As a member-based nonprofit organization, tracking and efficiently managing your membership dues is key to your continued success. With the right accounting processes, you’ll generate more revenue, foster better member relations, and gain in-depth insight into your financial trends.
Let’s start by diving into our guide to membership dues accounting and taking a look at the necessary steps to managing your association’s financials effectively.
Detailed Membership Tracking and Invoicing
To begin, you need a system in place to keep a detailed record of billing, invoicing, and payments for membership dues. With a membership management system, automate billing schedules and set up recurring payments to accurately track your revenue, growth, and donor database.
Revenue Recognition for Membership Dues
The regular payments made by your members fund various activities of your association, but they must follow tight guidelines for revenue recognition. According to new revenue standards, membership dues paid in advance are reported as deferred income until the individual services or goods are received.
Ongoing Financial Analysis and Reporting
Your financial reports guide important decisions for your business. Ongoing financial analysis will positively impact your cause and keep you informed on your member activity. By reviewing accurate reports often, you’ll discover which programs are beneficial to your members and profitable to your association.
Streamlined Account Reconciliations
At the end of each accounting period, you must make sure your general ledger is complete and accurate by comparing your internal financial records. Paper-based, manual spreadsheets complicate this process with errors, lengthy time dedication, and a lack of visibility. A streamlined process for performing membership account reconciliations will drive accuracy and enhance internal controls.
Proactive Audit Preparation
A proactive — rather than reactive — approach is the key to being prepared for a financial audit. Build a comprehensive audit trail and maintain complete transparency with your membership accounting. The best way to do this is with a membership accounting platform that offers a continuous, automated audit trail to track changes, adjustments, and compliance.
GAAP (Generally Accepted Accounting Principles) guidelines keep you on track. Accurately recording (—or deferring) your contributions and dues plays a big part in maintaining compliance and is often how associations get into trouble when recognizing revenue. These principles help better understand your organization’s liquidity, performance, and cash flow.
Hearing all of this at once may seem like information overload. We want to save you the time — and inevitable stress — of managing this on your own. Outsourcing your financial management to an affordable accounting team will free up your time and keep your membership expense accounting on track.
Lescault and Walderman combines technology with years of industry expertise to simplify your financial reporting and increase productivity. Contact us today for a free consultation with our experts and learn how we can help with your membership dues accounting.