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This is an example of Event and Membership Dues cash flow budget I have created for NFP clients.
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Business owners, be honest: which money task do you dread most? 👀
Chasing unpaid invoices 😟
A client asked me last week: “Why is there still a balance sitting in prepaid? I already paid all of it.”
Fair question. Honestly, it’s one of the most common things business owners get confused about.
Here’s how I explained it. When you pay your trade licence for the year, that money has left your bank. But you haven’t used the whole year yet. So the unused part isn’t an expense yet. It’s something you’ve paid for and still own, like a credit waiting to be used.
Say you pay 10,350 for a 12 month licence. Each month, 862.50 moves into expenses. Whatever hasn’t been used by 31 December stays on the balance sheet as prepaid.
The client still wasn’t fully getting it from the schedule alone, so I broke it down year by year. 2020, 2021, 2022. Same prepayments, just showing how much was used and how much was still left at each year end.
That’s when it clicked for them.
The visa, shared desk, insurance and licence costs all work the same way. Pay now, use over time, expense a little each month.
If your accountant keeps saying “prepaid” and you nod along, ask them to show you a schedule like this. It’s your money, you should be able to see where it is.
This is part of my contra series, where I explain accounting without the jargon.
#accounting #prepaidexpenses #smallbusiness #UAE
Great explanation! Breaking prepayments down year by year makes it much easier for business owners to understand how their money is accounted for and why balances remain on the balance sheet.
Restricted money isn't extra money.
When a donor gives $20,000 for a youth program, that money can't quietly cover the rent or a salary somewhere else. It has to be spent on what it was given for, and your books need to show that clearly.
When restricted and unrestricted funds get mixed together, the problem usually surfaces months later, when a funder asks where their gift went. Keeping them separate from day one makes that a two-minute answer.
Absolutely! Proper fund tracking is essential for maintaining donor trust and financial transparency. Separating restricted and unrestricted funds from the start helps prevent reporting issues and ensures every contribution is used as intended.
