The right nonprofit financial management team and reporting solution can be a critical driver of efficiency and visibility; the wrong solution can be a critical roadblock to strategic improvement. In accordance to “Close the Books” Survey Results – 2020 Edition, by Sage Intacct and our extensive experience with nonprofit outsourced accounting services, here are five keys to improving the close process for nonprofits:
Choose a nonprofit financial management system that can consolidate entities with the click of a button.
Over a quarter of respondents listed consolidations as a main barrier to closing the books on time. The best nonprofit organizations spend less than an hour on these consolidations. Ideally, nonprofits are performing consolidations on a monthly basis throughout the year, so year-end goes smoothly.
Choose a solution that scales with your nonprofit and supports.
The number of close days increases as revenue increases, they typically implement more robust financial management software. As nonprofits grow and receive multiple sources of revenue, reporting requirements can also become more complex. The close process for nonprofits can involve multiple types of reconciliations such as, payroll, by type of funding received, by platforms funding is received, fixed asses, etc…
Choose a solution that is fully accessible and supported from anywhere in the world.
Being highly available, having less IT needs, and scaling with the business were the top three benefits of using cloud software. Accessibility should also be customizable based on the roles and responsibilities. For example, management may want review specific reports on a regular basis and limit the ability to modify the reports. Instead of having the finance team spend the time to run the reports, management could do so on their own while the integrity of the data can stay intact. For more on how cloud-based financial system could benefit your organization, check out what CFO’s are saying in the article, Nonprofit CFOs Agree – Cloud Financials Key in Running a Nonprofit Today.
Choose a solution that eliminates tedious manual processes and spreadsheet headaches for improving your close process.
Respondents saw automation as the main aspect of their closing process that can be improved. These spreadsheets can come in the form of grants/contracts tracking. It is common practice for government contracts to require the reporting of how funding is spent by nature of expenses and function. Having to reconcile these expenditures on manual spreadsheets to a separate accounting system can be tedious and can significantly slow-down the closing process for nonprofits.
Choose a vendor that is already implementing AI and has a strong artificial intelligence roadmap for improving your close process.
Looking ahead, nonprofit organizations are most interested in AI features such as continuous closing, predictive analytics, and outlier detection. In evaluating vendors, we recommend selecting companies that are also forward looking and balance in the use of human resources and technology.
If you’d like to explore how your organization can improve how your nonprofit closes the books through-out the year, please contact us. At O&S we have dedicated a nonprofit outsourced accounting team, all located in Southern California, that specializes in developing & implementing customized accounting solutions for timely and accurate reporting so management can focus on strategic and operational activities. We are happy to answer your questions and show you solutions.
For other informative emails from O&S CPAs & Business Advisors, subscribe here!