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Last Updated: 4/27/15

Managing Finances and FPS

*For more details about Financial Processing Services (FPS), see the FPS Help Category.

How to get Elexio to match my current accounting processes vs. what processes might I need to change?

A Closer Look at Contribution Reporting Needs:

Sometimes it is necessary to change accounting processes to match other systems or processes as long as it is within generally acceptable accounting principles. A major software system change often requires changing "the way we've always done it." There are multiple ways to accomplish things. Stepping back to look at the big picture of accounting and reporting purposes often helps. Here are 3 of the purposes of Contribution tracking and reporting:

  1. Track giving data and trends for leadership decision making. This could use Elexio reports, accounting reports and/or something separate like an Excel spreadsheet.
  2. Keep records in the accounting system to create accurate annual financial statements according to the cash, accrual or combination method. Allowing designated giving to various funds, requires using fund accounts to track compliance with donor imposed restrictions. 
  3. Keep records to provide to individuals for tax reporting purposes.

What are some Accounting Best Practices when using Elexio Financial Processing Services (FPS)?

These below examples are General Ledger accounting practices we have learned from churches. We are not saying you have to follow them. We are just providing some possible solutions as "tracks to run on". Our recommendation is that you consult with your accounting professional or auditor to decide which processes are best for your environment.

Cash Basis Method

Many churches use a cash basis accounting method. With contributions, they book the entry into their accounting system when it is deposited into their bank. With the FPS weekly batch deposit and the corresponding Deposit Statement R4004 Report, churches are raving about how much it simplifies their processes. Even if a church uses the accrual basis method, the main requirement is yearly accrual, not monthly, so the below example process may still work for them with some adjustment at year-end. 

Example:

  • The FPS deposit is made to their bank account on 3/6 for $5,000.
  • They run the Deposit Statement report (R4004) for that date - 3/6.
  • The report shows giving of $4,800 to General Fund and $200 to Building Fund with $75 of Total Fees.
  • They make an accounting General Ledger entry with a date of 3/6:
Credit Contributions General Fund $4,800  
Credit Contributions Building Fund $200  
Debit Cash   $5,000
Credit Cash  $75  
Debit Bank or Merchant Fees Expense   $75

One church chooses to make a single entry each week by adding the totals (per fund) from the Friday FPS deposit to the following Sunday's offering totals and posts the entry on Monday's date.

What about year-end timing?

Churches that are cash basis may not need to do anything different for the end of the year.

Some churches that are accrual basis or a combination of cash and accrual basis adjust the process at year-end to make sure they are booking all the contributions in the year they were made/initiated by the donor. (See this article for an explanation of accounting methods.) They run the Deposit Statement report on January 1st (or the first day of their fiscal year if different than January 1) for the batch date of "Undeposited". This gives them the totals of all the online December donations that have been made but not booked in the accounting system yet. They enter these December contributions into the General Ledger. Then they subtract these December amounts from the next one or two weekly Deposit Summary reports in January which can contain both December and January donations. 

Accrual Basis Method

The year-end process above may work to fulfill the annual accrual requirements. If you want monthly accruals, you could use the option for daily FPS deposits. This way you will be able to divide out each specific day's contributions and fees to book to the General Ledger in the month of your choosing. Or you could use the below method which uses Contribution Reports instead of Deposit Statement Reports.

Some churches prefer recording income when it is received instead of when it is deposited because it more accurately reflects the reality of the church's financial position at any given point in time or because they want to track exact monthly giving in their accounting system as well as in the Database. Because the online contributions are posted in the database immediately, it is not necessary to wait for the deposit to record the funds as income.

To illustrate this principle of timing, a church received $20,000 in checks for the General Fund on Sunday. After being recorded as contributions, the checks are taken to the bank for a deposit with Tuesday's date. It is acceptable to record it as income on Sunday's date, since that is when they were received.

Example:

  • A church has $8,000 worth of online giving from 2/21 to 2/28.
  • On April 3, they run the Contribution Detail Report (FCR3301) and group by Fund so it gives the total for each Fund.
  • The General Fund totals $6,000 and the Mission Fund totals $2,000 with $100 of Total Fees.
  • They make an accounting General Ledger entry with a date of 2/28:
Credit Contributions General Fund $6,000  
Credit Contributions Mission Fund $2,000  
Debit Cash   $8,000
Credit Cash $100  
Debit Bank or Merchant Fees Expense   $100

Reconciliation Processes

FPS makes reconciling contributions between accounting (General Ledger), Elexio and the bank deposits very simple. It can be done through one powerful report that does the work for you. Cash basis method Reconciling: run the Elexio Deposit Statement report (which pulls Elexio contribution records and merchant fees and lines them up side by side) and match it to the bank deposit total, then enter the fund totals into the General Ledger. It can't get any easier than that! This report shows the detail of each and every transaction including the merchant processing fee for each. You no longer have to guess which daily batch a transaction was grouped in or wade through monthly merchant statements matching up fees and totals. 

In addition to the weekly reconciliation, some churches also reconcile the General Ledger to Elexio contributions on a monthly, quarterly, or annual basis by running a report in each systems to compare total contributions and/or totals per fund.

Quarterly reconciliation example:

  • We'll assume Sample Community Church started booking contributions with a January 1 date and forward into General Ledger.
  • They then book contributions each Friday based on the Elexio Deposit Statement report.
  • The April 10th deposit includes online giving dates of 3/31 to 4/6.
  • In order to get the total of all the contributions in the General Ledger through 3/31, they need to include this 4/10 entry.
  • Since the 4/10 entry includes contributions through April 6, they run the Elexio Contribution Detail FCR3301 report with dates from 1/1 to 4/6 and group it by Fund which gives fund totals and a grand total. 

*If a church uses the accrual basis method mentioned above, they would run the Elexio Contribution Detail FCR3301 report with dates of 1/1 to 3/31. 

How to handle adjustments to contributions made online including chargebacks and NSF eChecks. 

Contributions made online are protected, so the Amount, Date, and Method fields can't be edited or deleted. However, the Fund, Tag, and Comment fields can be edited. Be very careful when changing the Fund name because the Deposit Statement report (R4004) still uses the original Fund and many churches make accounting entries based on this report. If you need to correct an error with an online contribution, you can enter a new adjusting entry on the record and list the giving method as "Fund Adjustment".

Here is an example for a church not using Elexio FPS: if someone submits a credit card charge for $100, then later there's a chargeback, enter a new contribution record for that person for -$100 (negative $100) with a giving method of "Fund Adjustment" picking the same funds as the original transaction.  

If you are using Elexio FPS, chargebacks will automatically appear on a person's contribution record on the date of the original transaction. This may take up to 10 days to appear depending on how long the banking processes take. Any chargebacks or adjustments will be listed separately on the Deposit Statement report (R4004).

 Example:

An Online-eCheck was initiated on Friday, 3/27 for $100, but then because of Not Sufficient Funds (NSF), it was reversed on Monday, 4/6.

  •  Process Option 1:
    • If the church was using FPS and booking General Ledger entries from the weekly Deposit Statement report (R4004)
    • The 3/27 contribution (income) would have been included in the 4/2 batch, then the 4/6 reversal would have been included in the 4/10 batch. No General Ledger adjustment entries would be necessary since FPS would have added a Contribution adjustment record to the database on 4/6 (with the date of 3/27 to match the original date) and FPS would have included the income on one Deposit report and the reversal on another Deposit report.
  • Process Option 2:
    • If the church was using FPS and booking General Ledger entries from the Contribution Details report
    • On 4/3, the church made a General Ledger entry which included the 3/27 contribution along with the other contributions between 3/25 and 3/31. (There are many other ways and timing methods for entries. This is just one example.)
    • The first notice of the NSF adjustment came on the Deposit Statement on 4/10 and Elexio created a reversing contribution record matching the original date of 3/27.
    • The church then either makes a reversing General Ledger entry with a date of 3/31 or if the month is closed, makes a reversing entry in April.
    • You will want to note any adjustments carefully and have a process to either adjust your weekly General Ledger entry accordingly or make a separate General Ledger entry for the adjustment. As you can see from option 1, using the Deposit Statement report is the easiest method.

Event Payment General Ledger Entry

Event payments will appear on the same Elexio Deposit Statement report (R4004). Church best practices handle this income similar to contributions by completing a journal entry based on the totals of this report and using the deposit date.

Example:

  • The FPS deposit is made to their bank account on 3/6 with total event payments of $380 (and contributions listed as well).
  • They run the R4004 Deposit Statement report for that date - 3/6.
  • The report shows $360 for High School Retreat and $20 for Womens Bible Study with $8.30 of Total Fees.
  • They make an accounting journal entry with a date of 3/6:
Credit High School Retreats account  $360  
 Credit Womens Ministry account $20  
Debit Cash   $380
Credit Cash $8.30  
Debit Bank and Merchant Fees Expense   $8.30

          *If you have one account budgeted for all merchant processing fees, the event fees and contribution fees could be combined and booked in one entry.

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