3.4 Revenue and Accounts Receivable

Published

April 18, 2022

Policy and Procedure 3.4 – Revenue and Accounts Receivable

A. Invoice Preparation

  1. Policy: All grants and sponsors are invoiced each month, or as required by the agreement, to capture all billable time and expenses and ensure a regular healthy cash flow for the organization. All invoices for the prior month are completed by the 15th of the following month (ex: June 15th for May). Invoices are based on costs recorded in the accounting system and any indirects allowed by the agreement.

  2. Procedures:

    1. The Operations Director gathers relevant expense documentation, prepares all invoices, and submits to the Executive Director for approval by the 10th of each month.

    2. Following approval, the Operations Director electronic invoice is emailed or mailed and saved in a network folder.

    3. The outside accountant will perform a monthly reconciliation between recorded direct costs shown in the accounting system and amounts invoiced. Discrepancies will be addressed in the next billing cycle.

    4. As part of the monthly close process, the outside accountant reviews an Accounts Receivable Aging report and alerts the Executive Director of invoices more than 60 days overdue.

    5. The Executive Director determines appropriate collection efforts for long outstanding invoices. The Executive Director is also notified of any receivables that are more than 90 days outstanding and/or more than $5000.

    6. If an overpayment from a government customer has been identified, the government customer will be notified and grant overpayments will be refunded on a timely basis to the paying office or applied to subsequent billings. Records will be maintained of the timely identification of over or under payments and the actions taken to correct the overpayment.

B. Revenue Recognition

  1. Policy: All contributions will be recorded in accordance with GAAP, with specific attention to standards FASB 116 and 117. Contributions are recorded as pledged or received in accordance with FASB 116, and must be credited to the appropriate revenue lines as presented in the annual budget and coded as designated in the organization’s Chart of Accounts.

  2. Procedures:

    1. The Executive Director reviews all revenue in excess of $5,000 and indicates on the letter or copy of the check how the revenue shall be recognized (as earned/contributed, conditional/unconditional and restricted/unrestricted). If there is a question or uncertainty about how to recognize a particular contribution, the Executive Director will ensure that the donor is contacted to clarify the intent of the contribution.

    2. The Operations Director is responsible for posting revenue to the general ledger in accordance with the determination made by the Executive Director.

C. Cash Receipts

  1. Policy: Most incremental payments from grants are electronically deposited into a designated ESIP bank account. Monies received by other means may be deposited physically or electronically. No single deposit account will contain an amount over which the FDIC will insure.

  2. Procedure:

    1. The Operations Director receives and opens all mail.

    2. Checks are endorsed by Executive Director and deposited. If a bank deposit is made, the check is first scanned or copied to retain a record of its existence.

    3. Checks and cash are kept in lock box until depositing. No deposit will be locked in the filing cabinet for more than 24 hours except when received over a weekend or holiday.

This Policy was approved by the Board of Directors of ESIP on October 17, 2017. Revisions to this policy were approved by the Board on September 15 2021.