Some organizations use subsidiary accounts to simulate an "invoicing" system. For each type of student charge, they create a subsidiary control account. Thus, the subsidiary account tracks the amount due for each type of charge. In this approach, the subsidiary account represents an invoice.
ID |
SBS Code |
Subsidiary Description |
Posted Balance |
000000001 |
AT |
A/R - Tuition |
3,200.00 |
000000001 |
AH |
A/R - Room and Board |
1,200.00 |
000000001 |
AR |
A/R - Registration Fee |
50.00 |
000000001 |
AA |
A/R - Activities Fee |
100.00 |
000000001 |
AG |
A/R - Graduation Fee |
0.00 |
The advantage is that you can see the amount due for each type of charge. In addition, the students statement appears with multiple balances that show the amount due for each type of charge. Some organizations prefer this format instead of using one subsidiary account per student. Unfortunately, the "invoicing" approach has several disadvantages:
· Accounts Receivable is not an invoicing system. In the system, a student does not "pay down" individual charges. Instead, they "pay down" subsidiary balances.
· You have more subsidiary accounts to track. To simulate an invoicing system, you must create a new subsidiary account for each type of charge. As mentioned earlier, more subsidiary accounts per person means your system is more complicated to manage.
· You create more payment transactions. More subsidiary accounts will result in more payment transactions. If you receive a $5,000 check for tuition and fees, you must apply it to several subsidiary accounts. This process can be automated by the payment priorities mentioned earlier; however, the result is a greater number of payment transactions that will clutter the statement, inquiry window, and other reports.
· Financial Aid awards only go to one subsidiary when transferred. The Accounts Receivable staff will need to manually "split" the awards between subsidiaries.