npo-accounting-ikiwiki/UseCases/WorkFlow.mdwn

# Non-Profit Workflow

Many accounting systems seem to assume that the workflow fits a certain type
of uses.  While the ability to impose a specific workflow (e.g., for a
bookkeeper who might make an error easily if the system doesn't require a
workflow), the  workflow should not be dictated.

## <a id="unaccrued-invoice"></a>The "Unaccrued Invoice" Example


The easiest example I have of this relates to accruing income upon invoice
generation.  Non-profits very typically generate invoices as part of a
fundraising discussion *even though* the non-profit doesn't have a good faith
belief that the invoice will be paid.  Using an invoice to convince a donor
to make a donation is, in essence, just a fundraising strategy to pressure
for them to commit to a donation that the donor has hinted they might make.

Under GAAP, these invoices should **not** be accrued nor recognized, because
the organization doesn't have a good faith belief that the income is
forthcoming.

Many accounting systems assume that the user would never possibly generate an
invoice without realizing the income immediately.  In most for-profit setups,
this is true, but for non-profits, there is good reason to generate invoices
before accruing the income.  In fact, if you're  generating an invoice merely
to "inspire" a donation, it's wrong to accrue that, since you don't have a
good faith belief that the invoice will be paid.