FAQ: I want cash accounting

We are asked for this a lot by colleges who migrate to onCourse. Often this is because they might be used to managing accounting on paper or that’s how they did things in their old accounting system. Usually the conversation starts like this:

"I get how onCourse works, and it looks great, but I really want to report the class name, code and income account alongside every payment. Surely onCourse can tell me what every payment was for!"

In a Cash Accounting system, this is slightly easier. You only assign income to your general ledger once you receipt payment. It is at that point you decide where to post that income in your P&L, breaking it up by account code as required. An Accrual Accounting system is more complex but also much more accurate. onCourse goes a step further and can be described as a Deferred Accrual Accounting system. Let’s look at what that means.

Jane enrols in a class with you for $500 plus $50 GST. Her friend Bob enrols in another class for $435 with no GST. They enrol together on the same invoice under Jane’s name. First, that $50 immediately goes to a liability since it is payable immediately to the tax office. Even before you receipt the payment. That’s a nuisance for your cash flow, but at least the ATO gives you 22-50 days to pay. At the same time you have an asset (Jane owes you $985) and a liability ($935 worth of training needs to be delivered).

Now Jane pays you a first installment of $130. So if you wanted your 'cash payment income' report what would go on it? What happens if that $130 payment also finished paying off a previous invoice for $17.50 and only $112.50 went toward the new invoice?

Now you might cry "Oh, that never happens. Our accounts are simpler than that."

onCourse can’t make those assumptions, and it certainly can’t generate reports and exports which might sometimes be wrong based off an assumption that an invoice will never be partially paid, or that more than one invoice won’t be paid at once or indeed that invoices only ever have one invoice line.

So how do you solve this? Separate your financial management reporting from your cash reconciliation audit. Don’t mix them up. Look at your trial balance in onCourse to make management decisions. Look at detailed budget reports from the class list to analyse which classes have problems and which areas are doing well. Then look at the banking list and associated reports to balance the cash in your bank against what should be there. But don’t try and do management high level analysis of the money landing in your bank. It will not end well.