Many U3As have a financial year and membership year that coincide or overlap when taking into consideration the advance renewal and grace periods. The number of members who renew early, i.e. before the end of the financial year, can vary significantly. If just 10% of members renew late then the membership income for the previous year will be 20% less, and that’s disregarding any variation going further back.
As well as statistical variations there are factors influencing this that range from the number of renewal reminders issued to even the weather.
2. Financial Implications
Producing a Financial Statement from Beacon will generate figures that meet the accounting requirements for all but the largest U3As.
However, U3As need to know is whether they are running a surplus or deficit so that they can make spending decisions and the timely setting of fees. A statement based on the transactions for the financial year will not reveal this accurately without making an adjustment to include only the fees relating to one membership year.
3. Worked example to create a true picture
This requires some basic spreadsheet skills – deleting rows and summing figures in a column (how to do this is explained below).
Also, ensure that all the membership fees for renewals are banked before the financial year-end, otherwise further adjustments will need to be made.
Assume a U3A has a membership and financial year starting on 1st April with the advance renewal period and grace period both 13 weeks.
Do the following in Beacon: -
- From the main menu select Ledger (by category) and then select the Year before the financial year you are analysing from the dropdown (this will usually be 2 years back). Ensure the Category is Membership.
- Scroll down to the bottom and click on Download Excel
- In your spreadsheet select all the rows from row 1 down to the last entry dated before the advance renewal period i.e. to 31st December in this example. Delete them (right click your mouse to see a menu item to do this)
- The remaining rows are fees paid in advance. Click on an empty cell such as P1 (column P row 1). Put =SUM(L:L) in the cell. The cell will display the total of all the fees paid from January to March. Make a note of the amount and call it “Advance fees”.
Now repeat the above with the following Year i.e. the financial year you are analysing. Call this total “Next year fees”.
On the Financial Statement look down the “In” column to find the Membership category line that shows the total membership fees. Call this “Total fees”.
Now calculate “Total fees” plus “Advance fees” minus “Next year fees” and call it “Adjusted fees”.
Your surplus/deficit for the year will the sub-totals of the “In” minus “Out” columns. If this is negative you have a deficit. To adjust the surplus/deficit then add the “Advance fees” minus “Next year fees”
This will give you a surplus/deficit figure adjusted for the fees that belong to the membership year in question.
Don’t forget to check and adjust for other anomalies before making financial decisions. For example, did you make Trust payment(s) late one year meaning they occurred twice in one financial year and were absent from the previous year?
Copy of KB article with the same name