Cash vs. Accrual Accounting for Associations

The MSAE Financial Networking Group met on May 11th and discussed the pros/cons of cash and accrual accounting systems, as well as tips to make the process easier. Here a few of the takeaways from the meeting:

1. The definition of Cash & Accrual Accounting:

• Cash Accounting: An accounting system that recognizes income when it is actually received as cash and expenses when they are actually paid rather than when they are earned or incurred. Pros/Cons: Generally easier, less time consuming, harder to know where you are throughout the year.
  

• Accrual Accounting: An accounting system that recognizes income when it is earned and expenses when they are incurred, rather than when they are received or paid. Pros/Cons - Allows you to get a clear picture of where you are throughout the year, more time consuming than cash.
  

2. W-9's - Ask for W-9's from speakers before the check gets cut (if over $599), add to the speaker confirmation.

3. Dues/Renewals - If you have members who are continually paying dues late (more than 90 days), charge a processing (or rejoiners) fee to rejoin. Other ideas include: keeping the original start date (so they don't get three months free), give them a new start date (don't get to keep their original start date and longevity) or if late, they don't get included in the directory.

4. Don't record dues as AR, it depends on the situation.