In every Chama, money is always involved. Money which belongs to the Chama as a whole not to the members concerned. The person who looks after the financial affairs of the Chama, the Treasurer, wants to do what is in the best interest of the present and future Chama members.
Choose the right bank
For your Chama, a bank connection is very important. Choose yours carefully and then find out all the ways it can be helpful to you. You will find the Manager and staff anxious to help and give you useful advice at all times. Why A Bank? The Chama is just like a business. It needs a system to keep its money safely, earn interest on the amount not needed immediately, provide a method to pay bills and provide a summary of transactions at regular intervals. The bank will do all of this for you. That is what it is there for; to act as a go-between in financial matters of all kinds. Banks that are friendly to Chamas includ Bank of Africa, Co-operative Bank, KCB, Jamii Bora, etc.
In looking after the financial affairs of your Chama you do not want to be responsible for a big bundle of cash and you do not want to pay the bills with cash either cheques are much more business like.
Usually your Chama will need two types of accounts:
Current Account. This account is for the day-to-day business of the Chama, to deposit money as it comes in and to write cheques as bills need to be paid. Your Chama name is often printed on the cheques, along with the account number. Once a month, or so, the bank will send you a printed statement showing deposits; the money put in and withdrawals; the money taken out during the previous month. These are called transactions. These include charges on ATM withdrawals, over-the counter withdrawals, etc On Current Accounts interest is not paid and fees are charged for services. It is a good idea to shop around to see what the service charges are and who will give you the best deal.
Savings Account. This account is for the money the Chama does not need right away. You cannot write cheques on it, but you can withdraw any part at any time, or transfer any amount to the Current Account. And because the bank is in effect “borrowing” your money, it will pay you a rate of interest.
In most cases there are no service charges to operate a Savings Account.
How To Open An Account
After you have selected the bank you are going to do business with, go to their customer service counter to open your account. A representative of the bank will take it from there. The bank is there to serve you, so do not be hesitant to ask questions.
Signing Chama officials
Most Chamas require that cheques and other withdrawals be signed by two officers of the Chama, one of whom is usually the Treasurer. Depending on your Chama they may decide to appoint additional Signing Officers, any two of whose signatures will then validate a cheque or withdrawal.
The bank will usually require a list of the office bearers in the Chama; President, Vice-President, etc. with an indication of who has signing authority. Each person with signing authority will be required to fill out a Signature Card, so they can be checked against the signatures on cheques the Chama issues. Remember that when the office bearers change in the Chama, the bank should be advised and new Signature Cards will have to be signed.
Money for a Chama is received as either cash or as cheques. Cash Receipts should be issued for all cash received. A Cash Receipt should include the date, who the money is from, what the money is for and the amount. The sum of the Cash Receipts and cheques should be equal to the bank deposit. Cash that is received should be deposited as soon as possible. Some banks will provide a special lockable bag that can be deposited at night or on the weekends. When cheques are received make sure they are made out properly to the Chama. If a cheque is made out to an individual, make sure they sign the cheque, then write on the back of the cheque “For Deposit Only to the Credit of (Name of Chama)”.
All expenses should be paid by cheque, never by cash. A cheque is your written instruction to pay some of your money to the person or company named. Bills for a Chama can be presented to the Treasurer as: an invoice or cash register receipt that has already been paid; and an unpaid invoice where the Treasurer pays the company directly. The Treasurer should never pay an expense unless there is a receipt or invoice. Receipts or invoices for an expense should include; date, name of individual or company being paid, amount, cheque number, and an indication of what the expense is (example: Chama lunch, meeting hall fees, etc.) When receiving an unpaid invoice the Treasurer should pay the bill within two weeks.
A Safe Place
The records of the Chama should be kept in neatly in a safe place. The Treasurer should keep a separate file folder for: statements and canceled cheques, invoices and receipts, deposit slips and cash receipts and financial reports. A separate set of files should be kept for each year. Generally a Chama’s records should be kept for no less than seven years. The records should be kept in a place where they will not be damaged. If possible the records should be kept in a safe or a safety deposit box at the bank where you have your accounts.
Looking after your Chama’s financial affairs is mostly a matter of common sense and remembering to write down the details of each transaction at the time it occurs so that your don’t have to try to catch up later. Your bank will help you get started and the people there will always be glad to give you advice.
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