How can I accrue for income owed? (Accounts Receivable)

This article is for churches and charities that account on an accruals basis.

In most situations, if you are owed income, you should create a corresponding invoice for this income.

If you create accounts on an accruals basis AND you have auto-accruals enabled, when you create and invoice an 'Accounts Receivable' transaction is created automatically for the money you are owed. Your Balance Sheet total for Accounts Receivable will also update to show an increased outstanding total.

This can be found in the Adjustments screen > Accounts Receivable, as well as via the Creditors and Debtors report through the Finance Reports screen. The total of any income owed will show on your Balance Sheet, under Current Assets, Accounts Receivable (see below).

When an invoice is paid, the income is reconciled as an invoice payment against the sum due, and the Accounts Receivable record will be adjusted accordingly. For example, when a £40 invoice is created, your Accounts Receivable record will increase by £40. It will then subsequently decrease by £40 when the invoice is paid by the customer. To find out more about Invoicing, please view the Invoicing module overview video here.

Manually adjusting for income owed:

For organisations that create accounts on an accruals basis, there are some situations where you may want to manually adjust for income owed. An example of this would be where Gift Aid hasn't been claimed or received within the financial year it corresponds to. You are not likely to issue an invoice to HMRC but you do need to account for the income. You can do this easily via the following method:

1. Within the Adjustments screen, click on 'Accounts Receivable' in the Creditors & Debtors table.

2. Click the 'Add New Accounts Receivable' button and then enter the details required.

3. This adjustment will then be shown in the Accounts Receivable table and will have adjusted your Balance Sheet total. It can be reversed out in the first month of the next financial year (or when the Gift Aid income is actually received) using the Reversal button on the right-hand side of the adjustment.

To help you better understand the Adjustments module as a whole, please visit the module overview page here.

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