Working with Deferred Revenue and Prepaid Balances in MonkeyPod

Deferred revenue is money your organization has received but hasn't yet fully "earned" from an accounting standpoint. It's recorded as a liability on your balance sheet, not as income, because it represents an obligation to deliver goods, services, or membership benefits in the future. Only when that obligation is fulfilled does the revenue get recognized and moved to your income accounts.

This distinction matters for proper accrual-basis accounting, grant compliance, and financial reporting accuracy.

Where Deferred Revenue Commonly Appears in Nonprofits

Deferred revenue shows up in a variety of scenarios nonprofits encounter regularly:

• Program Deposits / Camp / Course Pre-enrollment A parent pays a $200 deposit to hold their child's spot in a summer youth program. When the full sale is later processed, the staff member applies the prepaid balance to cover part or all of the sale rather than collecting again.
• Gift Cards or Prepaid Credits for a Nonprofit Store/Shop A supporter purchases a $50 gift card to a nonprofit's thrift store or gift shop. When they come in and buy items, the sale is settled against that prepaid balance instead of cash or card at point of transaction.
• Overpayment Applied Forward A supporter accidentally sends a $500 check but only owed $300 for an event ticket. Rather than refunding the $200, they ask it be held as a credit. Next time they register for an event or make a purchase, staff applies the balance.
• Member Credits  A community arts center sells prepaid class packages. The payment is recorded as deferred revenue, since the center hasn't yet delivered the value of the membership. Later, when a member uses their package to register for a workshop, the staff records the transaction as a prepaid balance payment, reducing the deferred revenue balance and recognizing the income.

Where are prepaid balances recorded in my chart of accounts?

Prepaid balances are recorded using a Deferred Revenue liability account. You'll find Deferred Revenue accounts in the Liability section of your chart of accounts.

How can I apply a prepaid balance to a sale or donation?

MonkeyPod supports deferred revenue transactions through a dedicated "Prepaid Balance" payment method on both Sales and Donations.

Recording a Sale Using Prepaid Balance

1. From the Finance menu choose Record a Sale and begin entering a new sale.

2. In the Accounting & Tracking section, select Prepaid Balance from the Payment Method options.

   

3. Select the appropriate deferred revenue liability account from the Paid from Account options.
4. Complete the rest of the sale details as usual and save. Note that the Processing Fees field will be hidden and set to zero automatically, since no payment processor is involved in this transaction type.  

Recording a Donation Using Prepaid Balance

1. From the Finance menu choose Record a Donation and begin entering a new donation.

2. At the top of the form, you'll see the donation type radio buttons. Select Paid from Prepaid Balance.

   

3. Enter the donation details, and in the Accounting section, select the appropriate deferred revenue account.
4. Save the donation. The entry will debit deferred revenue and credit contributed income, with no processing fees.

Frequently Asked Questions

I don't see "Prepaid Balance" as an option when recording sales or donations. What's up?

The Prepaid Balance option only appears when your MonkeyPod has at least one active deferred revenue account. Check your Chart of Accounts to confirm that a deferred revenue account exists and is set to active. See How to Use the Chart of Accounts for help.

Can I apply a prepaid balance to pledges, invoices, or bills?

Pledges, invoices, bills and other transaction types cannot be paid using the Prepaid Balance payment method at this time.