Ask Jon Paul: Recent Comments

Comment on Revenue Recognition – It Affects Non-Profits Too

JonPaul — Tue, 10 Jun 2008 05:17:24 GMT

I usually build these custom- it depends on your dues structure. A simple one is if you have annual dues.

The first column would be the month. The next column would be the amount of dues paid that month. Then going across in columns would be the calendar months. In each month would be the monthly amortization. The last column would then be the unamortized balance.

The rows going down would be the calendar months as well.

So if you had dues of 12,000 paid in January for annual dues, you would show in the first row of data, January, 12,000, then 1,000 in each month for the amortization. If you were looking at the end of January, you would then have an unamortized balance of 11,000 at the far right.

The sum of the columns each month would be the dues revenues that you would recognize.

Whether they cancel before or after a fiscal year does not matter then. Since you are recognizing dues over time, if they cancel after a fiscal year ends, that is OK. You earned a portion of their dues during the fiscal year. The cancellation took place afterwards and is recognized at that point.

You could build a separate schedule for cancellations. Say if some had paid dues in July and then cancelled in January so you gave them 300 back on their 600 dues. In January you would take out 300 from dues for that person. You would also reduce the amortization for January to June for the 50 per month that is being recognized for the person in January to July.

This assumes you prorate dues and do not give someone a full cancellation. If you give full cancellations that is a different matter. Hopefully that is not the case.

Does this answer your question? What is your dues structure?

Comment on Revenue Recognition – It Affects Non-Profits Too

Sandy — Tue, 10 Jun 2008 05:03:27 GMT

Thank you for the article. Do you have a sample amortization schedule that can be used for membership dues revenue? Also, if a member cancels a subscription after a period (or fiscal) year has been closed, how do I recognize the cancellation?

Comment on Revenue Recognition – It Affects Non-Profits Too

Melanie Jones — Thu, 29 May 2008 22:09:33 GMT

Thanks for this valuable input and your blog - it seems this will be a valuable resource for me on issues relative to private industry practice.
Melanie Jones, CPA

Comment on Taking Care of Travel & Entertainment

Mary Schaeffer — Sun, 11 May 2008 16:50:58 GMT

I especially like the first point about setting guidelines and sticking to them. Too often organizations have two sets of rules - one for the rank and file and a separate unwritten set for a few top level executives and perhaps a few sales people. This leads to discontent and poor morale - because, trust me, news of approved extravagant expenditures travels fast!

Mary Schaeffer
author Travel & Entertainment Best Practices (John Wiley & Sons 2007) and a dozen other business books.
editorial director Accounts Payable Now & Tomorrow (www.ap-now.com)

Comment on Revenue Recognition – It Affects Non-Profits Too

Natalie Rinard — Sun, 06 Apr 2008 19:21:41 GMT

Thank you, this is a concise article to help explain a change in dues recognition policy to our management and board.

Comment on Pre Money and Post Money

JonPaul — Wed, 19 Mar 2008 17:58:56 GMT

The investor will probably work off the proforma, determine the cash flows, then discount those cash flows back to the present to determine the post-money valuation. The pre-money valuation would be the post-money valuation less the amount of new money being put in to generate the cash flows from the proforma.

Comment on Pre Money and Post Money

Larry Caplen — Wed, 19 Mar 2008 17:56:43 GMT

Jon, great article. I have a question. If an investor is looking for a pre-money valuation amount, how is that caluculated in regard to a business doing a specific sales amount in a prior year but has Pro-forma P/L's that increase the sales, etc.

Comment on When the QuickBooks File Has Gotten Too Large

Rocky — Tue, 11 Mar 2008 17:39:15 GMT

Thanks Jon. I just never had seen a general guideline for database size.

The network here at work is 100 Mbp and the Server just handles storage QuickBooks is the only database it is running other than a few Excel files and Word Docs. It runs fine, not fast but the bottle neck is coming from P 700 MHz clients.

I used to work for a law firm who billed by 1/10 of an hour for everything imaginable and would kill the network when someone opened ten, 50 page PDFs that was stored on the server! I think it started an unintentional Denial of Service attack on the server/network and locked the network up for about 10 minutes. It was kind of funny when looking back at it. Now I am back in college and out of that mess. Last time I will ever work for a Lawyer!

Thanks for your input!

Comment on Who is Jon Paul?

JonPaul — Sun, 09 Mar 2008 13:45:32 GMT

Good luck. I love entrepreneurs. You might want to check out local angel groups in your area. I would suggest doing a Google on angel investors and narrow it down to your state or metro area.

Comment on Who is Jon Paul?

JonPaul — Sun, 09 Mar 2008 13:43:38 GMT

Have not read it- just look at it on Amazon. I am sure there is lot behind the scenes we are not aware of.