Enhancing Accounting Processes for Nonprofits: A Commitment to Continuous Improvement

Effective accounting processes are essential for nonprofit organizations to ensure accurate financial management. However, achieving perfection in accounting practices is a rare feat. This article highlights the importance of committing to ongoing improvement in nonprofit accounting processes. By prioritizing key functions, leveraging software capabilities, and addressing inefficiencies, nonprofits can enhance their financial oversight and reporting.

Prioritizing Key Functions:

Within a nonprofit organization, certain financial functions demand heightened attention. For instance, it is crucial that individuals or groups responsible for financial oversight promptly review monthly bank statements and financial statements. This review helps identify errors or unexpected amounts. Nonprofits should address any inefficiencies in this process, whether it stems from a lack of understanding among individuals or systemic failures.

Another critical area to prioritize is invoice payment. Implementing policies and procedures that establish a monthly cutoff for invoice submission to the accounting department can streamline the process. Minimizing adjustments and reducing the reliance on additional input from employees or departments can save time and expedite the completion of financial statements.

Harnessing the Power of Software:

Nonprofits often underutilize their accounting software due to a lack of familiarity with its full functionality. Consider investing in a trainer who can provide an overview of the software's basic functions and teach time-saving tips and shortcuts to staff members. If the current software is outdated or inadequate for the nonprofit's needs, replacing it should be a priority.

Leveraging the right software enables nonprofits to standardize financial reports without modifications. This not only reduces input errors but also provides valuable financial information on-demand, rather than just at the end of each month. Automating standard journal entries and payroll allocations within the accounting software can further streamline processes. Periodic reviews of estimated figures against actual data are essential, ensuring adjustments are made before closing the books at year-end.

Identifying and Addressing Inefficiencies:

The aforementioned improvements are only the beginning. Depending on the nonprofit's size, programming, and other factors, there may be other accounting functions that require optimization. Consider seeking advice on specific challenges or conducting an organization-wide audit to identify and address multiple inefficiencies. By proactively identifying and resolving issues, nonprofits can enhance their financial management processes.

Nonprofit organizations committed to continuous improvement in their accounting processes gain a significant advantage over those that settle for the status quo. Prioritizing key functions, maximizing software capabilities, and addressing inefficiencies are crucial steps towards achieving greater accuracy, efficiency, and financial oversight. By embracing ongoing improvements, nonprofits can strengthen their financial management practices and better serve their missions.

How HoganTaylor Can Help

The HoganTaylor Nonprofit team of business advisors and CPAs is comprised of former CFOs, controllers, and industry experts with extensive experience providing the guidance organizations need to lean forward again in their leadership. If you have any questions about this content, or if you would like more information about HoganTaylor’s Nonprofit practice, please contact Jack Murray, CPA, Nonprofit Practice Lead.

INFORMATIONAL PURPOSE ONLY. This content is for informational purposes only. This content does not constitute professional advice and should not be relied upon by you or any third party, including to operate or promote your business, secure financing or capital in any form, obtain any regulatory or governmental approvals, or otherwise be used in connection with procuring services or other benefits from any entity. Before making any decision or taking any action, you should consult with professional advisors.