Finance Policy

At Handcrafted, we are committed to maintaining high standards of financial management to ensure transparency, accountability, and the responsible use of resources. Our financial policies and procedures are designed to safeguard the organisation’s assets, ensure compliance with legal and regulatory requirements, and support effective decision-making.

This policy outlines the financial controls, responsibilities, and processes in place to manage income, expenditure, and reporting. This policy will be reviewed as required and at least annually by the group or individual responsible for review and authorised by the Trustees as below:

Group or individual responsible for review	The Finance Steering Group
Last review and approval	19/09/2023

Overview

Handcrafted needs to be capable and resilient to sustain and grow our work. Handcrafted’s trustees and senior management are committed to building long term financial sustainability as a foundation for further growth. This policy is built on the following principles:

Commitment to long-term financial sustainability through thorough financial planning, monitoring and reporting, and generating income through supported housing, training provision, grants, donations and enterprise income.
Developing financial procedures & policies that allow our organisation to run efficiently, grow sustainably, follow best practice and comply with legal requirements. Reviewing and updating these policies regularly to maintain best practice as our organisation develops.
Dedicating resources to maintain quality financial data to facilitate analysis that will meaningfully inform internal decision making and external partnership or funding decisions

Approval & Payment

Handcrafted (HC) needs processes in place for making purchases and payments to protect HC assets and to reduce risk whilst also allowing activities to be delivered smoothly and in a timely manner.

Sometimes the purchase/ordering and payment occur at the same time, but sometimes the payment happens later. There is a tendency to focus on the point of payment, but by then it is often too late because the organisation is already committed to paying. Approval processes therefore need to be in place at both stages.

The approval processes below are for expenditure that was included in the annual budget and approved by the Board. Different approval levels need to be considered if an expense was not included in the annual budget. Anything not included in the annual budget, and not covered by additional funding committed, should be approved by the Managing Director (MD) for amounts up to £500 and by the Board for anything higher.

Making purchases

Cash

Cash is used in the Durham, Gateshead and Chester-Le-Street hubs.

The Support/Administrator has overall responsibility for the cash box in their hub and only 1 other person should have access to the key.

Process

Hub staff incur petty cash expense using personal funds.
This is then refunded by Support/Admin once all relevant receipts are presented and checked.
The details (date, transaction date, description, budget line and amount) are entered onto the cashbox spreadsheet. The receipt should be signed or initialled by the member of staff receiving the cash as proof of the reimbursement.
If cash is given in advance instead, a note should be kept in the petty cash tin until the receipt and unspent balance is returned. Again, the receipt should be signed or initialled by the member of staff that received the reimbursement.
At the month end, double check the cashbox spreadsheet is up to date.
Count the cash in the tin and ensure it agrees to the balance on the spreadsheet. Add a note onto the spreadsheet saying the cash has been counted and the amount. Make sure any difference is reconciled and corrected.
Email/share the cashbox spreadsheet with the Project Dev Manager to review. In the email state the month end cash balance asking them to count the cash and confirm the amount by return of email.
Support/Admin then uses the debit card to top back up to agreed amount. Top ups may also be required mid-month. Any top up should be recorded. Maximum amount that can be withdrawn is £250 per day.

Documentation required:

Cashbox spreadsheet showing the date, description, budget line, value etc.
Cash receipt (signed or initialled as proof payment).
Month cash count and reconciliation email

Staff expenses

Staff expenses can be incurred by any staff member and claims should ideally be submitted immediately using Airtable. Several journeys may be submitted together on a mileage claim – mileage claims should be submitted before the month end where possible but can be submitted more frequently.

Staff should only use their own funds if purchases cannot be made on account or using the debit card.

Staff expenses must only be approved and paid once all the paperwork has been submitted.

Process

Once a member of staff incurs an expense using their personal funds, they should complete a ‘Staff Expense Claim Form’ using the Airtable link. This details the cost centre, budget line, description, date, amount etc. They will also need to attach the receipt.
The budget holder should then review and approve the expense by logging onto Airtable. The budget holders should check the cost centre, budget line and the attached receipt. They should then approve or decline the expense. Once approved, no further action is needed by the budget holder. If the expense if declined however, the budget holder must contact the member and staff and explain the reason.
No member of staff should be approving their own expenses.
Ops Director and MD to approve each other’s expenses.
Once approved, staff expenses will be paid weekly by BACS.

Documentation required

Staff expense claim form - completed online using Airtable.
Receipts/invoices/mileage form - attached to claim form using Airtable.

Invoices

Supplier accounts and invoicing should be used where possible rather than paying by cash or staff expenses.

Process

Items should only be purchased in line with the budget and with prior approval (via a discussion or email) from the budget holder.
Upon receipt of an invoice, it should be checked by Support/Admin, and then submitted for approval using the relevant Airtable form.
The budget holder should then review and approve the invoice by logging onto Airtable. The budget holder should check the cost centre, budget line and the attached invoice. They should then approve or decline the invoice. Once approved, no further action is needed by the budget holder. If the expense is declined however, the budget holder must contact the Support/Admin staff and explain the reason and agree on the course of action to dispute the invoice.

Project Development Managers can approve up to £2,500 for budgeted expenses. Operations Director up to £5,000 for budgeted expenses.

Managing Director up to £10,000 for budgeted expenses.

Above £10,000 needs Board approval.

Once approved it should be paid by BACS.

Documentation required

Invoice authorisation form – completed and approved using Airtable.
Invoice - attached to the Airtable form.

Debit card

The Support/Administrator and Finance Assistant has overall responsibility for their HC debit cards. Cards must only be given to people once approved by the MD. Card details must NOT be shared with anyone else.

The card should only be used with trusted companies and websites.

Process

Approval to use the debit card should be received in advance of the card being used. Therefore, in advance of making a purchase on the debit card, the card holder needs to obtain approval from the budget holder by completing the relevant form on Airtable. For the amount, always put in a higher estimate if you are unsure as this makes the process simpler and avoids having to get re-approval at a later stage.
Once a request has been made, the budget holder needs to review and approve it by logging onto Airtable. The budget holder should check the cost centre, budget line etc. They should then approve or decline the request to use the card. If the request is declined, the budget holder must contact the Support/Admin staff and explain the reason and agree on the course of action to dispute the invoice.

Project Development Manager/Operations Director can approve up to £400.

Managing Director to approve £400 - £1,000.

If approved, the card holder can make the purchase.
Once the purchase has been made, the card holder should update the relevant record (with the receipt and actual amount etc) as soon as possible and always by the end of the week.
If the actual amount is the same as or lower than the estimated amount, that is the end of the process.
If the actual amount is higher than the estimate, a warning will appear in the ‘Overspend alert’ field. At that point, the card holder needs to ask the budget holder to go onto the main view and click the tick box in the ‘Reapproval given’ column.
Debit and credit card fraud is commonplace, so it is important that Airtable is updated promptly so Finance know transactions on the bank statement are genuine.

Documentation required

Debit card approval form – completed and approved using Airtable.
Receipt - attached to Airtable.

Standing orders and direct debits

Some contracts and invoices that are in line with the budget, can be paid for by direct debit or a standing order. Approval needs to be sought before setting up a direct debit or standing order and then payments will be made automatically.

Process

Approval to set up a Direct Debit (DD) or Standing Order (SO) should be received in advance of setting it up. Finance or Support workers/Administrators need to obtain approval to set up the DD or SO by completing the relevant form on Airtable and attaching necessary supporting documents.
The budget holder should then review and approve the request by logging onto Airtable. The budget holder should check the cost centre, budget line and the supporting documentation. They should then approve or decline the request. Once approved, no further action is needed by the budget holder. If the request is declined however, the budget holder must contact the Support/Admin staff and explain the reason and agree on the course of action to dispute the invoice.

Bases on average annual amounts:

Project Development Managers can approve up to £2,500 for budgeted expenses. Operations Director up to £5,000 for budgeted expenses.

Managing Director up to £10,000 for budgeted expenses.

Above £10,000 needs Board approval.

Once the SO or DD has been set up. The supplier account number or reference number should be entered onto Airtable to allow finance to easily track payments to the bank.

Documentation required

SO & DD Approval Form – completed and approved using Airtable.
Supporting documents - attached to the Airtable form.

Payroll

Once the monthly payroll has been run, it should be passed to the MD for checking and approval. In the absence of the MD, this should be done by the Operations Director.

Making payments

Signatories per mandate: Dan, James, Lorraine, Ruth and Catherine.

Bank payments

When paying new suppliers, always call them to confirm their bank details over the phone (invoices received electronically may have been tampered with).
Always call the suppliers if you receive notification that their bank details have changed.
Always call the suppliers to confirm bank details for payments over £5,000.
BACS:
- Where possible, supplier invoices should be paid fortnightly or monthly.
- Staff expenses are paid weekly.
- Finance and Support/Administrators should set up the BACS once approval has been given on Airtable for a payment to be made.
- It is best practice to have dual authorisation. If this is set up, then Finance, the Ops Director or MD should give the final approval online.
- If cashflow needs to be monitored more carefully at any point, then the MD should review the list of proposed payments to ensure it is in line with expectations and there is sufficient cashflow. The BACS should then be set up and approved as per the bank mandate.
Cheques (if applicable):
- The cheque should then be signed per the bank mandate.
Debit Card:
- Payments are automatically taken from the bank account, so sufficient controls need to be in place before incurring the expense. See ‘Making Purchases’ section for the process to follow.

Cash payments

There are a relatively large number of low value cash payments.

See ‘Making Purchases’ section for the process to follow.

Handcrafted approval limits

Managing Director (MD)

Can approve for all departments.
Cash up to £75
Staff expenses up to £200

Invoices up to £10,000
Debit cards up to £1000

Operations Director

Can approve for hubs, core expenses and renovations.
Cash up to £75
Staff expenses up to £200
Invoices up to £5,000
Debit cards up to £400

Project Development Managers

Can approve for hubs only.
Cash up to £75
Staff expenses up to £200
Invoices up to £2,500
Debit cards up to £400

Support workers & Administrators

Can approve for hubs only.
Cash up to £75
Staff expenses – N/A
Invoices – N/A
Debit cards – N/A

Department approval and payment information

You cannot approve your own staff expenses or cash reimbursement.

Gateshead, Chester-Le-Street and Durham hubs:

Budget holder is the Project Development Manager
Expenditure to be approved by Project Development Managers (or Operations Director or MD if required). Support workers and Administrators can approve cash expenditure.

Core Operations (including Renovations):

Budget holder is the Operations Director
Expenditure to be approved by Ops Director, or MD if required.

Corporate:

Budget holder is the Managing Director
Expenditure to be approved by MD.

Procurement

Good procurement is essential for Handcrafted to deliver its strategic aims and day to day operations efficiently conserving charity funds.

The policy establishes standards and guidelines for the procurement of goods and services to ensure that they are obtained as economically and socially responsible as possible through an open and competitive process, and that contracts are managed with good administrative practices and sound business judgment.

General Principles

These standards apply to purchases of all goods and services and as a minimum:

Handcrafted will aim to purchase from suppliers who demonstrate openness, integrity and transparency in their business.
Handcrafted will aim to purchase from suppliers who are able to work with us in a relationship of mutual trust and respect, with a shared understanding and sympathy for Handcrafted’s ethos, mission and objectives.
In all dealings with suppliers, and potential suppliers, Handcrafted will preserve the highest standards of honesty, integrity, impartiality and objectivity.

All staff involved in procurement have a responsibility to conduct the procurement legally and ethically and to secure value for money.

Before procuring the goods/services, the relevant budget holder must ensure the funds required are available within their budget. Budget holders are also responsible for adhering to this policy and the approval and payment processes when placing orders or committing the organisation to any expenditure.

Budget holders are responsible for retaining all original quotations and documents and for statutory purposes, any contracts must be retained for 6 years from the expiry of the contract.

Code of conduct

Any member of staff participating in the selection who has a personal or family connection to a supplier must alert the budget holder of this potential conflict of interest, regardless of the value of purchase, and the budget holder will ensure that any decision is reviewed independently prior to a contract being signed or other commitment made.

Any members of staff participating in the selection will neither solicit nor accept gratuities, gifts, consulting fees, trips, favours or anything having a monetary value in excess of £5 from a supplier, potential supplier, or from the family or employees of a supplier, potential supplier or bidder, or from any party to a sub-agreement or ancillary contract.

Value for money

In purchasing goods and services all budget holders are responsible and accountable for achieving value for money. Budget holders are expected to ensure that purchases are cost effective, and all hubs are urged to seek continuous improvements in value for money. It is recognised that the cheapest option may not always be the most cost effective, but where a more expensive option is selected the reason for this must be recorded and the note filed with the project documents and all quotations.

When reviewing value for money, the following factors should be considered:

Price
Quality of product or service
Fit of product with need
Reputation and capacity of provider
Range of goods and services and suppliers available
Reliability
Responsiveness
Delivery times
Environmental impact

Policy

The following procedures should be observed unless a purchase is being made from an approved supplier or there are exceptional circumstances (see below).

The thresholds apply to the total order and in the case of contracted services to the annual contract cost. Budget holders should be aware that the above thresholds apply to both large, one-off items of expenditure and regular on-going expenditure with the same supplier. Contracts must not be artificially split to avoid appropriate tendering.

Written quotes should then be obtained, or the contract put out for tender, dependent on value as follows:

Value of Purchase	Action Required (minimum)
Less than £2,500	Best value for money
£2,500 -£9,999	Two written quotes
£10,000 - £19,999	Three written quotes
More than £20,000	Formal tender

Best value: There is no requirement to obtain more than one quotation or follow the tender procedures, but the budget holder must act in the charity’s best interest and seek value for money.

Written quotes: For goods/services expected to cost between £2,500 and £19,999, two or three written quotations must be sought from reputable, independent suppliers. The budget holder should clearly document their rationale for the procurement method selected. Where it is not possible to source two/three quotations an explanation should be attached to the documentation.

Formal tender: Interested suppliers submit a full tender in response to an advertisement. Following the closing date, tenders should be evaluated by at least two people (the budget holder and MD), against agreed criteria. Where necessary, shortlist suppliers and/or invite them to an interview/presentation. The panel should evaluate the tenders and the minutes of the meeting should be recorded in writing.

Approved suppliers

A list of independent Approved Suppliers will be maintained for goods/services where it is felt that a streamlined purchasing approach is appropriate as the charity will benefit from a high-quality service and competitive pricing through existing or longer-term relationships.

Approved Suppliers will initially be appointed and justified by the MD and approved by the Board when the policy is first introduced. The Board will then review and approve the Approved Supplier list annually to ensure it is appropriate and there are no potential conflicts.
After which, any new Approved Suppliers must be appointed by the MD using the same procedures set out in the table above.
Once added to the Approved Suppliers list, goods/services may be purchased from the supplier without a tendering process, provided that the budget holder responsible is satisfied with the quotation received and feels that there would be little benefit in a tendering process.
Each Approved Supplier must be reviewed at least biennially to ensure the supplier is still appropriate. At this point their contract should be reviewed and commercial negotiations with each of these suppliers over £20,000 will also be held to ensure the charity is still getting value for money.

Exceptions

Where one supplier is uniquely qualified to provide a service, then the above process may not always be deemed necessary following a proper assessment of the service that will be provided. This may arise where only one supplier has an adequate knowledge of a particular existing system or where the service is highly specialised. There may also be occasions when urgency means that it is not possible to follow our normal tendering process. However, any such exceptions and cases in which it has not been possible to source the appropriate number of quotations may only be approved by the MD in these circumstances and must not be the norm.

Conflicts of Interest

This policy should be read in conjunction with our Conflict of Interest Policy