The way we handle and manage money has changed significantly with the information age. Cash will always be with us, and checks are still in use, but electronic funds transfer is becoming the way we move money around.
Should a smallish enterprise like a Scouting unit take advantage of these innovations? Let’s look at some situations, and see if they make sense for you.
Face it, almost everything we buy these days is paid for with a credit card. From big-ticket items like appliances and vacations all the way down to feeding parking meters and picking up lunch at the drive-through, we are using plastic to pay for more and more of our purchases. It’s fast, easy and convenient, with no need to carry checks or cash.
Your unit parents may find it more convenient to pay their registration fees and outing costs with a credit card. You may even get more prompt payments that way – the excuse of “I left my checkbook at home” would no longer apply. And it gives them the ability to manage larger purchases (summer camp and high adventure are two that come to mind) or make more timely payments. Even Trail’s End Popcorn allows Scouts to accept credit card payments from customers.
For example, I was assisting a pack with its Join Scouting Night last week. The pack accepted twenty application forms from new youth members but only eight parents paid the pack for their son’s registration fees and pack dues on the spot. The most common reason I heard? “I don t have my checkbook.” And I heard several ask if the pack accepted credit or debit cards. I imagine most of those fourteen families would have paid with a credit card if that option was available to them.
There are many new services available to small enterprises that make accepting credit cards much easier than in the past, when it was necessary to establish a merchant account with an issuing bank and purchase one of those mechanical card imprinters (now I’m dating myself!). Mainstream e-commerce companies like Amazon and PayPal, and newer enterprises like Square, have merchant systems that make accepting credit cards as easy as swiping the card using a tiny reader that plugs into a smartphone or tablet and tapping a few boxes on the screen, and the money automatically appears in your linked checking account the next day.
As with everything worthwhile, though, these conveniences come with a cost. While a conventional merchant account charges as much as six percent out of the credit card proceeds, the newer e-services are much cheaper. Square, for instance, charges 2.75 percent, but includes conveniences such as e-mailed receipts and analytics for tracking transactions. Intuit has a similar system that allows you to synchronize your credit card activity with their financial software, which could be a real convenience if you use programs like Quickbooks. Your unit will need to see if the benefits justify the cost and how to work the cost of accepting cards into your budget (it is an expense, after all).
Most packs and troops could easily afford the small one-time cost of the card reader to make accepting payments a much more convenient experience for the unit membership.
Paying with plastic
Accepting credit cards may be a no-brainer for some, but what about paying your unit’s expenses with a credit card?
As we observed, everyone’s taking credit cards, and that most certainly includes your council office and Scout shop. You will most likely send a substantial amount of money to your council for charter fees and membership, insignia and awards purchases, campsite fees and summer camp payments. Rather than writing a check for each purchase, why not just put it on the card?
Credit cards are very convenient – almost every large business has corporate credit cards for its key people – but can also come with liabilities. Since there is normally no way to approve expenses as they occur, it may be difficult to maintain accountability. If someone uses his or her credit card to rack up a large balance, you may not know about it for a month or more until the bill comes. For that reason, Scouting units should be wary when it comes to having a credit card account.
However, because of the convenience it offers, you may decide that it’s worth the extra trouble to pay with plastic. Make sure you maintain some good practices when it comes to credit cards:
- Check with your financial institution and see if they can offer you a business credit card as part of your banking package, with the ability to issue additional personalized cards.
- When shopping for a credit card, be sure to choose one with no annual fee if at all possible. As with checking accounts, a local bank or credit union is more likely to offer this concession to a small non-profit than would a large institution.
- Only those with spending authority should be issued a card. It should bear both the person’s name and the unit’s name, to make it more clear that the card is to be used for organization expenses only.
- A reasonable spending limit should be set per user. If the advancement coordinator needs to spend about $100 per month, set that card’s limit at something just above that, like $150.
- Any use of the credit card should be pre-approved. Resist the temptation to wander into the Scout shop and load up on stuff you think the troop could use.
- Employ the credit card issuer’s e-mail alerts. Many will send an e-mail when a card is used (or used for an expenditure over a set amount), when the credit or spending limit is exceeded, and when a payment is received.
- As with other bank account details, proper internal controls should be employed. The treasurer, committee chair and Scoutmaster should receive the alert e-mails, and the credit card statement should be mailed to the committee chair before being given to the treasurer.
- And it should go without saying (but I’ll say it anyway) that the bill should be paid in full by the due date each month, to avoid paying what could be costly interest charges.
By observing that A Scout is Trustworthy, and with some carefully defined procedures, a unit can safely enjoy the convenience of making credit card payments.
Alternative banking providers
More and more people are abandoning their local financial providers and going with online or Internet banks. These are actual institutions that do all their business on the Web, in the same way as Amazon.com has no stores but sells millions of dollars in merchandise online. For many individuals, this kind of banking presence is an acceptable alternative. (When was the last time you dealt with a teller in person?)
An online bank may be a good alternative to a brick-and-mortar institution, but if you choose to go that route, there are several important attributes you should look for:
- Choose only a US-based institution, with US-based customer service, insured by the FDIC or NCUA.
- Make sure the bank offers both checking and savings accounts. Compare fees with local banks and credit unions.
- The online account must have a high security level, preferably employing two-factor authentication, and provide e-mail or text notification capabilities.
- Look for 24/7 telephone support, along with live online chat and e-mail customer service.
- Mailed statements are nice, but if only online statements are available, use the same “two pairs of eyes” as with conventional banks – statements should be reviewed by at least one person besides the treasurer.
- You’ll still need to deposit paper checks and most likely deposit and withdraw cash, so look for one with convenient free ATM access. Many online banks also reimburse you for fees charged by the ATM owners.
- Compare the funds availability policy to those of local institutions.
If you do decide to look into online banking, consider these factors as part of your decision.
I won’t even go there. My son has dabbled in Bitcoin, and has both lost and made money as the virtual currency fluctuates. While many businesses, primarily technology companies like Dell, NewEgg and Tiger Direct, accept Bitcoin, it is our fiduciary responsibility to safeguard the funds of our units. It’s not likely that your Scout shop, grocery store or camp ranger will accept Bitcoin any time soon. And for families who ask to pay that way, just tell them you only deal in dollars and cents.
Is it time that your unit moves into the 21st century with your financial processes? It’s worth a serious look – but carefully consider all the factors before you do.
Note: Mention of specific services in this article do not constitute an endorsement by the writer or this website. They are named for illustrative purposes only.