in closing our books for year end our membership numbers aren't matching our budget/financials because the inactive accounts with monies are appearing. What is the best way to handle this, removing the inactive accounts. Is there a report to pull?
Those inactive members with balances still due ARE Part of your financial statements. Those balances make up part of your Accounts Receivable.
This is information you need to know for budgeting. What part of your sales don't get paid? Important to know !
If these are uncollectible, create a Credit Memo and apply to each outstanding invoice. I would create an item called BAD DEBT, UNCOLLECTIBLE - something along those lines. Point it to a Revenue account you create just for this. (This is called a contra Revenue account because it will have a minus sign in front of it) I would use this line on your budgets, too.
Hope this helps. Let me know.
Debbie
Debbie, what type of evidence does the IRS require to write those balances off as a Bad Debt? How many attempts need to be made to collect?
The fact you didn't get the money would be evidence. If they later pay you - then create a new invoice. No big deal.
Debbie
thanks for your help Debbie, is there another account besides bad debt to set up, some non profit organizations don't want to use that term.
Hi EMBKG
If you really do want to "write off" some of the accounts (not eliminate all as my last post explained). Create a credit memo and use the same item from the original invoice. This reduces the same income specifically - which I believe is your goal.
Hope it helps.
Anna
It sounds like you are trying to accomplish Cash Basis reports by excluding the Customers that owe you money. Making them inactive has no affect on the reports. As long as there is an accounting balance, they will appear.
You can see the total of the amount due as of the statement date by using the Customer Balance Summary report (Reports: Customers & Receivables: Customer Balance Summary and set it to that date. If this is everything you wish to eliminate, then you just need to look at Cash Basis Reports. If you are trying to pick and choose which ones show and which ones don't, this is an accounting question that may require you writing off old accounts or applying credits. You should follow up if this is the case.
To create the Cash Basis report, at the top of your financial reports, select Modify Reports and in the center of the Display tab, select Cash Basis. This is hide any uncollected receivables from the totals IF they have been recorded as Income.It also eliminates and Accounts Payable balances you have not paid.
If you see balances in Accounts Receivable or Accounts Payable on a Cash Basis Balance sheet for this date, you may be recording balance sheet postings on these unpaid invoices. If so, this is a deeper accounting issue and not a direct conversion QB will perform, you may need an accountant or ProAdvisor's advice to help you quantify the adjustment.
If this answers your question, please mark as solved. If not, please follow up so we can help you proceed.
Hope it helps.
Anna
thx Anna, we are an accrual accounting, but I believe they are using cash to show on financial and balance sheet, I will check. The numbers for the members and inactive members should be separated I'm assuming since they are not legitimately going to be paid to due cancellations of membership. I need to create a separate report for the inactive balances and deduct it from the balance on the financials. To do this and then create an entry to write them off or should I go into each account and do receive payments write off. There are hundreds of inactive accounts, I'm trying to find the easiest way to get a real total and write it off.
Sorry for going on so much, I'm so upset by all this.
If you are using Cash for the Financials, these numbers do not show. On correct Cash Basis Financials A/R is 0.00 and your Income is reduced by any outstanding invoices/credit memos. So financially you may be fine.
QB offers many management level reports to maintain receivables under Reports, Customers & Receivables, But if everyone only looks at the financials, they don't realize this is a problem. The detail often gets away from people looking at Cash Basis reports because they don't show the whole picture.
I would suggest using the Open Invoice Report (Reports, customers receivables, Open Invoices) which you can print and document the ones you are removing.
You do need to correct them individually. Even by Journal Entry it would be no quicker, QuickBooks will only let you make 1 posting at a time to Accounts Receivable type accounts - and you would need a second step to apply the payment.
Refer to my posting above, but create a credit memo for each outstanding member using the item from the original invoice. When you save, you will be prompted to apply it to an invoices(s). By doing so, the balance will not only be eliminated from the accrual financial statements, but the open balance detail reports as well.
I would suggest going forward that you have a policy on how long you will keep these on the books, At minimum, they should be reviewed each fiscal year. But every organization handles this grace differently. Also that someone review some of the A/R Management reports more regularly (i.e. membership committee or development)
Hope it helps you.
Anna.
