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The basis for determining the best practice for using Shelby Financials General Ledger may depend on the size of your staff and the complexity of your reporting needs.  However, there are three primary rules you should consider.  1) Establish company settings to maximize the experience.  2) When creating the structure and chart of accounts, consider the number of keystrokes needed for every entry.  3) Do not make the chart of accounts overly complex.

(NOTE:  Separation of Duties will be covered in an additional blog post.)

This post provides the following areas for your consideration

  • Establish Company Settings
  • Structuring the Chart of Accounts
  • Entering Manual Journals
  • Posting from Sub-ledger

Establish Company Settings

First, decide if you need more than one company.  I believe most churches only need 1 company.  However, if you have more than one IRS EIN, then you will need a separate company for each of those entities.  Sometimes churches that have schools operate under the same EIN but still want a separate company for the school.  That can work, but it might require running separate payrolls for the church and school.  The program will allow you to combine information across companies with the same EIN to produce FORM 1099 and FORM W-2.

You will need to set up a few fields on the Company Information page for each company.  Besides the 5 required fields on that page, there are 2 additional options you should select.  First, Send Entry to Bank Account Management.  If this is not selected, then posting any manual entry that includes a bank account, will not update Bank Account Management.  Naturally, this will make reconciling your bank statements difficult.  So, make sure this field is selected.  Second, Require the Posting Date and the Period to match on all Journals should also be selected.  If it is not selected, then some reports can produce unexpected results.

Structuring the Chart of Accounts

If you have a chart of accounts that is over 3 years old, then it is a good time for review.  Over time, programs and focus change and you probably have new reporting needs.  When programs end, there is no need to continue having a set of accounts that will not be useful.  So, whether you are just getting started, revising, or starting again, you might find the following helpful.

First, consider if you need more than one Statement of Financial Position (balance sheet.)  If you have a daycare, school, or other operation which has its own assets and/or liabilities, then you will need more than one Fund in your structure.  Also, some ministries like to keep their gifts with donor restriction completely separate from their operating activity.  A simple way of doing that is to create a separate Fund for the activity involving gifts with donor restriction.  Churches with multiple campuses can use a fund for each campus to make reporting easier to understand.  If you determine that you do not need multiple funds, then do not set up or select Funds when setting up your accounting structure.  Remember, keep it as simple for data entry as possible.  (NOTE: Large operations also might discover that they need to use the Fund Group setting where each campus has multiple funds.)

Second, decide if you need departments.  If your church staff is small, then you might not need departments.  But, if your church has several ministry leaders, then you might find departments a good way to keep track of income and expenses related to each ministry area.  Some users set up one department to track all income while others mix income and expenses in various departments.  Examples of departments include Youth, Missions, Men’s Group, Women’s Group, etc.  If you have a large operation, then you might find the Cost center group helpful.  Cost centers can also be used for organizations that have multiple campuses but need one consolidated Statement of Financial Position in place of using multiple funds.

TIP:  if you have less than 10 funds or departments, then use a single digit to keep transaction entry easy.  Likewise, if under 100 funds or departments, then only use a 2 digit numbering system.

Entering Manual Journals

Keep the number of monthly manual journals as few as possible.  Try to do as much work in the sub-ledgers as possible.  This approach will provide better reports and better audit trail.

Posting from Sub-ledger

Each sub-ledger provides a way to post activity directly to General Ledger.  If you have a small staff, this might be a handy approach.  However, if you have a large staff, the director of Accounting might want to review all postings to the Ledger.  In that case, do not use the Post Directly to General Ledger without Editing option.