Accounts Receivable

Many chapters have problems with the collection of dues. Dues that are owed but not yet paid are known as Accounts Receivable. Accounts Receivable is like a contagious disease to your chapter. If left untreated, your chapter will soon be crippled or dead. It can be cured, but it is best to avoid the problem in the first place.

Here are two possible incentive plans that can help keep your Accounts Receivable to a minimum. It is strongly recommended that your chapter adopt one of these plans.

The Discount-Incentive Plan

  1. At the beginning of each term or semester, each member is given a bill for the total amount of dues for the term.

  2. A deadline is set for the payment of dues in full (usually the third week of the term).

  3. All members who pay all of their dues by the deadline are given a discount of a certain amount. (For example, if dues are $600 per semester, all Fraters who pay before the deadline could be given a discount of $60).

  4. Any member who cannot pay all of his dues by the deadline must make at least a one-third payment by the deadline. The remaining two-thirds are divided into two equal installment payments, due at the first of each of the next two months.

Example: Jim is a member of a chapter whose dues are $450 per semester. He must pay the Crysophylos at least $150 before the deadline. The remaining two-thirds ($300) is due in two monthly installments of $150 at the beginning of each of the next two months.

The Penalty-Incentive Plan

  1. At the beginning of each term or semester, each member is given a bill for the total amount of dues for the term.

  2. A deadline is set for payment of the dues in full for the term (again, usually the third week of the term).

  3. Any member who does not pay all of his dues by the deadline is fined a specific amount (usually 5 % to 10%).

  4. For any member who does not pay in full, the total amount (dues plus fine) will be divided into three equal payments. The first payment will be due at the deadline that was set up as above. The remaining two payments will be due at the first of each of the next two months.

Many TKE chapters have proven time and time again that these plans are the two best methods for keeping Accounts Receivable to a minimum. Both plans offer some type of encouragement for Fraters to pay their dues on time. Billing dues on a monthly rate quadruples the effort needed to collect dues. Paying dues in full at the beginning of the term is simpler, easier to enforce, and puts chapter income in the bank as soon as possible.

Even with these plans in force, some members may still fall behind in paying dues. This is usually due to failure of the officers to enforce the penalties for non-payment of dues. Your chapter should have specific rules as to the penalties for not paying dues. These penalties should include all of the following:

  • A member who is behind in dues cannot play in intramural sports.

  • A member who is behind in dues cannot attend any social functions.

  • A member who is behind in dues cannot vote at meetings.

  • A member who is behind in dues cannot run for chapter office.

  • A member who is behind in dues cannot be a Big Brother.

These penalties should be a part of your chapter bylaws and should be enforced regularly and equally for every member, including officers.

A/R Ledger

The Accounts Receivable Ledger is an accounting tool that lets you record all debt and payments of each individual member. Regular maintenance of these ledgers gives the chapter an up-to-date record of all money owed the chapter.

An individual page is used for each member. Start a page for a member as soon as he becomes a candidate. Each time a member is charged for something, such as dues, Red Carnation Ball, etc., an entry is made into his ledger. Every time he pays the chapter money, an entry is also made, this time in the payment column.

This is the individual ledger for David W Dow. At the top of the page, the Crysophylos has entered the information needed to contact Frater Dow. The first item recorded on Frater Dow's account is a charge for dues for the fall semester ($450). A similar entry will be made in every Frater's account for the term.

On August 25, the Crysophylos received a check from Frater Dow for $450. This was recorded as a payment and subtracted from the balance due, resulting in a new balance due of $0. The Receipt #167 in the description column refers to the receipt number that was given to Frater Dow by the Crysophylos.

The following semester, the Crysophylos has recorded an item for Frater Dow's spring dues ($450). A similar entry will be made in every Frater's account for the term. Frater Dow will be unable to make one payment for dues this semester, and is charged a $45 penalty on January 31 because the chapter uses the Penalty-Incentive Plan. His new balance due is $450 + $45 = $495.

On February 1, March 1, and April 1, Frater Dow makes his three monthly payments. Each is recorded in the ledger. Notice that by keeping an individual member ledger, the Crysophylos can tell at any time, how much each member owes by looking at the most recent entry in the balance due column.

Tips for Handling Money

  1. Keep all chapter money in a safe place at all times. There are several lockable fireproof cash boxes readily available on the market today. Some of these can be bolted down for extra security.

  2. Deposit all cash and checks into the chapter bank account as soon as possible. This will prevent possible loss from theft and will make reconciling the bank statement much easier. Do not allow cash to accumulate.

  3. Every time money is received by the Crysophylos, a receipt is written. This must be done in order for the receipts to balance with the Accounts Receivable Ledger.

Previously, the account of Frater David Dow was discussed. These sample receipts represent the payments that Frater Dow made to the chapter. Each receipt is numbered consecutively as they are written by the Crysophylos. Frater Dow's receipts are not in consecutive order since many other fraters made payments during this time. Note that each receipt is written clearly and that the amount of payment is written twice, just as on a check.