Financial Operations in Clubs

Most students have taken a module in accounting, finance or both. There are many aspects of both of these areas (and where they overlap) that apply to clubs. In this chapter, we will present the areas with which students should be familiar, and those which club managers have told us are important. This chapter will focus primarily on ‘big picture’ financial topics, that is, financial areas that are under the purview of the general manager, finance committee, controller, and/or the board of directors. However, club practices differ from those of other hospitality organizations in both large and small ways, many of which affect their financial procedures. For instance, many clubs do not accept cash payments (or credit cards) for services, only allowing members to charge services rendered to their accounts. This obviously impacts who pays, how they pay, cash flows, and systems and procedures. Another example is the importance of dues to clubs – clubs’ greatest source of revenues is usually in dues (quarterly or monthly payments by members). This means that clubs rely greatly on a source of funds that is a function of the number of members, not member activity. Another example of how club finances differ is that they have sources of revenues and expenses that are unique in the hospitality industry, such as initiation fees, ‘unused food minimums’ and ‘unrelated business income’. Add to this that the majority of clubs are operated on a not-for-profit basis, meaning that they manage their operations for the long-term sustainability of the organization and not for short term profit. All of this adds up to clubs representing a unique niche in the area of financial management.