Recording a grant tranche that arrives in the bank
How a non-profit records a grant tranche that arrives with no invoice: from the bank line to an approved journal, the right account and the evidence.
By Achekam · · 5 min read · For Non-profit businesses in South Africa, Nigeria, Kenya
Most funders do not wait for an invoice. A foundation approves the second tranche, its finance team releases the payment, and one morning a large deposit appears on your statement with a reference that may say the funder's name, a grant number, or a code only the funder's own system understands. There is no document in your books that the money can be matched to, because nobody in your organisation created one.
That is normal, and it is no reason for the tranche to sit unrecorded until month end, or to be dropped into a general income account because nobody was sure where else to put it. A grant tranche deserves the same care as a supplier payment going out: a clear trail from the bank to the ledger, with evidence attached.
This article walks through that trail in Achekam.
The bank line is the starting point
With no invoice, the bank statement is your source document. Get it into the books first.
Achekam imports statements as PDF, CSV, Excel, OFX, QIF, MT940 or CAMT.053 files, and every import is checked so that the opening balance plus the movements equals the closing balance. If the check fails, a page or line is missing; fix that before going further, because a tranche recorded from an incomplete statement can be recorded twice when the missing part is found.
Once the statement is in, the tranche appears as one bank line with a date, an amount and the funder's reference. Before you do anything else, confirm what it is:
- Does the amount match the tranche due under the agreement?
- Does the reference or payer name identify the funder?
- Has the funder sent a remittance advice or e-mail saying the payment is on its way?
If you cannot answer those questions, do not guess. Treat it as an unidentified deposit until you can; bank deposits you cannot trace to a donor explains how to handle one.
From bank line to an approved journal
Bank lines are matched by suggestion, and a person accepts each match. A tranche usually has nothing to match, so it takes the other route: a line not yet in the books becomes a suggested journal that a person approves.
The suggestion is only a suggestion, and nothing posts until a person approves it. The approver is answerable for where the money lands, so they should check the account on the journal before approving, every time. That is where most mistakes are prevented, so the approver should be someone who knows the grant: who funded it, what it is for and how your organisation accounts for it.
One case needs care. If you did send the funder an invoice or claim through receivables, matching the bank receipt does not record the payment on that invoice. It must also be recorded as a receipt in receivables, or the invoice will keep showing as unpaid and may trigger reminders.
Choosing the grant's own account
Which account the tranche goes to is the key decision, and it should be made once, when the grant is set up, not each time money arrives.
Your ledger starts from a standard chart of accounts, and accounts can be added, renamed or switched off. For each grant, set up its own accounts so its money never mixes with others:
- An income account for the grant, if your accountant treats the tranche as income when it arrives;
- A liability account for the grant, if the tranche is held as received in advance and released to income as it is spent.
Which of the two applies depends on the grant's conditions and the framework your organisation reports under. Investopedia's explainer on accrual accounting shows why revenue is recorded when it is earned rather than when the cash arrives, which is the reasoning behind holding some grants as liabilities. If yours is one of those, grant money received before it is spent explains the monthly release.
If the tranche lands in the wrong account, a posted journal is corrected only by reversal. Reverse it and post it again correctly; the ledger keeps both, which shows anyone reviewing it that the error was found and fixed.
Filing the remittance advice with the entry
The bank line proves money arrived. The remittance advice, or the funder's e-mail confirming the payment, proves what it was for. Keep them together.
Document Centre is a folder-based store where you can upload files, tag and search them, and keep earlier versions when a new one is added. A simple structure that works for most organisations:
- One folder per grant, named the same way as the grant's accounts.
- Inside it, the signed agreement, the budget, each remittance advice and each report sent.
- A tag for the financial year, so an auditor can find the year's tranches quickly.
- A note in the journal's description pointing to the remittance advice by its file name.
When a funder's auditor asks you to prove when the second tranche arrived and where it was recorded, you can go from the agreement to the remittance, the bank line and the journal in a few clicks.
Checking the tranche against the budget
A tranche is also a moment to look at the grant as a whole. You can set a budget per account and period and compare it with actual figures from the ledger, so after posting, check:
- Was the tranche the amount the agreement said? A shortfall may mean the funder deducted something, perhaps an unspent balance from the last period, and you need to know why.
- Did it arrive when expected? A late tranche may have forced spending from other funds; note it for the next report.
- Is spending on track? If the funder released the tranche after reviewing your last report, the next one will compare spending with the budget again. Tracking grant spending against the budget explains that comparison.
A one-page routine
Keep this beside whoever approves bank lines:
- Import the statement and confirm it passes the balance check.
- Identify the tranche from the reference, amount and remittance advice.
- Approve the suggested journal into the grant's own income or liability account.
- File the remittance advice in the grant's folder and note it on the journal.
- Compare the amount and timing with the agreement and the budget.
Ask your accountant this week which of your current grants are recorded as income on arrival and which as liabilities, and write the answer into each grant's folder.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
