Chapter Banking: The Cure For National-Chapter Headaches

We share the basics of chapter banking, how chapter banking works for your association and chapters, and how the solution works.
Chapter Banking: The Cure For National-Chapter Headaches

This virtual solution is sometimes called “consolidated banking” because the sub-accounts of every chapter are consolidated under one larger bank account. Consolidated banking is also called:

  • Chapter banking
  • Component banking
  • Concentrated banking

We call it “chapter banking” throughout this paper as a generic term because this banking solution was developed specifically for organizations with chapter, affiliate, or component networks — and it’s unique to the Billhighway platform.

Why Chapter Banking Works

Master Bank Account

With a virtual banking solution, the National association creates one master bank account.

Virtual Sub-Accounts

That bank account is divided into distinct and separate virtual sub-accounts, at least one for each chapter.

Chapter Functionality

A chapter’s virtual sub-account functions like (and can even replace) a standard, physical bank account, except with much greater capabilities.

Manage Separately

Individual chapters can view and manage their sub-accounts separately thanks to specialized software.

The Basics of Chapter Banking

Before we go into the many benefits of chapter banking, let’s get technical for a minute and explain how chapter banking would work at NATL and its sixty chapters throughout the U.S.


NATL has an account it uses solely for chapter banking at Acme Bank.


Within that account are sixty virtual sub-accounts, one for each chapter.


These sub-accounts are virtual because they exist only within the Billhighway platform.


The sub-accounts were created by NATL and Billhighway, not by Acme Bank.


Billhighway acts as an agent for NATL’s account at Acme Bank.


The Billhighway platform sits on top of the actual bank account — it’s an interface between the bank and the financial ledger of each of NATL’s chapters.


Billhighway updates each chapter’s ledger as transactions are processed through the platform. Both account receivables and payables.


The software also takes care of administrative tasks like record-keeping, balancing accounts, automating financial statements, and generating reports.

How Chapter Banking Works For Your Association & Chapters

How Chapters Pay

How Chapters Pay

When a chapter wants to pay an invoice, they use the system’s online bill pay functionality (just like they would with a Chase, Wells Fargo, or any other bank account). They can also cut a physical check from the system or use a prepaid card. Billhighway has an ingenious way of making sure accounts can never be overdrawn, and uses efficient workflows that make fraud nearly impossible.

How Members Pay

Revenue flows in as normal thanks to Billhighway integrations. A member goes to the chapter’s office or website to register for an event that costs $45. They pay for the registration with their credit card or a bank debit (via Automated Clearing House — ACH) through the usual e-commerce built into the chapter’s membership or association management system (AMS) or event management software. If the member pays by check, the chapter uses the Billhighway system’s remote deposit capture functionality to deposit the check remotely.

Missing Dollars and Data? Here’s How to Fix the Leaks.
chapter ROI project

How Payments Are Reconciled

The system transmits the credit card payment, ACH file, or remote deposit to the bank. The member’s record in the AMS, as well as the chapter’s financial ledger, get updated with the $45 transaction. The chapter no longer has to worry about this accounting reconciliation or any other — it’s all handled by Billhighway. Plus, all these individual transactions are aggregated into automated income statements and financial reports.

Automatically Split-Send Dues & Other Payments

For more complicated transactions, like splitting dues between the chapter and NATL, auto-routing functionality comes into play. During the Billhighway platform implementation, accounting rules are established. Revenue line items, like dues payments or foundation contributions, are tied to a particular sub-account line.

When a payment is applied against that account, those funds are automatically routed to the appropriate sub-account, as established during implementation. All the general ledger journal entries are posted and the funds are reconciled against the invoice to make sure the proper amount was received and deposited.

“The chapter banking model has worked really well in the fraternal market. Now we’re offering it to the association and union community as well.”

– Troy Schryer, Director of Finance and Accounting, Billhighway


NATL members pay their National and chapter dues at the chapter level. When a new member pays $300 dues to the chapter, $200 is routed automatically to NATL’s sub-account and $100 stays in the chapter’s sub-account. Here’s a few benefits of auto-routing for your organization:

  1. Eliminates the manual calculation of funds to be split between National and its components
  2. Removes the need for cutting corresponding checks
  3. Saves everyone a lot of time and manual effort
  4. Allows members to join anywhere
Chapter Banking Whitepaper Cover

Download Our Guide

In the Chapter Banking Guide, we share the basics of chapter banking, how your association and chapters could benefit from the solution, ways to overcome possible resistance, and how your national-chapter relationship can change positively with the solution.

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