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From On-Premises to the Cloud: A Digital Transformation Strategy

By | Cloud, Nonprofit, Technology | No Comments
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Adopting forward-thinking digital strategies is critical for small and medium-sized businesses to remain competitive. This means not only updating existing systems but also moving in new directions.

One such direction is cloud native. Cloud native refers to a design and development approach that focuses on building applications and services specifically designed from the start to reside in the cloud. Companies began to shift from on-premises financial software during the pandemic. It quickly became apparent that on-premises solutions were not meeting their needs when people were forced to work from home. Companies with cloud-based solutions were able to move rapidly to work-from-home situations, keeping workers and customers safe. Now, many realize that cloud-based solutions offer more benefits than just the flexibility of the work environment.

But before shifting from on-prem to cloud, it is essential to have a strategy. Here’s how you can come up with a sound cloud-first plan that can help your company remain agile and competitive now and in the years to come.

Why Small and Midsize Businesses (SMBs) Are Moving to the Cloud

If you’re currently using an on-premises system for financial management, you may wonder what all the fuss is about cloud-based solutions. According to Gartner, 85% of SMBs are moving towards cloud solutions. Here’s why.

  • Cost: Cloud solutions cost less than their on-premises counterparts. Cloud solutions require no special hardware to run. The cloud provider updates the software. And, although you may want a good consultant for training, implementation, integration, or advice, no additional staff are needed to keep a cloud platform running.
  • Security: On-premises systems are generally secure from a cyberattack perspective if not connected to the internet. However, data can still be lost due to natural disasters, power failures, or hardware and equipment failures. Backups must be maintained and kept secure. Cloud systems, on the other hand, often provided multiple geographic locations to back up their clients’ data so if a natural disaster hits in one area, their data is protected. Data and systemwide backups may also be automatic, ensuring that nothing is lost due to equipment malfunction.
  • Remote Work: On-prems generally do not support remote work. Cloud platforms can fully support remote work. Although many larger companies have switched back to in-person or hybrid work, workers themselves continue to be supportive and eager for work-from-home opportunities. The ability to offer flexible work arrangements can help you attract talent from a wider talent pool and hire a more diverse team than you might find in the local area. It’s an important consideration.
  • Flexible: On-premises or monolithic systems are difficult to adapt to user needs. Vendors often lock users into their ecosystem, resulting in a poor fit between customer needs and software. These limitations can keep a company from finding the best software for their needs. Cloud systems are easily scalable. Even integration can be easier with the use of APIs (application programming interface) to enable different platforms to “talk” to each other as needed.
  • Scalable: Systems that are on-premises can be hard to scale without a full lift and shift or an entirely new license. Cloud systems are often sold by the user or access, meaning you can add staff without huge price increases or new systems needed.

Plan Your Digital Strategy

With so many benefits and few drawbacks, it’s no wonder that more companies than ever are moving to cloud-based solutions. Plan your digital strategy accordingly. If you are convinced that cloud solutions are the right move for your company, begin by assessing your current system noting what is working and what is not. Consider what you may need now, three, and five years into the future. Assemble a cross-functional team with representatives from all major company areas to participate in a selection team. Interview and choose a good consultant who will help you navigate the many considerations to find the exact system you need.

For nonprofits shifting to the cloud, consider Sage Intacct. It’s a cloud-based financial management solution that empowers nonprofits by removing IT obstacles. Not only is it 100% supported online – and needs no special IT personnel to manage it—but Sage Intacct also includes many automated workflows to reduce repetitive functions and tasks.

Welter Consulting

Welter Consulting bridges people and technology together for effective solutions for nonprofit organizations. We offer software and services that can help you with your accounting needs. Please contact us for more information.

Do You Use Payment Apps? If So – Important Update on Form 1099-K

By | Nonprofit, Tax | No Comments

Does your organization accept donations or payments through popular apps such as Zelle, Venmo, or PayPal? Do you pay invoices or freelancers using these apps? If so, then it is important that you know about the new changes signed into law this year concerning how payments are reported through these apps.

Changes for Third Party Settlement Organizations Effective January 1, 2023

Effective January 1, 2023, a new law signed into effect requires all third-party settlement organizations (TPSOs) to report payments exceeding $600 total. The previous law required reporting only for payments exceeding $20,000, so the new law will require all TPSOs to report many more transactions.

Organizations that have received more than $600 total during 2023 through these types of payment apps will receive a form 1099-K from the TPSO. The form is intended to help improve reporting accuracy.

Business Impacts of the Reporting Change

The threshold changes from $20,000 to $600 means that all organizations must now keep careful track of payments received through popular payment apps and report them accurately. Entities are responsible for tracking their payments and reconciling them against forms 1099-K received from TPSOs.

Why Did the Law Change?

The IRS claims the law is needed to ensure income and taxes are accurate. With the growing popularity of payment apps, and the rise of the gig economy, the IRS is essentially trying to track down all the small amounts moving back and forth among consumers, freelancers, nonprofits, and businesses, and ensure that everyone is paying their fair share of taxes.

Who Issues Form 1099-K?

The TPSOs are responsible for issuing form 1099-K. However, organizations must ensure they are accurately tracking the income and the payment processor. You can use any form 1099-K issued to your organization to reconcile payments received via that TPSO.

What Tax Is Payable on Form 1099-K Income?

The answer is “It depends.” Form 1099-K income is just like any other income stream into your organization. Whether or not you owe taxes depends on many factors.

Just like receiving a 1099 from a business, a 1099-K merely lists the amount of income received. It should be recorded as income and then considered as you prepare your end-of-year taxes. The form is an added measure that enables both the IRS and the receiving entity to reconcile all income during the taxation year.

Where Do I Go for More Information?

The first step is to review the IRS information on Form 1099-K. This should clarify many of the points covered above.

If you still have questions about how to account for income listed on Form 1099-K, speak with your CPA or Welter Consulting. We can help you with audit preparations, accounting questions, software consideration, migration and support, and other nonprofit accounting needs.

As with all things, this information is subject to change. As of this writing, there’s yet another bill in Congress that would reverse the $600 threshold back to the original $20,000 threshold that was in place for many years. If this bill should pass, it will not impact 2023, however, so you should watch for 1099-Ks to arrive after January 1, 2024, for the tax year ending December 31, 2023, if you use third party payment systems.

Welter Consulting

Welter Consulting bridges people and technology together for effective solutions for nonprofit organizations. We offer software and services that can help you with your accounting needs. Please contact us for more information.

Key Benefits of AI-Powered Software for Nonprofits

By | Nonprofit | No Comments
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You can’t turn on the news or open a website without seeing headlines about AI. When Microsoft unveiled ChatGPT in November of 2022, they brought the world of generative AI to the public’s attention.

But behind the scenes, AI has been quietly enhancing software for decades. You’ve been using it well before Microsoft shared ChatGPT. If you’ve used Microsoft PowerPoint and clicked “Design Suggestions,” that function is powered by AI. So too are many common applications from grammar checkers to text completion tools embedded in our smartphones.

New software is now being released that contains multiple AI features. If you are shopping for new software or looking to update your existing systems, consider using platforms in which AI is incorporated for automation, data and analytics, and customer service or omnichannel support.

AI for Nonprofit Software: Automation, Data and Analytics, and Customer Service

If you are exploring new software purchases, upgrades, or integrations, consider seeking platforms that incorporate either automation or data and analytics tools, driven by AI. Additionally, customer service functions, such as omnichannel call center support with AI powered bots, can drastically improve customer satisfaction, and reduce hold and wait times for busy call centers.

AI Automation Tools

AI-enabled automation tools automate many common and repetitive tasks, such as sending invoices and reminders or routing information to relevant stakeholders. If correctly set up within a system, such automation can take over many tasks for accounting, marketing, operations, and human resources.

The time-savings benefits can be calculated in hours saved and then used for more creative tasks. For example, by automating an email send, the marketing team can turn their attention to crafting new donor emails. This may also enable you to do more with your existing staff rather than to add more positions, yet another cost savings.

Data and Analytics Tools

AI has always been useful in big data. It excels at analyzing massive amounts of data. Within nonprofit software, AI-powered data and analytics tools can analyze data in real-time. This enables teams to respond swiftly to changing conditions. It also enhances an organization’s ability to analyze activities and gain valuable business insights.

Where does data come from for AI-powered data and analytics tools? Customer data, or donor data, is one area that often produces vast amounts of data waiting for analytics. Think of donor activity, response to advertising campaigns, and so on. With the right tools at your disposal, you can analyze campaigns almost in the moment, and make changes to boost response rates. Customer service data can be analyzed to spot problematic areas and take corrective action. The areas where data can be used to improve service and delivery of programs are huge. AI-powered data and analytics tools, embedded within existing nonprofit software, can put such functions within the reach of any nonprofit.

Multichannel Call Center Support

Another area where AI software shines is in call center support. AI bots have been used for many years and continue to improve with the adoption of natural language processing and large data models. Unlike the impersonal bots of old, newer software can be integrated with existing customer service information to produce customized responses. SMS, or text-based customer service responses, are also available, enabling customers to contact organizations in any manner they choose.

AI for All

Customers encounter AI-powered bots in many areas of their lives, from the local utility company to their favorite ecommerce shop. Younger generations prefer to interact with bots to get responses to frequently asked questions. Adding AI powered tools to your organization is a natural step for growing nonprofits serious about digital transformation, whether they are included in the accounting package you choose or added as part of a customer relationship management or donor relationship management solutions.

The key to successfully choosing and using AI solutions is working with a vendor well-versed in this technology who also understands nonprofit environments. With such consultant by your side, you’ll be steered in the right direction to software that offers room for growth and improvement without being too big to handle.

Welter Consulting

Welter Consulting bridges people and technology together for effective solutions for nonprofit organizations. We offer software and services that can help you with your accounting needs. Please contact us for more information.

Strategies to Address the Accounting Talent Shortage

By | Accounting, CPA | No Comments
person at laptop computer using accounting software

Although accounting remains a popular undergraduate major, there is a growing shortage of talented accountants in the profession—and especially of CPAs. According to the Society of Human Resource Management (SHRM), over 300,000 accountants left their jobs in 2022, a decline of 17% from a peak in 2019. And while Baby Boomers are retiring in droves, it’s not the only reason for the career exodus; an almost equal number of mid-career professionals and younger generations are also leaving the profession.

This gap has not remained unnoticed. Several industry-leading groups, including the National Pipeline Advisory Group, are exploring solutions to the accounting talent and CPA gap. And while there’s no magic wand to fix the lack of CPAs in the near-term future, there are many strategies that may provide an answer.

Strategy 1: Personal Outreach

It’s old-fashioned but effective: the direct, personal approach. Members of the National Pipeline Advisory Group, as reported in the Journal of Accountancy, are taking a direct approach to encouraging young and mid-career professionals to become CPAs. The direct approach includes speaking to people at conferences and events, joining local organizations and attending meetings, and simply speaking to people who are talented at what they do, enjoy accounting, and may be interested in becoming CPAs.

It may seem obvious that a good career step for an accountant is to obtain their CPA license, but sometimes, people just need a little inspiration. That’s where the direct approach comes into play. Having someone mention it may be just the thing someone needs to explore their next career move. It can’t hurt, and it certainly leads to many industry connections, which benefit everyone in the conversation.

Strategy 2:  Remove Obstacles to the CPA License

As with any professional accreditation, the CPA exam requires an intensive amount of study and preparation. Some suggest changing the 150-hour post-graduate study requirement, for example, which adds approximately one year onto the bachelor’s degree. Perhaps other means of achieving the same high level of education and professional expertise can be explored so that more people can pursue the CPA path. Removing limitations without compromising integrity or quality may be an important path to increasing the number of CPAs.

Strategy 3: Augment with Technology

Technology cannot replace an accountant or CPA. No matter how good the platform, program, or system, it cannot and should not be used as a substitute for qualified accounting advice.

That said, technology can augment your existing accounting staff and improve efficiency by taking repetitive tasks off the plate of your current team. For example, automating legal disclaimers or routing emails that must be sent to clients can save up to an hour per day from a busy company’s time, freeing that time up for more advanced tasks. Other automations such as sending reminder invoices to clients for past due invoices, routing approvals automatically, and running reports can all be done by technology and save time for more advanced tasks for your current staff.

CPAs Matter to All Organizations

CPAs perform vital and irreplaceable functions for organizations of all sizes, including nonprofits. Students view the accounting profession favorably, citing ample job opportunities and room for career growth and interesting career paths as reasons they chose to enter the profession.

However, something is stopping these bright young minds from acquiring the advanced education to become CPAs. If we can work together within the profession to explore why this is occurring and remove potential barriers, we may be able to solve this crisis together.

Welter Consulting

Welter Consulting bridges people and technology together for effective solutions for nonprofit organizations. We offer software and services that can help you with your accounting needs. Please contact us for more information.