Transparent and efficient financial management of your association finds its indispensable ally in accounting. Unlike for-profit businesses, whose primary objective is to generate profits, the intrinsic mission of associations and charities is to serve the general interest. Associative accounting is therefore designed to monitor and report on the use of financial resources received, enabling them to carry out their activities in the service of the community.
Find out why association bookkeeping is an essential pillar of your non-profit organization, and how to manage it effectively.
Why keep association accounts?
Firstly, this is a legal requirement for certain associations, determined by their size, their activities (profit-making or not), and their sources of funding, particularly when they receive subsidies or are considering taking out a bank loan. In some cases, this obligation also derives from the association's articles of association.
Depending on these criteria, they may be required to set up either a cash accounting system, recording income and expenditure chronologically, or a more comprehensive commitment accounting system.
Even if you are not obliged to do so under the law of July 1, 1901, keeping accounts for your association can be extremely beneficial. Not only does it enable you to compare your data from one year to the next, making it easier to plan future strategies, it also enhances your financial transparency.
Associations often depend on donations, grants and other forms of external funding to carry out their activities. Associative accounting plays a key role in ensuring the proper management of these resources, guaranteeing stakeholders (members, donors and public authorities) that funds are used ethically and in line with the organization's statutory objectives.
Another essential aspect of association accounting is the distinction between different categories of income and expenditure. Resources generally come from a variety of sources, such as membership fees, donations, government grants and fund-raising activities. Associative accounting thus makes it possible to classify these revenues, providing visibility on the origin of funding and its destination.
At the same time, expenses are also categorized to ensure transparent and responsible management of funds. Administrative costs, expenses related to your association's core activities and long-term investments are distinguished, facilitating a thorough assessment of your financial performance.
Finally, associative accounting includes the production of your annual financial reports, such as the balance sheet and income statement, providing you with an overview of your organization's financial situation at any given time. These documents are essential for your internal and external communication, reinforcing the confidence of third parties, members and donors alike.
By adopting rigorous accounting practices, you can significantly optimize the management of your association.
How do you manage your association's bookkeeping?
Effective association accounting requires a thorough understanding of the legal specifics and good accounting practices. Since 2020, this approach has been guided by the chart of accounts n°2018-06 of December 5, 2018, relating to the annual accounts of private not-for-profit legal entities.
A crucial element of your association's accounting is the application of double-entry bookkeeping. This approach involves recording your financial transactions under two distinct aspects: debit and credit. This method gives you a detailed view of the flow of funds within your organization, making it easier to keep accurate track of your expenses, income and assets. For a clear picture of your finances, it's essential to categorize your income and expenses rigorously.
This information enables you, as an association manager, to make informed decisions and adjust your financial strategy to your organization's specific needs.
Opening a business bank account specifically dedicated to your association is also an essential step in tracking your transactions in complete transparency.
The use of management tools greatly facilitates the recording of your various operations, notably through the use of expense management software, for example.