Payments to or from (many) individuals

Some charities may have a need to track payments from a large number of individuals (for example “subscribers”) or payments to a large number of individuals (for example beneficiaries for whom the donor wants payments to be tracked).
Xero presents some issues in relation to these transactions. Firstly due to the high volume of referenced individuals and secondly in relation to the kind of information that needs to be recorded.

Let’s consider the kinds of recording requirements we might be dealing with:

a) Amounts owed to or from a group of individuals need to be captured for the annual accounts and it is not possible to do this accurately without tracking the situation of each individual.

b) Amounts owed to or from a group of individuals only arise when the corresponding payments are actually made. There is never any unpaid amount due. For the accounts, payments to or from such individuals only need to be recorded as being of a certain type of transaction; information on the individual is not needed for the purpose of the annual accounts, even if some such information needs to be captured, for example as an obligation to the donor of the funds or to track the history of payments from supporters.

c) The funds used for these transactions don’t actually belong to the charity but are only administered by the charity on behalf of other donors, perhaps because the charity has a local office and has some overlap in its target beneficiaries with those of the funding donors.

Only in case (a) is there a strong argument for associating individuals with these transactions within Xero: as contacts in the role of either customer or supplier, with invoices and bills due, respectively.

Although cases (b) and (c) are different situations, for record keeping purposes they are essentially the same: it is not necessary to keep data on individuals’ transactions in Xero, but one might want to do so if it has some advantage over the alternative.

One problem with having so many contacts is the difficulty of correctly identifying them (or even any particular contact) from the long list of contacts and the associated tendency to create unnecessary new contacts, with slightly different name spellings. One suggestion is to preface all customer IDs for this type of customer with, say, “ZZ” and then have a standard format of perhaps surname then secondary identifier, for example, “ZZ_Smith_12345”. You can create a “Contact Group” in Xero to help you filter a view of contacts for any one such group. There is the additional feature that you can issue the same invoice at the same time to all members of the group, which makes it a lot easier to manage invoices to or bills from a large group of contacts. [ Note that with the limitation of 100 values for each of the tracking codes, it is not practical to use tracking codes to track individuals’ transactions.]

For cases (b) and (c), since there is no need to see what is due but unpaid for each contact, then you don’t need to enter individuals as contacts with associated invoices or bills. In fact, it only creates work to do so, because it means first entering an invoice, for example, and then later matching the invoice to an incoming payment. It is easier to make the one entry in relation to the payment itself. If you are making a bulk payment, you can break this down into the individuals’ contributions by “Splitting” the payment and entering a line for each contributor in the payment reconciliation.

In the line for a transaction you only have the Description field in which to enter this kind of information. You would therefore need again to have a standard format for entering the data you want to capture. The “customer/supplier” for the payment could be the type of supporter or beneficiary (for example, “Senior Member sub”). In the description field you can put the individual tracking information (for example, “Smith_12345”). In a report on transactions of this type, the Description field will then combine the customer name with the description entered (for example, “Senior Member sub – Smith_12345”). You can sort this alphabetically (so think about the order in which your standardised format presents the data) and export it as either PDF or Excel.

As you can see, we are short of useful fields in Xero for this kind of recording. We are already combining more than one data element (name, ID reference) into one string of words. If you wanted to sort by one of these terms for one purpose and by the other for another purpose, you would be a bit stuck. So, if you do have several fields of information you want to record in relation to individuals’ transactions, you might prefer to use spreadsheets as the system of first data entry and only record the bulk payments in Xero. (For those interested, I understand that Sage 50 allows editing of up to 3 fields per line entry – without using Department codes or the Projects module -, which would be more useful for this kind of situation. I make no representations about how good Sage 50 would be in other respects.)