anybody could simply pick that up and would be able to make deposits into the cash box and accept credit card donations spur of the moment. Cash should still be put in envelopes, but maybe then you would just have to write the transaction # or something similar on the envelopes, so it can be recounted if necessary but won't have to be painstakingly logged into the accounting software.

[Chad Stearns]

I started physically writing down deposits when I was making them over the summer. I would report them to jose. Might have been some paper vs electronic confusion there. Likewise Nate Caine leaves paper notes and doesnt have access to square. Any random person with random cash might be inclined to leave paper. Like, I know Austin Kipp has to often has to withdraw cash and then donate his change to make purchases.

-ChadCS

On Tuesday, October 30, 2012 11:06:35 PM UTC-7, Will Bradley wrote:

[Ben Humpherys]

I wonder if there isn't a way to get debit cards? Like, a debit card for Austin that would be charged with the balance of the building budget, so he wouldn't have to withdraw cash and redeposit change, he could just use the card. I don't know how or where you might go about logging what each transaction was for, but it would save a few steps in trying to keep track of such expenditures.

[Chad Stearns]

Also, a permanent tablet sounds like a neat idea. I am trying to think of a point of failure, but I am not getting any ideas. Should work so long as people log with each item put into the drop box.

One advantage I see with record keeping donate at the dropbox, is that its more transparent.

-ChadCS

On Tuesday, October 30, 2012 11:06:35 PM UTC-7, Will Bradley wrote:

[Chad Stearns]

He has a credit card. I forgot what problem he runs into that requires him to use cash.

-ChadCS

[Will Bradley]

Seems like a poor practice to have anyone take cash from the dropbox unless it's going to the bank. If Austin needs cash, let's get him cash, but not in a way that makes cash deposits harder to reconcile.

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[Chad Stearns]

Oh no, I mean something else...

Austin uses his card to get cash back. But, cash back doesnt say what it was used for, and can only be done in certain increments. So, like last time he needed to spend like $57 bucks, and the cash back system can only give him $60. So he gets $60, with a receipt, spends $57 on something for the lab. And then brings the $3 back to the lab.

...which I guess might not cause a record keeping problem, but the money does get recycled.

-ChadCS

[Will Bradley]

Oh cool that seems fine.

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[Ben Humpherys]

If a small cash reserve is necessary, keep it separated from the normal cash box. A second box or safe that can be counted and managed independently. Then if it needs more money, refill it after all the cash in the "income" cash box is accounted for, but before it gets deposited. That should keep things tidy, shouldn't it?

[Nate Caine]

 

It's a side note, but related to this topic.

 

I think we need to get those people who pay their monthly dues via check, onto the AutoPay system thru the bank.

 

Occassionally, some random dues check if found lying around.

 

Worse still, some people use on online bill paying system which results in a check being printed and mailed to HeatSync.

 

On more than one occassion I've found these mailed checks lying on the floor near the front door as the letter carrier slipped them thru the door when no one was around.

 

Some of these even had footprints on them where people had walked over them.

 

Bad practice.

 

So, I'd say to re-examine our practice for receiving these regularly scheduled checks into something more electronic.

 

 

[Will Bradley]

Bank bill pay is via paper check. We could look into a recurring e-check solution like apartments use, but my to-do list is long. Would someone like to research service providers for recurring e-check or credit card payments? I know there are some coworking management systems out there, not to mention all the generic payment processors in the world.

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[Ryan Rix]

Striiiiiiiipe.

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Ryan Rix -- http://rix.si

[Ben Humpherys]

We already HAVE a solution for recurring payments: PayPal. Not only that, but its already setup on our site by the looks of it. We should remove the option to pay via check or cash, or at least blatantly encourage doing it through paypal instead. Then tracking membership payments would be totally automated.

Actually, doing everything through PayPal would make a lot of sense. It just doesn't appear to have a way to track cash payments as well, like Square does. On the upside, paypal can cash checks by scanning them via phone. We could still put a phone/tablet by the cash box, because PayPal also lets you manage multiple users. On top of all of that, Paypal has a discount for nonprofits, of 2.2%+$.30 per transaction for online transaction, 2.7% for swiped credit cards, 3.5%+$.15 for manually entered cards and scanned check transactions. By comparison, square charges 2.75% for all credit card transactions and the same 3.5%+$.15 for manually typed ones. So paypal would also be ever so slightly cheaper. 

The only things paypal doesn't do that square does is allow for tracking of cash, and wireless payments via phone. Keep in mind, PayPal DOES do recurring payments, and Square does not. So lets just consolidate all our online stuff into PayPal. One less system to manage.

[Ryan Rix]

Works great except for those of us that don't have paypal.

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[Ben Humpherys]

If a lot of people have that issue, we could solve it for $20/mo: https://merchant.paypal.com/us/cgi-bin/?cmd=_render-content&content_ID=merchant/erp_overview

It's not that hard to setup a paypal account anyway though. Why not just get PayPal?

[Ryan Rix]

http://www.paypalwarning.com/

(disclose: i have a paypal account but know that others in our group don't because they're scummy and gross. I plan to kill mine as soon as I can figure out how to renew my slovenian domain without it)

On Wed, Oct 31, 2012 at 2:23 PM, Ben Humpherys <moog...@gmail.com> wrote:

If a lot of people have that issue, we could solve it for $20/mo: https://merchant.paypal.com/us/cgi-bin/?cmd=_render-content&content_ID=merchant/erp_overview

It's not that hard to setup a paypal account anyway though. Why not just get PayPal?

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[Corey Renner]

For anyone that pays with Paypal, yet finds it slimy & gross: remember that if you make payment under "personal" and mark it as "gift" Paypal does not take a cut of the transaction.  It lets you use their money tubes for free and HSL winds up ~2% ahead.

cheers,

c

[Nate Plamondon]

It's also not true, therefore slimy and gross (with possible potential
blowback, if discovered). I'd rather not be slimy and gross on a slimy
and gross system.
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Nate Plamondon

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[Corey Renner]

Well, if they're going to call themselves "The safest way to pay on the internet" which is absolutely false, then I feel pretty good about my comparatively minor falsehood.

cheers,

c

[Ryan Rix]

The problem is that they can hold your money hostage for your falsehood; you cant do that with theirs.

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[Ben Humpherys]

I am sceptical of that particular paypal-bashing site, since they redirect you to another "better" payment processor without any analysis of competitors to paypal. Sounds like they are run by that competitor to me.

But if PayPal is really as evil as stated, here are a few alternatives I dug up:

Stripe: flat 2.9$+$.30 fee per transaction. Money is deposited into your account weekly. It's primarily a web API to their companies payment system, aimed at web developers who want to integrate the payments into the rest of their site. 

I know this will be VERY tempting to all the web-developers among us, but keep in mind that this is primarily an API for developing your own application. Do we REALLY want to go to the time and effort of designing, building, debugging, and managing a system for our own payments? 

ccbill: They appear to offer a complete package for things like order management, and have a flat fee. What that fee is, the site does not say. The site appears to be aimed more at bigger companies with larger needs. They direct you to a salesman for most questions. ccbill.com

BluePay: Their site promises very flexible rates depending upon needs. Being a nonprofit with somewhat simple needs, we could probably get a good rate. Offers things like virtual or actual POS terminals, mobile payment processing, and pretty much anything else you want. Also direct you to a salesman at every opportunity. bluepay.com

BlueFin: They seem to be aimed at people creating software that would include payment processing. But they also seem to have all the normal bells and whistles for payment processing, like providing a payment gateway for processing transactions, managing recurring billing, a virtual terminal, etc. bluefin.com

NPC: This looks promising to me. They provide all the usual features, but also include a QuickBooks plugin. npc.net

Amazon Flexible Payments Service: Pretty much PayPal, but is web-only.

Google Checkout: Also web-only.

Dwolla: Cuts out the middle-man and makes direct deposits from bank account to bank account, instead of through the chain of credit card companies. This makes the fees MUCH smaller: $.25 per transaction for transactions over $10.

Intuit GoPayment: Integrated directly with Quickbooks, being from the same vendor and all. Provides more or less the same features as paypal and square, with mobile credit card readers and has somewhat cheaper rates than paypal does. 

In summary:

Square does everything we need, including logging cash transactions, except for recurring payments like membership fees.

Paypal does everything we need, except for logging cash transactions. Also apparently people hate it.

Dwolla would be by far the cheapest payment system because it doesn't use credit cards or checks at all. But not many people have Dwolla accounts.

ccbill, bluepay, bluefin, and npc offer pretty much every payment processing feature you could ever want. Aimed mostly at bigger businesses.

My thoughts

We should encourage people to sign up and use Dwolla wherever possible, because it saves SO MUCH ON FEES. You can setup recurring payments via Dwolla too.

We should use Square to process credit cards and cash. 

If members don't want to use Dwolla, then give them one other option for paying electronically, either Amazon FPS, PayPal, or GoPayment.

[Ryan Mcdermott]

Why don't we just switch to bitcoin only?

http://bitcoin.org

Check it out, it is the most secure, most stable, most hacker-friendly payment system in the entire world, and it's even more secure.  I hear it has over 9000 gbs.

It's also totally microphone free.

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[Will Bradley]

We currently support Dwolla and I think even Google, so it's more a question of convincing people, or finding a solution that's easier / less objectionable than signing up for Dwolla. (Not sure there is one, Dwolla is pretty easy)

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[Ben Humpherys]

Half the battle is letting people know they even have options. Neither Google or Dwolla are listed on the hsl donations/memberships page. May as well add a field saying what the donation is for while you're at it too. That would simplify donating to specific projects or causes, rather than making a payment here and sending an email there.

[Chad Stearns]

I'd rather not tell people how to pay. But it is true that some forms of payment greatly inconvenience Marita and I. For every online payment system Marita and I need another account to regularly monitor.

It could be that one form is such a hassle that as policy we shouldnt simply not accept it. But thats because its hard on heatsync. 

Right now we take money by paypal, dwolla or physical payments logged in square.

-ChadCS

[Jose Diaz]

As Chad mentioned we have accounts already set up including Paypal, Dwolla, Google Checkout, Amazon Payments and Square. We do not only use Square for cash transactions but credit card as well. Over 95% of our recurring membership is through paypal already, only one person through Dwolla and like four or five via checks. 

More specifically the issue is how to handle any cash transaction. Not only for recurring membership but for fundraisers (e.g. t-shirts, arduinos, etc), donations, soda funds, etc. We can chose not to take cash but we do have quite a bit of walk-ins that prefer cash.

Nate C: as Will mentioned the checks coming into HSL are from the members bank Auto Bill Pay system.

[Will Bradley]

Maybe Chad/Marita can ask the few people on checks/cash if they'd like to switch to some electronic method to avoid the "envelope on the floor" problem?

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[Harry Meier]

If we have all those options, then it'd be great if the options on the membership page gave more than just paypal and cash/check. Anyone have a clue how to setup subscription payments via Google Checkout or Amazon or Square?

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[JR]

For those who didn't already despise Paypal:

http://it.slashdot.org/story/12/11/02/1444250/paypal-security-holes-expose-customer-card-data-personal-details


Disclosure: I once had my paypal account frozen because of a sudden influx of cash (I was organizing a paintball game and got paid via Paypal).  So the previously linked site that listed horror stories galore is certainly believable to me, even if its motivations may be suspect.  

[Nate Plamondon]

"There's suddenly money in this account. Strange. Better keep it!
Also, tell him to smash any violins he might have."

http://articles.businessinsider.com/2012-01-04/strategy/30587786_1_paypal-counterfeit-goods-antique-violin
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Nate Plamondon

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[JR]

Scary thing is that I'm actually shopping for a violin for my daughter.  You haven't been snooping on me, have you?