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Many not-for-profit organisations receive grants for particular projects on a regular basis. These grants may be received in advance of the actual period to which they apply, and are recorded in your accounting system by receiving them into a liability account. The grants are then allocated to an income account each month via journal entry.

Calxa has no built-in method to automatically set the cashflow for grants received in advance. This help note will describe the accounting system and Calxa set up to handle this for cashflow purposes. 

What to do in your Accounting System

Please note that while we are using MYOB in this example, the same principles apply to all accounting systems.

  1. In your accounting system, add a new liability account close to the Grants Received in Advance account, and call it Grants Allocated or something similar.

    Note: If you receive multiple grants in advance, it’s advisable to set up separate pairs of accounts for each grant – this will make reconciliation simpler.

  2. Ensure the Grants Received in Advance account has a default tax code of GST (unless your grants don’t include GST), and the Grants Allocated account is set to N-T.

  3. When the grant is actually received, record the receipt against the Grants Received in Advance account.

  4. Each month, enter a journal to credit the relevant income account (and job number) for the grant and debit the Grants Allocated liability account.

  5. At the end of the financial year, or when the grant is fully allocated, credit the Grants Allocated account with its balance and debit the Grants Received in Advance account. This will clear the balance from both accounts.

What to do in Calxa

  1. Enter a monthly Income budget for the grant amount you will journal monthly.

  2. Enter a budget in the Grants Received in Advance liability account for the grant amounts you expect to receive (excluding GST), in the months you expect to receive them.

  3. Enter a monthly budget for the Grants Allocated liability account which is -100% of the income account budget. This will reflect the debit side of the monthly income journal.

  4. In CashflowSettings:
    1. Set the Cashflow Type for the Grants Income account to None (as the transactions on this account will have no effect on cashflow).

      Set cashflow type to None

    2. Set the Cashflow Type for the Grants Allocated account to None (for the same reason).

    3. Set the Cashflow Type for the Grants Received in Advance account to Profile and 100% Current. Use this setting to show the grant funds received in the same month as they were budgeted in the Cashflow Forecast.

      Cashflow type Profile 100% Current

The Balance Sheet forecast will show two lines for Grants Received and Grants Allocated, which together will show the net balance of the unallocated grant. You could create a header account in your chart of accounts or with Calxa Account Trees to summarise them to get a net balance.