"We sell corporate pre-paid memberships at our club. As in the past, we ring in a Payment on Account of $10,000 for the given member. This puts a credit balance on the member's account ledger. We then let that account buy anything at the club against that credit balance until it is depleted. Works fine for the most part but the problem is that the Payment on Account is showing up as Revenue/Income when we really haven't sold anything yet. Is there a better way to do this?"

    There is a better way to handle this. While the above method will work for the POS systems, it does not sync up with accounting. The bottom line is that Pre-Paid funds are a Liability in the Accounting world so you need to cross-reference a pre-paid transaction to a Liability GL code instead of doing a Payment on Account (which by definition will reduce your liability and increase cash).

     First, we have some set up work to do.

     Click Tools > Options > Accounting > Chart of Accounts:

     If you don't already have a Pre-Paid GL account set up as a Liability Type, click on the Add button (as shown above).

1) Enter a new GL Code. You may want to get this number from your accountant since they tend to have a method to numbering these.
2) Give it a meaningful description (I used "Pre-Paid Funds". Clever, eh?)
3) Set the Type to Other Current Liabilities
4) Set the Major Category to Current Liabilities
5) Click Save

     From Options > Reference Tables > Sale Category, find or Add a Pre-Paid Sale Category. Set the Description, Category Type, and General Ledger fields as I have below. If any check-boxes are checked, un-check them. Click Save.

     Now, about that Pre-Paid check box. This is used to let the software know what items/products the customer can buy using Pre-Paid funds. So, if you only permit Pre-Paid funds to be used for Greens Fees and Cart Fees, you need to go back to the Sale Categories for those items and select the Pre-Paid checkbox and then click Save. Do this for each Sale Category that you want to allow Pre-Paid funds to be used for that purchase.

     Ok, that completes the setup. Let's look at what happens when I come in and give you my $10,000 for a Pre-Paid account.

     From the Sale screen, pull up the Account (I used myself here) and then click on the Pre-Paid button.

     Enter the amount of Pre-Paid funds (use the keyboard, touch-screen, or mouse) and then Enter.

     Verify the Pre-Paid item and amount, set your Payment Method as needed and Finalize the sale.

     As Rick comes in to purchase the item Golf Fee, here's what happens...

     Note that once we pull up Rick's name, you see the $10,000 available in Pre-Paid funds. Selecting a golf fee (note that the sale category for Golf Fee has the Pre-Paid indicator checked) adds the fee and, in this case, a free cart to the sale. From Payment Methods, I select Pre-Paid. The eligible amount (all $160 in this case) is taken care of in Pre-Paid funds. Finalize the Sale. The $160 has been deducted from the Pre-Paid balance and applied to the Sale of the Golf Fee. In accounting terms, we just reduced the liability account and recognized the revenue for the sale of the Golf Fee.

     That's it! Now, when you export sales to your accounting system, your accounting Debits and Credits will line up with your CPS Sales.

Until Next time,

Enjoy :)