How best to Record a contribution by a 3rd party

Some of the members of my Club are eligible for a contribution toward their fees from an outside 3rd party. The Club applies for them direct to the 3rd party e.g. we submit an application for the 20 members to receive a $10 payment. The $200 payment is received by our bank direct from the 3rd party and I must then apply $10 to each of the club members referred to on the application as a contribution for their fees. I wasn’t sure whether to simply record the contribution as income and then apply it as an expense. It is not a donation to the club to disperse. I need to be able to apply the payments to each individual to show on their statements that they received the $10 contribution. Should I add each member as a supplier and then they can order the $10 available to them. That will then show as a liability, then when the 3rd party makes the payment I would then apply it to each individual. But wouldn’t the receipting of the received income double my figures up. Not sure how to best go about this one. I should wait until I receive the money for them and then record it…

Are you invoicing the members, if yes, do you know in advance which members are entitled to the contribution, if yes, then:

When you are doing the member invoicing, say 100 pa, Line 1: put 100 to membership fees and Line 2: put -10 (minus) to a BS Asset - 3rd Party Contribution account. Your bank deposit would be Receive Money - 3rd Party Contribution.

Your member pays 90, their account shows the contribution and the 3rd party is simply managed.

Unfortunately we don’t always know in advance who is applying or eligible to apply. Sometimes we don’t know until after invoices are done. I have in the past recorded the payment as income from the 3rd party and then created individual credits for the amount for each of the members.

This sounds perfect except, record the payment to a BS Liability - 3rd Party Contribution account and then create the individual credits using this account allocation.

Does that mean I need to enter the 20 or so recipients as the specific customers. When I receive the payment it shows as suspense.

You could do it as part of the Receive Money, each Account line would be:
Accounts Receivable + Customer (member A)
Accounts Receivable + Customer (member B) etc

Or allocate the Receive Money to a BS Liability - 3rd Party Contribution and redistribute via either a Journal or individual credit notes.

The latter allows for all 3rd Party Contribution to be reviewed in one location, if required.

I’d prefer to enter the 3rd party contribution as a bulk payment, so I have created the BS liability as suggested. I may have gone wrong here, but I created the 3rd party as a customer and received $200 from them. I have an income account also for the contribution. The BS shows $200 as well as cash on hand. I create the credit note for customer A and I can choose which invoice number to apply it to (be great if the description was displayed here to, I had to go back and check the number). I can apply the invoice and all is good except the BS Liability total stays at $$200. The amount at income shows -$10. All looks good on the customer statement except it doesn’t show the description, just credit note 1 and the amount, but that probably another post.

In actual fact, income shows as zero, I applied the $10 to fees and it shows $10 and another income for the contribution as -$10

Then just do this and nothing else - allocate the Receive Money to a BS Liability - 3rd Party Contribution and redistribute via either a Journal or individual credit notes.

Yes, they aren’t a Customer of the Club, they are actually a “customer” of the Member but with the club being the intermediary (processing centre).

No, as you previously stated “It is not a donation to the club”

Can I just say that you have a tendency towards over complication

I’m just over thinking it and want to do it simply but reflect the situation that occurred. Yes, I’ll delete the income. Just wondered why the Liability did not decrease after the credit was given

Because you allocate the credit to income “The amount at income shows -$10” not the liability where you should have.

The reason I added the 3rd party as a customer was that when I received money and allocated it to the Liability, it wanted to know the customer. I have since reviewed your instructions and have resolved my error. Makes perfect sense now I can see my error. Nice and simple now. Thanks