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
Full review and approval	19/09/2023
Changes to Approval & Procurement Limits approved	21/07/2025
Full review and approval	28/01/2026

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 Chief Executive Officer (CEO) for amounts up to £500 and by the Chair of Trustee's for anything higher.

Making purchases

Cash

Cash is used by all community hubs and Young People’s teams.

The Assistant Manager/Administrator has overall responsibility for the cash box in their hub/team and only 1 other person, preferably the Hub/Team Manager, should have access to the key.

Process

• Hub staff incur petty cash expense using personal funds.
• This is then refunded by Assistant Manager/Administrator 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 no receipt was given or is missing, then the member of staff should fill out a Missing Receipt slip and provide any supporting evidence to their Manager for approval.
• 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 Airtable record is up to date.  
• Count the cash in the tin and ensure it agrees to the balance on Airtable. Add an Airtable entry saying the cash has been counted and the amount. Make sure any difference is reconciled and corrected.
• Regular spot-checks should be carried out by the Hub/Team Manager or Finance Manager and any variances investigated and escalated as appropriate. Spot-checks should take place preferably monthly and quarterly at a minimum.
• Assistant Manager/Administrator 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 for hub operations is £250 per day.

Documentation required:

• Cashbox Airtable records showing the date, description, budget line, value etc.
• Cash receipt (signed or initialled as proof payment), or Missing Receipt slip if no receipt was provided.
• Month cash count recorded on Airtable.

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.
• If the receipt is missing or unavailable, the member of staff must fill in a Missing Receipt slip and upload it with any supporting documentation available (e.g. evidence of bank transaction, emails relating to purchase). The budget holder is responsible for checking supporting evidence and the related circumstances before approving the expense claim.
• No member of staff should be approving their own expenses.
• Operations Directors and CEO 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 Assistant Manager/Administrator, 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 Assistant Manager/Administrator staff and explain the reason and agree on the course of action to dispute the invoice.

Hub/Team Managers can approve up to £2,500 for budgeted expenses. Operations Directors up to £5,000 for budgeted expenses.

CEO up to £10,000 for budgeted expenses.

Above £10,000 needs Chair of Trustee's 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 Assistant Manager/Administrators and Finance Officers have overall responsibility for their HC debit cards. Cards must only be given to people once approved by the CEO. 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 Assistant Manager/Administrator/Finance staff and explain the reason and agree on the course of action to dispute the invoice.

Hub/Team Manager can approve up to £400.

Operations Directors can approve up to £1,000.

CEO to approve up to £2,500.    

• 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 receipt is missing or unavailable, the member of staff must fill in a Missing Receipt slip and upload it with any supporting documentation available (e.g. evidence of bank transaction, emails relating to purchase). The budget holder is responsible for checking supporting evidence.
• 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 staff or Assistant Manager/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 Assistant Manager/Administrator/Finance staff and explain the reason and agree on the course of action to dispute the invoice.

Bases on average annual amounts:

Hub/Team Managers can approve up to £2,500 for budgeted expenses. Operations Directors up to £5,000 for budgeted expenses.

CEO up to £10,000 for budgeted expenses.

Above £10,000 needs Chair of Trustee's 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 CEO for checking and approval. In the absence of the CEO, this should be done by an Operations Director.

Making payments

Signatories per mandate: CEO, Finance Manager, Finance Officers, Assistant Managers and Administrators.

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 staff and Assistant Manager/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 an Operations Director or CEO should give the final approval online.
  • If cashflow needs to be monitored more carefully at any point, then the CEO & Finance Manager 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

Chief Executive Officer (CEO)

• Can approve for all departments.
• Cash up to £75
• Staff expenses up to £1,000

• Invoices up to £10,000
• Debit cards up to £2,500

Operations Directors

• Can approve for hubs, core expenses and renovations.
• Cash up to £75
• Staff expenses up to £400
• Invoices up to £5,000
• Debit cards up to £1,000

Hub/Team 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

Housing Support Officers, Assistant Managers and 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.

Hubs/Teams:

• Budget holder is the Hub/Team Manager
• Expenditure to be approved by Hub/Team Manager (or Operations Director or CEO if required). Housing Support Officers, Assistant Managers and Administrators can approve cash expenditure.  

Core Operations (including Renovations):

• Budget holder is the Operations Director for expenditure in their Operational Areas.
• Expenditure to be approved by the relevant Operations Director, or CEO if required.

Corporate:

• Budget holder is the CEO.
• Expenditure to be approved by CEO.

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.

There are additional requirements for Property Purchases and Large Capital Works outlined at the end of this section.

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 £5,000	Best value for money
£5,000 -£9,999	Two written quotes
£10,000 - £24,999	Three written quotes
More than £25,000	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 £5,000 and £24,999, 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. Documentation should be stored securely and attached the any relevant transactions on Airtable.

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 CEO), 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 CEO 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 CEO 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 £25,000 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 CEO in these circumstances and must not be the norm.

Property Purchases and Large Capital Works

Handcrafted is committed to making best use of its funds and sustaining the long-term work of the charity. There are additional financial, missional, operational and reputational risks for the purchase of large assets (e.g. property) and other large capital works (e.g. renovations of property and premises). These works carry potential benefits and risks over a long-period of time (10+ years).

In addition to the procurement policy outlined above, the following purchases/works must undertake a ‘Large Capital Procurement Assessment’:

• All property purchases, including their initial renovation to make them fit for use by HC.
• Renovation works of properties or other premises owned or leased by HC exceeding, or with reasonable potential to exceed, £25,000.

The assessment consists of:

• Alignment with organisational need, mission and strategy.
• Project management capacity & expertise
• Financial impact and feasibility
• Evidence of procurement process and expertise
• Full risk assessment
• Written opinion of CEO, Operations Director and Finance Manager
• Proposal review and approval by Trustees
• End of Project Review

The form must be completed and approved before any purchase/work has been committed to.

Trustees can delegate responsibility to approve projects to the Finance Steering Group. This may be for works agreed in the annual budget.

Conflicts of Interest

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

Reserves

The trustees commit to maintaining Handcrafted’s reserves in line with its levels of financial risk and expenditure to mitigate the impact of any unforeseen loss/delay of income or unexpected expenditure.

The purpose of this policy is to support Handcrafted’s financial planning and resilience by outlining i) key financial risks & mitigations, ii) targets for current assets, total reserves and equity and iii) procedures for setting aside and accessing reserves.

Risk Management

Key Financial Risks

The Finance team and Finance Steering Group have outlined the following as the key financial risks the charity faces. This will be reviewed at least annually.

Risk	Likelihood	Impact	Proportion of Income affected
Significant disruption/ceasing of housing income	Low	High	41%
Significantly missing fundraising targets. Grant and Training Contracts are subject to decisions of a few individuals and to increasing demand.	Med	Med	25%
Significant disruption/ceasing of support income for under 18s	Med	Med	31%

Mitigations

Reviewing and forecasting to assess level of risk:

• The Finance team will review financial performance and forecasts monthly.
• The Finance team will report to the Finance Steering Group quarterly. They will review financial performance, forecasts and conduct sensitivity analysis of the key risk areas.
• The Finance Steering Group will report findings to the trustees.

Minimising likelihood with preventative steps:

• Hubs will maintain professional relationships with local councils, ensure all paperwork is submitted in a timely manner, concerns are dealt with promptly and residents receive high-quality support & housing.
• Designated Ofsted Officer will ensure that all Ofsted requirements are met and correct procedures for working with under-18s are always followed.
• Business Development and Training teams will aim to build strong relationships with funders and create high-quality funding bids.

Minimising impact on the organisation:

• Diversify funding sources and maintain financial reserves for unexpected challenges (see Financial Targets).
• In the case of a financial event that may disrupt Handcrafted’s activities the Business Continuity Plan will be followed. The actions available to respond include:
  • Stopping recruitment of new and replacement staff,
  • Pausing growth of activities,
  • Reducing expenditure to baseline levels (see Committed and Baseline Expenditure),
  • Releasing cash from Reserves Account (see Reserve Cash Account).

Financial Targets

Targets for levels of cash and cash equivalents, total reserves and equity are linked to current levels of operational expenditure. Their purpose is to mitigate financial risks and support the continued work of the organisation.

Financial planning must demonstrate how future plans will either i) move Handcrafted’s financial position towards these targets if currently below, or ii) maintain financial position at or above these targets.

Financial reporting must compare financial performance to these targets.

The Finance Steering Group will meet to evaluate financial planning and performance, and report their findings and recommendations to the trustees at least quarterly.

Committed and baseline expenditure

Financial targets will be linked to current levels of operational expenditure by calculating Handcrafted’s “baseline expenditure”. The Baseline Expenditure is defined as the cost to continue running normal Handcrafted activities at a minimal cost. It is calculated as the sum of all committed expenditure and a proportion non-committed (discretionary) expenditure, as outlined below.

Committed expenditure is Handcrafted’s commitment to an expense at a future date. This includes,

• Committed staff costs
• Leases
• Insurance payments
• Interest payments on borrowing (but excludes repayments of the principal)

Baseline expenditure is a sum of committed expenditure and the below reductions in discretionary expenditure:

Item	How reduction in expenditure would be achieved	Reduced by %
Maintenance	Reduce non-essential maintenance and maximise in-house maintenance.	33%
Training Materials	Cut costs of food spend, seek material donations, pause replacement of equipment.	66%
Travel & Subsistence	Essential travel only.	66%
Sundry	Pause non-essential spending	50%

Reserve & Cashflow Targets

Target	Months of baseline expenditure
Reserves	4 months, no more than 6.
of which, free cash and cash equivalents	2 months, no more than 3.

Equity Targets

Handcrafted have a growing property portfolio purchased through social investment loans. Financial planning must demonstrate that Handcrafted will remain on track to maintain a sufficient equity stake in our property portfolio to be able refinance the portfolio to cover repayment amounts when they become due.

Target	Target Date	Purpose
30% equity stake in owned property portfolio	January 2032	To repay outstanding amount of £2,000,000 loan agreement with Social and Sustainable Capital. 30% stake will ensure we can access funds from commercial as well as social lenders.

Reserve Cash Account

Purpose

To set aside cash for future unforeseen circumstances which is managed by the trustees.

Access Procedure

• Finance team shall carry out monthly finance reviews to identify any future cashflow problems at the earliest opportunity.
• Should the need arise, the Finance team will arrange a meeting of the Finance Steering Group.
• The group will analyse the situation and decide upon if and the amount of reserves to be released. The group must decide on a plan for paying back reserves once the risk has been managed.
• To make transfers from the reserves account to the current account, the following conditions must be met:
  • The Finance Steering Group must give written approval of the transfer, including date of approval and the approved amount.
  • The approval must then be signed off by either two trustees, or a trustee and the CEO. This should include the chair of trustees unless exceptional circumstances prevent them doing so. In this case, a trustee on the Finance Steering Group may do so and failing this another trustee.
• The transfer will then be setup by the Finance Officer on receipt of the written approvals. If they are unavailable, an Assistant Manager/Administrator may do this.

• The Reserve Bank Account will have Dual Authorisation and require approval of two signatories to make the transfer.

Reserve Account levels

The levels held in the Reserve Account and any transfers required shall be agreed quarterly by the Finance Steering Group.

Any transfer from the Current Account to the Reserve Account shall be approved by the CEO.

Minimum target is 0.5 months baseline expenditure in the Reserve Account.

Should the Reserve Account levels fall below 0.5 month of baseline expenditure the Finance team must notify the Finance Steering Group and meet to agree a plan to bring Reserve Account levels above the minimum target.