Setting up a new employer contract in your books

The first month of a new employer contract sets the pattern for every month after. If the setup is right, invoices match payments and you can see what the contract earns. Send your bookkeeper the contract and five facts before the first invoice goes out.

What to send your bookkeeper

• The signed contract.
• The start date and billing frequency.
• The rate per member and any minimum.
• The billing contact and payment method.
• Whether any months are paid in advance.

What gets set up

• A customer for the employer, with the billing contact.
• A revenue account or class for employer membership, separate from individual members. Why to track employer contracts separately.
• Separate lines for onsite fees and other services.
• Prepayment handling if the employer pays ahead. Prepaid employer contracts in your books.

The first invoice

Build it from the census, check it twice, and send it with a note on how changes will be handled. What to put on an employer invoice.

The first payment

Match it to the invoice when it lands. In a made-up example, you bill $2,100 for 30 members at $70. The employer pays $2,100 ten days later. Your bookkeeper applies it to the invoice and A/R for that employer goes to zero. If the amount differs, ask why before recording it. How to reconcile employer payments.

What I'd do this week

• Send the contract and the five facts to your bookkeeper.
• Agree on who builds the invoice each month.
• Put the first invoice date on your calendar.

Common questions

Do I need a separate bank account for employer payments?
No. Separate revenue accounts or classes give you the detail you need.

Cash or accrual for employer contracts?
Ask your bookkeeper and CPA. Accrual shows what each contract earns month by month.

Who sends the invoice?
Whoever you choose, every month on the same date. Your bookkeeper can if it's in your agreement.