Connection Card Pro Help & Documentation

Best Practices: Cash Basis vs. Accrual Basis in Connection Card Pro

Connection Card Pro supports both Cash Basis and Accrual Basis accounting. This guide will help you understand the things you should know for either method and how it translates to your usage of Connection Card Pro. 

1. Cash Basis vs. Accrual Basis – Plain Language

What is Cash Basis vs. Accrual Basis?

Cash Basis

• Income is recorded when cash actually hits or leaves your bank / cash.
• Simple and common for smaller churches.
• Great if you mainly care about “How much money do we have right now?”
• Example: You receive a room-rental payment on March 10. You record income on March 10, even if the event happens in April or if the invoice was sent in February.

Accrual Basis

• Income and expenses are recorded when they are earned or incurred, even if the cash comes later.
• Gives a more accurate picture of what really happened in that month (useful for budgets, staff reporting, boards, and audits).
• Example: You sign a contract for a $1,000 room rental that happens in April:
  • Record the invoice (income) dated in April (when the event happens).
  • Record the payment when it’s received as a movement between accounts, not as new income.

In Connection Card Pro, there’s no “cash vs. accrual” switch.
Your method is determined by how and where you record transactions.

2. Core Principle in Connection Card Pro

• Income Statement (Profit & Loss): Shows income/expenses based on the date of the transaction that hits income or expense accounts.
• Balance Sheet: Shows balances of assets, liabilities, and funds as of the report date.

So:

• For Cash Basis – date your income/expense entries on the date cash changes hands. Avoid using Accounts Receivable (A/R) and Accounts Payable (A/P) except for the special online-giving use described below.
• For Accrual Basis – use A/R and A/P to record when income/expenses are earned, then create separate entries that move money between asset/liability accounts when cash actually moves.

3. Donations & Online Payments (Works for Both Cash & Accrual)

Recommended Setting (for everyone):

Giving > Giving Setup → “Use Accounts Receivable for Donations / Payments”

• When checked:
  1. Each donation / event payment is recorded as an individual entry in your Accounts Receivable account (or whatever A/R asset account you choose here).
  2. When the payout/settlement from Stripe or Fortis actually hits your bank, a single entry moves the lump sum from that A/R account into your bank register.

This has huge advantages:

• Your payout amounts match your bank statement (one deposit per settlement/payout).
• Your reconciliation process is much easier.
• You still have full detail of individual gifts/payments in the A/R account and in the Giving module.

Cash-Basis Twist

If your church is cash basis, this can feel confusing because “Accounts Receivable” sounds like accrual-only. Here’s the simple fix:

• Rename or create a special A/R-type account and use that in Giving Setup, e.g.:
  • “Stripe Unsettled Amounts”
  • “Fortis Unsettled Amounts”
  • “Online Giving Clearing Account”

Treat this as an asset account that simply holds online payments until they hit your bank.

In cash-basis reporting, you (or your accountant) can treat the payout date as the true “cash received” date if required for tax reporting, while still benefiting from the internal clearing workflow.

Accrual Basis

For accrual, you can treat that A/R or clearing account as true Accounts Receivable if you want, or simply as a clearing account that holds transactions between donor payment and payout. Either is acceptable as long as you’re consistent and your accountant agrees.

4. Invoices & Room/Resource Billing

Connection Card Pro’s invoices can behave in a cash-basis or accrual-basis way depending on one checkbox:

“Save Entry in Accounts Receivable” (on the Create Invoice page)

• If you’re Cash Basis:
  • Leave this UNCHECKED.
  • No ledger entry is created when the invoice is issued.
  • When the invoice is paid, a single entry is created in your cash/bank register with income and any tax/discount.
  • Effectively: income is only recognized when you actually receive the money.
• If you’re Accrual Basis:
  • CHECK this box.
  • When you issue the invoice:
    • An entry is created in your A/R account, recording the income and showing the customer owes you money.
  • When the invoice is paid:
    • A second entry moves money from A/R into your chosen bank register—this movement is between asset accounts and doesn’t create new income.
  • Effectively: income is recognized when you issue the invoice, not when you get paid.

You can use similar logic for Accounts Payable (A/P):

• Enter bills into an A/P account when they are incurred.
• Later, record payments moving money from your bank register to A/P.

Accrual churches might go all-in on A/P; cash churches might only use it for tracking bigger invoices, or not at all.

5. How Reports Reflect Each Method

For Cash-Basis Churches

To behave like cash basis:

• Record donations and event payments on the date they are received.
• Record expenses on the date you actually pay the bill (check date, EFT date, credit card payment date).
• Avoid using A/R and A/P for timing differences (except the recommended clearing accounts for online giving).
• When you run an Income Statement for January, it should only show:
  • Donations and other income recorded with January dates.
  • Expenses recorded with January payment dates.

For Accrual-Basis Churches

To behave like accrual:

• Use A/R and A/P:
  • Record revenue when it is earned (e.g., when you hold the event or the service occurs), using A/R if cash hasn’t arrived yet.
  • Record expenses when they are incurred (invoice date), in A/P if unpaid.
  • Later, record separate entries moving money from bank to A/P or A/R to bank when payment happens.
• Your Income Statement for January now shows everything that belongs to January, regardless of when cash moved.
• Your Balance Sheet shows:
  • A/R balances – amounts still owed to you.
  • A/P balances – amounts you still owe.
  • Funds (your internal restrictions or departments) as of the report date.

You can go as deep as you want with accrual:

• Some churches will only use A/R for invoices and online giving.
• Others will also use A/P for reimbursements, vendor bills, event expenses, etc.

Work with your accountant to decide how detailed your accrual tracking should be.

6. Common Scenarios & How to Handle Them

1. Member Reimbursement

• Cash Basis:
  • When you reimburse the member (write the cheque/EFT), record the expense on that date in your bank register.
• Accrual Basis:
  • Option A: Simple – same as cash basis; record when reimbursed.
  • Option B: Full accrual – record an entry in A/P on the receipt date, then later move money from bank to A/P when you reimburse them.

2. Event Deposits for a Future Retreat

• Participant pays a deposit in February for a retreat in June.
• Cash Basis:
  • Record income in February (date money received) unless your accountant prefers treating it as a liability until the event happens.
  • If your board wants good “per-event” reporting, you can still tag it with the event's tag.
• Accrual Basis:
  • Option 1: Record as a liability (e.g., “Deferred Revenue – Retreats”) in February, then move from liability to income in June.
  • Option 2: Record as income in June using A/R and treat February as a payment against A/R.

3. Using Funds in Connection Card Pro

• Funds are your internal “buckets” (similar to classes or funds in other systems).
• Both cash and accrual churches should:
  • Assign income and expenses to the correct Fund when they post them.
  • Use tags (Projects, Events, Fundraisers, Departments, Divisions) to track specific initiatives inside a fund.

Funds and tags work the same whether you are cash basis or accrual; the difference is when the income/expense hits the fund.

7. How Connection Card Pro Automatically Records Entries

Some important considerations for how Connection Card Pro automatically tracks income through various modules. 

Recurring Gift 
When a donor sets up a recurring gift, donations are treated as cash basis and acceptable for accrual basis. Only the amount received at the time of donation is recorded in your ledger and each recurrence of that gift will be recorded when it is received. This is also acceptable for accrual basis, because a recurring gift can be canceled by the donor at any time, is not a contract, and therefore can't be recorded as a receivable asset until committed. Before the donor's payment method is charged, this is only an intention. 

Pledges
Recording pledges (a donor makes a commitment to give) does not automatically create any entries in your ledger. Pledges are used in Connection Card Pro to only track goals and commitments but are not tied directly to recurring gifts or other donations. Gifts received online will be automatically counted toward someone's pledge based on settings (and once given will create the ledger entry), but gifts received offline will still need to be recorded manually. This also does allow some flexibility regarding how you wish to treat a pledge if you use accrual basis - but, our recommendation is to still treat it as an intention, not a contract, and therefore not qualified as a receivable. 

Event Registrations
Event registration income (full paying, amounts owed and payment plans) is more aligned with cash basis rather than accrual basis. Connection Card Pro automatically records the entire amount received at the time it is received as income in the asset register (or A/R account) which you choose.

If your organization uses accrual basis but you allow registrants to cancel without enforcing the balance owing, then this may still be acceptable practice based on your normal procedures, please consult your bookkeeper.  

For organizations using accrual basis, event registration payments will require some manual adjustments / entries if you are treating the income as A/R and as a contract liability or deferred revenue liability until the event occurs and only recognizing it as income once the event occurs. If this is something that your organization does, please let us know. We will prioritize automating this based on the level of interest received. 

8. Practical Best Practices (Both Methods)

1. Be Consistent
   • Choose a method and stick with it, especially for year-to-year reporting.
   • If you change methods, talk to your accountant about the right way to transition.
2. Name Your Accounts Clearly
   • For online giving clearing:
     • “Online Giving Clearing – Stripe”
     • “Online Giving Clearing – Fortis”
   • For true A/R or A/P:
     • “1100 – Accounts Receivable”
     • “2100 – Accounts Payable”
3. Use Reconciliation Monthly
   • Regularly reconcile bank and credit card registers against statements.
   • For both cash and accrual churches, this confirms that what Connection Card Pro shows matches your bank.
4. Separate “Real World” and “Internal” Uses
   • You might use A/R as a true receivable (accrual) and as a clearing account for online giving. That’s okay as long as your accountant understands your setup.
   • If you prefer, create separate accounts:
     • “1100 – A/R – Invoices”
     • “1110 – Online Giving Clearing”
5. Document Your Policy
   • Create a short internal document: “How We Record Income/Expenses in Connection Card Pro.”
   • Include:
     • Are we cash or accrual?
     • Do we use A/R for invoices?
     • How do we treat online giving?
     • Who reconciles which accounts and how often?

9. FAQs You Might Get from Staff or Volunteers

Q: We’re small. Do we have to use A/R and A/P?
A: No. For pure cash basis, you can record everything directly in your bank registers. But we still strongly recommend using the online giving clearing account approach described above so your payouts match your bank.

Q: Can we be “mostly cash” but use A/R only for big invoices?
A: Yes. Many churches do a hybrid: cash basis for day-to-day, but use A/R for facility rental invoices or large receivables to keep better track.

Q: If we use accrual, do we have to go back and fix past years?
A: Not necessarily. Talk with your accountant. Many organizations switch methods going forward from a clean starting date.

Q: How does this affect tax receipts for donors?
A: Donation receipts are based on the date of the gift, which comes from the Giving module. That’s independent of whether your ledger is cash or accrual—but your accountant may care how that flows into your financial reports.