Cleaning Up Unpaid Pledges at Year End.

It is the end of the year for
your religious or small nonprofit organization and you may find some of your
well-intentioned donors could not fulfill their pledges. Rather than carry the
uncollectible pledges forward in the following year, you will want to issue
credit memos in QuickBooks to write off the balances.

First, set up a new item (Lists, Item List, right click, New)called Uncollectible Pledges or Uncollectible
Tithes and have it link to your Pledges/Tithes/Offerings
Income Account. By using items, your organization can track the amount of
write-offs each year.

[image error]

Next you'll need to determine
which pledges should be written off. Print out your year-end A/R Aging summary
report by going to Reports, Customers
& Receivables, A/R Aging Summary. Select the end of the year for the date and if
you have more than one receivable account (i.e. operating pledges vs building
fund pledges), select Customize Report,
Filters, Account, and use the drop down arrow to select the specific pledge
receivable account.Print out this list
and mark the donor accounts you feel are not likely to be received.

Now you will issue credit
memos to apply to the invoices. A credit memo tells QuickBooks to treat the
invoice as fulfilled, so it will no longer show up as outstanding. Go to Customers, Create Credit Memos/Refunds. Enter the donor name, the class the pledge
originally went to, and the pledge receivable account across the top. Change
the Date to the year-end date.

Under Item, put your new Uncollectible
Pledge item and under Amount,
put the amount to be written off.

[image error]

Near the top of the screen,
you will see a couple of green icons. Select Use credit to apply to invoice. This screen lets QuickBooks know which invoice your are wanting to write off. The following screen will appear.

[image error]

Click the box near the invoice
you would like to write off and select Done.
Repeat this process for the remaining uncollectible pledges. Rerun the
year-end aging to be sure all of the uncollectible accounts were written off.

You can track how much your organization is
writing off each year, by running a Sales
by Item Detail report (Reports,
Sales, Sales by Item Detail) customized for the Uncollectible Pledge item.

[image error]

Now you are ready to start
the new year.If one of the donors pays
the pledge in the next year, enter it through Sales Receipts, instead of Receive
Payments and code the revenue to a Pledge income sub-account called Last Year's Pledge Rec'd This Year.
This keeps the revenues separate from the normal pledges received and, over
time, allows you to see how much of the pledge dollars written off your organization
recovers.

I hope that helps your
year-end closings. Next week I'll talk about independent contractors and 1099
filings.