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  • Balance Swap Overview & Calculations

    Overview

    The Balance Swap feature provides system suggested movements of money based on a where a fund's money is currently held in relation to where a fund's investment strategy says it should be.BalanceSwap1.png

    Balance Swap involves four main components: Funds, Investment strategies, Accounts, and the Manage Cash feature.

    • Funds involved with balance swap include the Z_Cash_Balance system fund, and any funds that you want to participate in balance swap.
      • CommunitySuite uses the Z_Cash_Balance fund as a holding fund in the balance swap process.
    • Investment Strategies define where (which accounts) a fund's money should live in in the real-world.
    • Accounts involved with balance swap include a fund's default checking account, and any bank and investment accounts that are assigned to an investment strategy.
    • Manage Cash (also known as Cash Management) is an account and fund level setting that must be enabled for each fund and account that you want to participate in balance swap.

    How It Works

    Setup

    1. Enable the Manage Cash flag for any bank and investment asset accounts that you want to include in balance swap. 
    2. Create Investment Strategies. 
    3. Assign an Investment Strategy and enable the Manage Cash flag for any fund(s) that you want to participate in Balance Swap.

    For step-by-step instruction, see "Edit an Account", "Create a Fund Investment Strategy", and "Edit a Fund" in the Foundant Help Menu.

    Review and Process Balance Swap Suggestions

    At the end of each month, navigate to Balance Swaps and review and process the suggested balance swaps. This is often referred to as a paper movement of money.

    For step-by-step instruction, please refer to "Run Balance Swap" in the Foundant Help Menu.

    Transfer Money in the Real World

    Once you're ready to initiate the real-world transfer of money with your bank, you will need to simultaneously transfer the money in CommunitySuite. This must be done at the time in which you make the actual real-world transfer with your bank.

    For step-by-step instruction, please refer to "Transfer Money from Balance Swaps" in the Foundant Help Menu.

     

    Example Calculations

    Example balance swap calculations were created using three funds, three investment strategies, and three accounts.

    Funds Investment Strategy Investment Strategy Account
    Endowed Fund #1 Short Term Investments Short Term Investment Pool
    Endowed Fund #2 Long Term Investments Long Term Investment Pool
    Endowed Fund #3 Checking Bank of MT - Checking

     

    Each investment strategy was configured to allocate 100% of a fund's assets to the account defined in the investment strategy (see example below).BalanceSwap2.png

    Prior to balance swap, each fund had the same fund balance (+/- $.02) and each fund's assets were distributed in the same manner between the "Bank of MT - Checking" account and "Short Term Investment Pool" account. Additionally, each fund was assigned the "Bank of MT - Checking" account as the fund's default checking account, and an investment strategy (example below from Endowed Fund #2).
    BalanceSwap3.png 

    Suggested Swaps

    To provide context for how balance swaps are calculated, let's first take a look at balance swap suggestions from the example data. For the purpose of this example, we'll focus specifically on the suggested swaps related to Endowed Fund #2 (line items 2 and 3).
    BalanceSwap4.png

    In the second and third line items, Balance Swap is suggesting that we move the following amounts of money:

    • $5,000 from the "Bank of MT - Checking" to the "Long Term Investment Pool" account.
    • $32,358.35 from the "Short Term Investment Pool" to the "Long Term Investment Pool".

    Within the cash management settings of Endowed Fund #2, the default checking account for the fund is set to the "Bank of MT - Checking" account, and the fund was assigned the "Long Term Investments" strategy; which is configured to allocate 100% of a fund's assets to the "Long Term Investment Pool" account.BalanceSwap5.png

    The fund has $5000 in the "Bank of MT - Checking" account, and $32,358.35 in the "Short Term Investment Pool" account; so the system recommends that those amounts should be moved (i.e. swapped) to the "Long Term Investment Pool" account.

    For the purpose of this example, we accepted the suggested balance swaps (i.e. clicked Swap Checked Balances). At this point, the swapped balances have not actually moved money in the real world, nor do they affect the financial statement- money was only moved within CommunitySuite at a fund level.

    For example, if you look at the journal entry below you can see that CommunitySuite suggested that we move $5000 from "Bank of the West - Checking" into "Long Term Investment Pool". However, the exact opposite entry was also booked into the Z_Cash_Balancing fund (i.e. the net impact of the transaction is zero). This ensures that the transaction has no impact on the overall balance sheet until you actually transfer the money at your and record the transfer in CommunitySuite (see Transfer Money below).BalanceSwap6.png

    Transfer Money

    The following processes should only be completed at the time in which you actually transfer the money at your bank- not before or after.

    Once the suggested balances have been swapped, the Cash Balancing Fund Assets window (within the Balance Swap landing page) will update to reflect the dollar amounts held by the Z_Cash_Balancing fund for each of the asset accounts listed. The objective here is to transfer money from asset accounts with a positive balance to asset accounts with a negative balance until the total of all Cash Balancing Fund Assets is $0.BalanceSwap7.png

    In our example, we transferred $22,358.35 from the "Short Term Investment Pool" account to the "Bank of MT - Checking" account, and $37,358.35 from the "Short Term Investment Pool" account to the "Long Term Investment Pool" (example below).BalanceSwap8.png

    The resulting transfers clear out the Cash Balancing Fund Assets and the balance swap process is complete.

    BalanceSwap9.png

     

    BalanceSwap10.png

     

  • Cash Balancing Overview*

    Cash balancing is a unique process that you can use to manage and rebalance the Funds in your Fund Accounting system. Once all Funds and their default settings are set-up, you can utilize the Cash Balancing Function to rebalance Funds so you can see where to move assets.

    To rebalance your Funds, we use a Cash Balancing Fund. The Cash Balancing Fund is a system default fund that has no Assets and always nets to zero (0). This overarching fund identifies where cash is and where cash needs to be moved in order to rebalance and track all Funds and show you the actual balances.

    For example; a $5,000 Donation to the Do Good Fund is deposited into a checking account but technically the Do Good Fund is housed in a long-term investment account. In the meantime you are writing a $5,000 grant check out of the checking account, using Cash Balancing you can write the check and not worry about moving money over - your system will keep track of the overall balance for each account and fund so you don't have to. 

    Cash Balancing will assure that your checking and investment accounts are rebalanced when you select Balance Swap. When you run a Balance Swap the system will show you if you need to make any transfers of assets from one account to another, and it will show you the amounts that need to be transferred so each Fund and each Account has the proper balances.

    After taking in donations and paying out grants you will be able to see how this system works.

  • Review your Cash Balancing Fund*
    • Go to Funds from the Home page
    • Choose the Cash Balancing Fund 
    • The system will show the balances for all the funds who have Manage Cash selected. 

    You will see each Fund and where their assets are - assets may be in bank accounts or investment accounts, for example, a Funds assets may be in your checking account, but they should be in an investment account or vice versa.

  • Review Balance Swaps with a Balance Sheet*

    To view and verify transactions, you can go to the Balance Sheet.

    • Go to Funds from the Home page
    • Choose the ID number of a Fund
    • From that Funds page, choose Balance Sheet from the left-side menu
    • Choose the date (usually the current day)

    After doing a Balance Swap and asset Transfer from the Cash Balancing Fund - all the Accounts should have a zero (0) balance.

     
  • Bulk Delete Balance Swaps

    To Bulk Delete Balance Swaps:

    1. Navigate to Accounts.
    2. From the left-side menu, select:
      • Balance Swap
      • Account Transfers
      • Bulk Un-Post
    3. Click the Unpost and Delete button to unpost and delete any past Transfers or Balance Swaps. 

    Money from transfers will return to the Cash Balancing Fund.

    Note: The system only shows transactions back to the last time the books were closed. Once transfers have been reconciled, they cannot be unposted and deleted.

  • Balance Swap

    Balance Swaps are system suggested movements of money based on how a fund is defined and where it’s money is currently invested or held. 

    For example:

    • If a fund has $0 in checking, but $50,000 in a primary investment account, the fund can still write a $1000 check out of the checking account. Manage Cash will recognize that money going out needs to come from checking and the system will suggest a Balance Swap to re-balance.
    1. Select Funds from the Home page.
    2. Click List.
    3. Select a cash balancing fund.
    4. Click Balance Swap in the left-side menu.
    5. Select the Fund(s) with a balance that needs to be swapped (moved from one account to another).

      BalanceSwaps1.png


    6. Enter the Swap Date and click Swap Checked Balances.
      • Note: The Swap Date will be the date of the journal entry. 
    7. Scroll up to the assets window, and click transfer to transfer the assets to a different account. 
      • The amounts calculated in the Assets window show how much to wire or move between accounts to complete re-balancing.
        • Field Descriptions:
          • Last Reconcile - shows the balance of the account at the time of the last reconcile.
          • Rev Share (Revenue Share) - indicates whether or not an account is a revenue share account.

            Balanceswap2.png

    Note: You will need to contact your financial institutions to physically move money from one account to another.

  • Cash Balancing Setup
    1. Navigate to the Funds page.
    2. Click the ID of a desired Fund.
    3. Select Edit from the left-side menu.
    4. Scroll to the Cash Management section at the bottom of the page.
      • Check the box next to Manage Cash.
      • To the right of Investment Account, click the drop-down menu to assign an Investment Account.
      • If the Fund issues checks, click the drop-down menu to the right of Checking Account to assign a Checking Account. 

    5. Click Save.

    Note: To use the Cash Balancing feature, you must assign an Asset Account (A) to each Fund in the system (specifically, the bank or investment account that a Fund's assets should be in).