Charges & Transactions – What's the Difference?
Foundations → Financials
TL;DR
- Charge = What’s being billed.
Allocates revenue to the right Fund & Revenue Account. - Transaction = How it’s paid.
Moves money and clears Accounts Receivable (A/R).
Understanding this split keeps your books clean, makes reports accurate, and allows partial payments or future-dated billing.
Key Definitions
| Concept | Think of it as | Why it matters |
|---|---|---|
| Charge | Line‑item on an Invoice: tuition fee, recital ticket, Gift, etc. | Recognized as income (credit Revenue) and owed (debit A/R) on the charge date. |
| Payment Transaction | Money received: card swipe, ACH pull, cash, check. | Debits Cash, credits A/R—reducing what’s owed. |
| Refund Transaction | Money returned to the payer. | Reverses the original payment and re‑opens A/R. |
Typical Lifecycle
1) Create Lesson Fee Charge ($100) → Dr Accounts Receivable $100
Cr Lesson Revenue $100
2) Parent pays with Visa (Payment) → Dr Cash $100
Cr Accounts Receivable $100
The charge books income; the payment settles the receivable.
Partial & Multi‑Payment Scenarios
Because Charge and Transaction are separate records you can:
- Apply multiple payments to one charge (installments).
- Record one payment against multiple charges (bulk apply).
- Issue a partial refund without deleting the original charge.
Gifts: Same Pattern, Just Faster
When you use the Giving workflows a Gift form submits both records at once:
- Gift Charge – allocates the gift to the selected Campaign & Fund.
- Payment Transaction – instant card/ACH payment that clears the A/R immediately.
Why still create a charge? Because reporting and fund accounting rely on the charge metadata—Campaign, Fund, pledge attribution, etc. Even if the balance is $0 right away, the charge is your source of truth for where the money should live.
Accounting Impact Cheat‑Sheet
| Action | Debit | Credit | Effect |
|---|---|---|---|
| Create Charge | Accounts Receivable | Revenue Account (by Fund) | Increases recognized income & what’s owed. |
| Record Payment | Cash (or Undeposited Funds) | Accounts Receivable | Lowers A/R; increases cash. |
| Issue Refund | Accounts Receivable | Cash | Re‑opens receivable; lowers cash. |
System automatically posts these journals and ties each line back to the originating Charge or Transaction.
FAQ
Can I skip charges and just record payments?
Charges are created in the system automatically, and there must be a charge in order to process a transaction.
How do offline cash/check payments work?
Create the payment Transaction manually and select Cash or Check as the type. The accounting behaves the same.