Everything looks rosy from the outside. The finance department, however, has trouble brewing just under the surface. How can you tell? Welter Consulting has the experience to see and fix problems where they start. The finance department of a nonprofit is often the most overlooked place. After all, it’s all about the mission – right?
Well, yes and no. Nonprofits need margin to achieve their mission: no margin, no mission, no nonprofit. The finance department is the team charged with planning and managing the financial resources of the organization. Without a well-run finance department, there will not be enough capital to run all of the programs, services, and other activities for the organization.
There are certain telltale signs of dysfunction in the financial department that we’ve learned to spot over the years. We also work with teams to identify problems and help them fix them.
Sign #1: Unclear roles and responsibilities
Suzy handles accounts payable and any incoming checks, but John is the accounts receivable clerk. Oh, and he’s also in charge of petty cash and updating the finance software because he’s good with computers.
If that sounds like a mess, it’s because it is. Over time, many nonprofits find that roles and responsibilities shift and change. Instead of aligning people and roles, people are allowed to assume various roles according to their time and talents. New skills needed for the finance department, such as John’s penchant with computers, end up glommed onto current roles without rhyme or reason, except that the original person who agreed to accept the task liked the idea of it.
Unclear roles and responsibilities can cause many problems. If roles aren’t clear, it is hard to hold people accountable for them. This leads to blame and finger pointing, open-ended tasks, and lack of accountability.
To fix this problem, conduct annual reviews of job descriptions. Ask employees to update their job descriptions so that any new tasks they may have taken on during the year can be evaluated in light of their role within the organization. Once you get the big picture of who does what, you can determine if a new position should be created or if some other type of change is warranted.
Sign #2: Multiple General Ledger Accounts
This one makes our heads hurt: when a company ends up with multiple GL accounts because the GL isn’t set up to sort items the way the organization needs them. We’ve seen this happen when nonprofits attempt to force software from the for-profit industry to work for their needs; it’s a square peg, round-hole type of problem, and the fix often involves multiple GL accounts so that the final reckoning matches what the nonprofit needs. Unfortunately, what happens is a confused muddle of accounting that takes longer to untangle than it does to work with it on a productive basis.
Welter Consulting can help. We can match you with nonprofit software that works with your needs, not against them. And, because we have experience in the nonprofit financial and accounting world, we can straighten out your GL too and help you sort through any other accounting muddles created by ill-matched accounting software and needs.
Sign #3: Manual Processes
The computer sits right on the desk, with the accounting software open. The payables clerk writes paper-based checks. “It’s just easier,” she said.
It may feel more comfortable, but there’s the time spent entering the checks back into the accounting system, reconciling the bank account and everything else associated with paper checks, not to mention the time it takes to mail them. And the postage – did you know that the cost of first-class mail is once again going up?
Many nonprofits fail to utilize the technology available to them. We can help. We work with nonprofits to provide training and guidance on how to use existing technology, how to boost productivity through efficiency and better systems, and more.
Sign #4: Manual Reports and Spreadsheets
You have the computer programs; you have the data. But you’re still pulling data from the accounting program, importing it into a spreadsheet program, and manipulating it there to obtain the reports that you desire.
Sounds familiar? This is quite common but entirely avoidable. Most accounting programs for nonprofits offer robust reporting capabilities. If you’re not obtaining the reports that you need from your current system, it’s time to investigate new ones.
Spreadsheets are fine when you’re starting, but as your nonprofit grows, they are time-consuming and error-prone. Automated reports offer convenience, accuracy, and flexibility – if you have the right system!
Welter Consulting can help. We bridge the gap between people and technology and specialize in the world of nonprofits. Let’s discuss your reporting needs and find the right software for you. It’s faster and better than using spreadsheets, that’s for sure.
Sign #5: Lack of Goals and Objectives
Does your financial team have clear goals and objectives? You may have them within the department but lack alignment with organizational goals.
Yes, it’s great that you have your own team goals, but how do these align with everyone else’s? Consider the impact that financial knowledge makes on other departments. The more you share information, the better off everyone will be throughout the organization. Aligning your goals and priorities with the overall goals of the organization and ensuring that financial goals are part of every department’s objectives, as well as sharing the organization’s economic outlook with other departments, helps align the finances with the activities and vice-versa.
Do you need some help with establishing goals and objectives? We offer comprehensive business management and support for nonprofits and can help you develop goals, share financial data, and more. Training, audit support, and other nonprofit financial and technology services are also available.
Yes, there are signs that the finance department needs help. Fortunately, the fixes are at your fingertips, and if you need assistance, we’re only a phone call away.
Call 206-605-3113 or contact us.