Weekly Revenue Recognition

Department: Finance & Accounting
Process Owner: Senior Accountant
Last Updated: December 2025

1. Overview and Purpose

Objective:
To define the procedures for recording and recognizing revenue on a weekly basis. This includes processing incoming cash receipts, classifying revenue to appropriate accounts and programs, and ensuring timely and accurate posting to the general ledger. This SOP supports financial visibility, donor reporting, and grant compliance.

2. Scope

This SOP applies to all incoming revenue received by the organization, including cash, checks, electronic deposits, pledge payments, and grant reimbursements. It covers weekly recognition and classification of unrestricted and restricted revenue, with month-end deferral or accrual handled under a separate SOP.

3. Step-by-Step Process

3.1 Collect and Review Deposit Data

• Access revenue deposit records from:
  • Bank feed (primary financial institution)
  • Online payment processors settlement reports
  • Check log (from administrative staff)
• For each deposit, identify funding source (donation, grant, pledge payment, etc.)
• Gather backup documentation (donor letter, grant remittance, ACH remittance detail)

Reviewer/Back-up: Accounting Coordinator / Controller

3.2 Record Revenue in Accounting System

• In accounting software, navigate to New → Bank Deposit
• For each deposit:
  • Enter date, amount, and bank account
  • Select appropriate revenue account:
    • Unrestricted Contributions
    • Capital Campaign Contributions
    • Restricted Contributions (by purpose)
  • Revenue Classification Guide:
    • Unrestricted Contributions: Donations with no donor-imposed restrictions on use (general operating support)
    • Capital Campaign Contributions: Donations explicitly designated by donor for capital projects, building improvements, or endowment
    • Restricted Contributions: Donations with donor-specified purpose restrictions (specific programs, scholarships, etc.)
    • When in doubt: Check donor letter, grant agreement, or campaign materials for explicit restrictions. If unclear, consult with Development team and Controller before coding. Default to unrestricted only when no restriction language exists.
  • Tag the correct Class (e.g., program, administration)
  • If for a pledge, select the donor and apply the payment
  • Attach backup documentation (PDFs or scanned support)
  • Save and submit entry

Reviewer/Back-up: Senior Accountant / Controller

3.3 Classify Online Payment Processor Revenue

• Download weekly settlement reports from online payment processors
• Reconcile gross receipts, net deposits, and fees
• Post deposits in accounting software as revenue plus merchant fee expense
• Classify based on campaign or donation form if known
• Campaign Classification:
  • Check payment processor transaction details for campaign tags or form identifiers
  • Cross-reference with donor management system if integrated
  • For recurring donations, refer to original campaign setup
  • If unclear, code to general unrestricted and flag for Development team follow-up
  • Best Practice: Coordinate with Development to ensure donation forms include campaign identifiers in payment processor data

Reviewer/Back-up: Accounting Coordinator / Controller

3.4 Update Pledge Payment and Receivable Tracking

• Apply pledge payments to donor records (via accounting or donor management system)
• For partially paid pledges, update the balance and expected future payments
• Reconcile pledge receivable rollforward (beginning balance + new pledges - payments = ending balance) and confirm it agrees to the general ledger account balance
• Flag any anomalies (prepayments, mismatches) for review

Reviewer/Back-up: Senior Accountant / Controller

4. Key Roles and Responsibilities

Out-of-Office Coverage: If the Senior Accountant is unavailable, the Controller assumes primary responsibility for weekly revenue recognition. If both are unavailable, the Accounting Coordinator may process entries with Development team consultation on classification, subject to Controller review upon return.

5. Key Files and Systems

• Accounting Software – Revenue entry and classification
• Online Banking – Bank activity and deposit confirmation
• Payment Processors – Downloaded reports used for reconciliation
• Check Log (Excel spreadsheet) – Maintained by admin for physical checks
• Donor Management System – Pledge tracking and donor profile data
• Revenue Deposit Folder – Backup documentation stored in organized monthly folders with consistent file naming for easy retrieval

6. Exceptions and Special Cases

• Donor-Restricted Revenue: Should be coded to restricted revenue accounts and classes.
• Capital Campaign Gifts: Must be flagged to correct purpose for audit and board tracking.
• Split-Purpose Donations: Split entry between multiple classes and revenue accounts.
• ACH Remittances: May require email follow-up if the deposit is unlabeled or lacks detail.

7. Risks and Controls Summary