By Donald Cassady, President/CEO, GMS, Inc.
1. Not Recording Receivables at all (using the Cash Method of Accounting) – Typically, Not-for-Profit organizations prepare their Financial Statements using the accrual method of accounting, or at the very least modified cash. Since these types of organizations are funded on a cost reimbursement basis to a large extent you want to get your financial statements as real-time as possible. If you are preparing invoices on a regular basis to funding sources, those invoices are more than just correspondence, they are accounting documents that should be entered into your accounting system. This will recognize your revenue at the proper time (when earned) and give you a more current Financial Report.