When should we collect subscriptions?

[eteb3]

A non-profit collects annual subscriptions.

The best time to do this is April, as far as possible from the drains on family finances of Xmas, Summer holiday, and Back to School.

I am minded to say the subs are due on 1 April, but I'm wondering if that's going to cause havoc for our accounts. Will we make life difficult for ourselves if subs are payable before the end of the tax year, but (for a good number of late payers) received afterwards?

We currently run receipts and payments accounts, but may well have to do accruals/traditional accounting soon.

Thanks.

 

[Paul Kelly ICHYB]

When is the end of your tax year?

Also, as you know, accruals and cash accounting work different and have pro's and cons.

If you have an online membership system the invoice & payment could be generated at the same time.

Also, don't let the paperwork run your business. Unless there are VAT implications, take the money when you can get it!

 

[eteb3]

When is the end of your tax year?

End of September

If you have an online membership system the invoice & payment could be generated at the same time.

Good idea, but our beneficiaries are pretty hard up, so we need to be a bit lenient with payment dates.

Also, don't let the paperwork run your business.

this is a very fair point. There is a cost of volunteer time to any complexity, which is what I'm trying to avoid.

 

[Ziggy2024]

I second the last sentence, don't let the accounts dictate the subs. You can always manipulate the accounts (i.e. use cash or accruals) to suit. If April is the best time then go with that.

 

[Paul Kelly ICHYB]

When are the subs a usually due? Surely that is already in place?

You say that members are hard up. That has nothing to do with the membership process, just a reason for non payments.

With any membership system you can automatically chase non payers.reducing volunteer time.

 

[eteb3]

When are the subs a usually due? Surely that is already in place?

Anniversary of joining, which is a nightmare mess.

 

[Paul Kelly ICHYB]

Even more reason to automate it!

 

[Ozzy]

Is there a reason you don't opt for monthly payments?

 

[eteb3]

The fee is small and the main purpose is to give a clear and auditable indication that the person is still a member for voting purposes

 

[Daybooks]

Whilst I would tend to agree with the concept of not letting the accounting method determine the collection method you would be right to review the situation if a blip in income would cause you to go over the receipts and payment threshold; especially if it were not sustained. If it is a registered charity then there is the extra burden of complying with the Charities SORP if accruals account are produced regardless of whether you do so voluntarily or mandatorily.

Presumably you are looking to influence income collection by delaying invoicing; often only a consideration for receipts and payments accounts.

As @Ozzy says consider monthly subscriptions especially if you can automate it. It would solve the administrative nightmare of annual joining date; otherwise consider moving it to align with your accounting year.

It is always worth doing an annual review of your sources of income to ensure you categorise them correctly for VAT treatment and trading income.

 

[eteb3]

@Daybooks super helpful, thank you.