What to do when your project year is different from your financial year – Project Tracking, part 2

Want to know how to keep track of your different pots of money, and make sure you don’t overspend the budget for any project?

There are lots of ways to do this. In this series of posts, we’re looking at how you can use project tracking in your accounting software to do it.

This idea is useful for businesses and charities. 

In this post, we’re going to explore how to make the reports useful when the project year isn’t the same as your financial year.

An Example: 3-year charity project

Let’s say you get funding for a project to run 3 years, from April 2024 to March 2027. We’ll call this project Do Good Stuff.

It doesn’t matter if your financial year runs November to October, for example. We touched on how to handle this in the last post, but in this post we’ll go into more detail.

Now, create the sales invoice for the £30,000. Put 3 lines on it:

Amount	Class / Tracking Category / Cost Ctr
£10,000	Do Good Stuff:Apr 2024 to Mar 2025
£10,000	Do Good Stuff:Apr 2025 to Mar 2026
£10,000	Do Good Stuff:Apr 2026 to Mar 2027

Now when you run your Statement of Financial Activities for the class Do Good Stuff, you’ll see £10,000 income for each year.

You might get more income later that you can add to this project – just add it to the relevant year of Do Good Stuff.

How to post the expenses

For every transaction that has anything to do with this project, choose the appropriate year when you’re choosing the class.

Then, even if you get a late invoice (in, say, June 2025 for the first year), you’ll know it’s being shown correctly in your project reporting.

You’ll still be choosing the type of expense, too, such as Travel , Materials , Refreshments , Wages , etc. You’ll do that in the Account field on Xero or Sage, or the Category field on QuickBooks.

Reports

You’ll run your reports for all of your sub-projects together, with a Total column, and that will show you how each year has fared, and how the overall project is doing.

You’ll need to take care to choose the start and end dates for your report to be all the dates that any transactions happened, though.

This project is running April 2024 to March 2027, but if you actually received the income in March 2024, you’ll need to make sure when running the report in your accounting software that you run it from March 2024 to March 2027.

Likewise, if you actually pay some expenses in June 2027, you’ll then need to run the report from March 2024 to June 2027.

Since this report is only picking up income and expenses that belong to the project Do Good Stuff, you might just run it for All Dates, if that’s an option.

Either way, you’ll find it easiest to save it as a custom report so you can run this report with one click whenever you want to see how that project is doing. If your accounting software doesn’t support custom reports, I strongly suggest switching to one that does. It saves so much time!

End of the project year

If there is money leftover at the end of the first year, you’ll probably want to move it to the second year, depending on the terms from the grant body. Once you’re sure you have all the first-year expenses accounted for, your bookkeeper or accountant can do that with a journal.

You’ll do the same for the end of the second year and third year.

Another option, depending on the conditions of your funding, is to move that money back to your general pool. That, too, would need a journal.

(Please do not enter journals if you have no bookkeeping training. You need the underlying knowledge of double-entry to understand what is happening in any journal entry. If you would like to learn basic bookkeeping, there are lots of free courses out there, like this one from Open University, which I have not completed myself, but looks worthwhile.)

Another Example: Projects of less than one year

Instead of a project that spans multiple years, you may want to only run one for part of a year. You may want to try it just for 6 months. Or you may even run separate projects every 6 weeks, aligned with term time of your local school.

For example, you might want to try:

• 6 months of focused effort on podcast guesting, and then
• 6 months of focused effort on podcast paid advertising

and then compare the two.

Or, you might run an after-school activity club, and want to try:

• 6 weeks of singing
• 6 weeks of dancing
• 6 weeks of art
• 6 weeks of forest school

and then compare your profit for each.

(I don’t actually recommend this second example, because in that market it takes time to build your reputation and following. It may be a healthier business decision to create it as a mixed activity club, mixing up what’s done on different days, and then listening to the students to see what they prefer.)

 

Creating the project in your software

This is much more straightforward than the example above: you simply create one project and, to help Future You, note the dates in it.

For example:

6 months of podcast guesting + 6 months of podcast paid advertising could become these two projects:

• Guesting Mar-Aug 2024
• Podcast Ads Sep 2024 – Feb 2025

Or, 6 weeks of singing, then dancing, then art, then forest school could become:

• Singing 2024-2025 Term1
• Dancing 2024-2025 Term2
• Art 2024-2025 Term3
• Forest 2024-2025 Term4

Reports

As before, simply assign relevant income and expenses to the correct project, regardless of when they happen.

When running your reports, use All Dates or make sure to include all the dates there is anything about these projects. Set it up once and save it as a custom report.

Then you’ll be able to see how each short project has done and compare it against the others.

What Next?

In the next post in this series, we’ll look at allocating parts of expenses to a project. This can apply to projects run by both businesses and charities.

Perhaps your project takes 50% of the time of one employee: you’ll need to make sure that half their wages, NICs, pension, etc – everything you pay to have that employee – is allocated to that project. You’ll also need to consider your overheads. We’ll look at this next time.