Accounting Software

Planning for the Successful Transition to New Accounting Software

By | Accounting, Accounting Software, Nonprofit | No Comments
person using accounting software on laptop and mobile phone

Perhaps your organization has outgrown spreadsheets or off-the-shelf small business accounting software. Now, it’s time to find government fund accounting or nonprofit fund accounting software. The platform of your dreams has all the bells and whistles you’ve hoped for: great budgeting features, invoicing and automation, and super reports.

As you prepare for the implementation of your new accounting solution, there are several steps you can take to prepare your data and your team for the transition to the new platform. With these steps, you’re more likely to have a successful transition to your brand-new accounting software.

Clean Your Data

The data that’s currently in your system, whether you’re using spreadsheets or a small business accounting program, will move into the new system to get it started. If there are mistakes or errors in your current system, now is the time to correct them.

Cleaning data refers to the process of identifying and correcting errors, inconsistencies, and inaccuracies in a dataset to ensure its accuracy, completeness, and reliability for analysis or other purposes. This process involves several steps, including identifying errors, handling missing data, removing duplicates, and standardizing data. Additional steps may be resolving inconsistencies and developing what is called a “data dictionary” or a standard guide to data inputs.

Consider your donations for the past year, for example. Perhaps you input donor names and addresses into a database, spreadsheet, or your old business accounting program, and now you want to move it into your new accounting database. Checking to make sure there are no duplicates is a smart idea. Duplicates may not be exact matches, so you may need to work with your team to generate lists and manually check them. (For very large data files, there are companies that specialize in data cleanup.) Common places where duplicates creep into files include:

  • Addresses where road, street, or avenue are spelled out—and a second address where it is abbreviated. You’ll need to decide what the standard for your organization will be—the postal abbreviation or spelling out the full word.
  • Names where a first initial is used (J. Smith), fully spelled out (John Smith), or includes a middle initial (John A. Smith). You’ll have to decide which John Smith version to keep.

These are just two examples of some very common areas where duplicate records can occur. Other places to clean up before exporting your data to move it into the new system include reconciling bank accounts and credit cards, updating A/P and A/R, and ensuring other financial information is updated and accurate.

Document Procedures and Workflows

The accounting and finance team should document common processes, procedures, and workflows. This is important because your new accounting platform may include ways to automate steps in the workflow. It is also a good time to dust off any procedures you have already written out and update them if necessary.

Some examples include:

Donation Processing Workflow

  • Receiving donations via various channels (online, mail, in-person).
  • Recording donor information and donation details.
  • Issuing donation receipts or acknowledgments.
  • Allocating donations to specific programs or funds (if applicable).
  • Reconciling donation records with bank deposits.

Program Expense Allocation Workflow

  • Allocating expenses to specific programs or projects.
  • Tracking program-related expenses separately from administrative and fundraising expenses.
  • Ensuring expenses are allocated in accordance with donor restrictions (if any).
  • Reporting on program expenses to stakeholders, including donors and grantors.

Other common nonprofit workflows include grant fund management, compliance reports, and general financial reporting.

By documenting frequently used workflows on paper, you’ll be in a much better position to understand how the same process works in your new accounting platform. Working with your software vendor or consultant, you can set up the workflows, ensure the reports you need are ready, and be better prepared for the new software.

Work with a Skilled Nonprofit Accounting Consultant When Installing New Accounting Software

It’s vital to get your new accounting software set up, and the data moved into it correctly. This is an area where having a skilled and experienced nonprofit accounting software consultant is vital. With the right consultant by your side, the transition to your new platform will be smoother and easier. You’ll be up and running in no time, with the right automations in place for maximum efficiency so you can better manage margin to support your mission.

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.

A Guide to Nonprofit Budgeting: Navigating the Essentials

By | Accounting, Accounting Software, Budget, Nonprofit | No Comments
A Guide to Nonprofit Budgeting, people at desk or table with tablet, spreadsheets, and ledger

Budgets provide the financial foundation upon which an organization must run all its activities. Without a budget, it is almost impossible to manage cash flow. Budgets provide structure, organization, and financial stability that helps you with strategic planning.

Although it’s possible to run a company or a nonprofit solely off cash flow without budgeting for specific activities, it makes planning for steady growth and new activities very difficult. Budgets serve as both guidelines and tools, helping organizations plan for activities, manage cash flow, and view expenses. Here, we’ll share with you the main types of budgets used by nonprofits, as well as discuss each section of the budget in greater detail. Lastly, we’ll talk about ways to manage nonprofit budgeting to make the process go smoothly.

Key Components of Nonprofit Budgets: Income (Revenue) and Expenses

We can break nonprofit budgets into two simple categories: income and expenses. Income refers to money coming into the organization, and expenses refers to the money the organization spends. All financial activities can be grouped under each category. The difference between income and expenses results in a surplus when the difference is positive (more income than expenses) or a loss or deficit (when expenses exceed income).

Source of Income

Your organization probably has several sources of income. Some of these income sources are unique to the nonprofit world. Typical sources of income include donations, program fees, membership fees, sales of products or services, grants, and special events.

Because nonprofits invest their income into their programs and services to fulfill their mission, they must track carefully where revenues come from and how they are spent. Sometimes, nonprofit income is tied to specific programs or activities. For example, donors may indicate they wish their donation to be used only for a specific program or added to the general operating fund. If the donation is intended for a specific program, the organization must ensure that they budget the funds or add them to the fund for that specific activity.

A good example is a nonprofit animal shelter. Many have “spay and neuter funds,” which are set up to pay for low-cost or free spay/neuter programs to address the surplus of homeless animals in the local community. If donors give to that program, the shelter must honor the donor’s wishes and ensure that the money is spent on that program. They cannot reapportion the funds for the general budget to pay for advertising, for example, or for salaries and wages; funds raised for a specific purpose must go to fulfill that purpose.

Another example of how nonprofit revenues must be tracked differently from for-profit income streams is grants. Grants are often given for highly specific purposes or to fund specific programs. Granting organizations often require careful accounting of how the funds are spent.

Importance of Diversifying Income

Although we spoke at length about two sources of income—donations and grants—nonprofits receive income from many places. They may sell products or charge a fee for services. They may receive donations of goods. Each of these income categories requires careful tracking and recording of the income received.

As in the for-profit world, smart nonprofits diversify their income as much as possible. It’s never a good idea to put all your eggs in one basket or rely solely on one channel for income. A nonprofit that relies on a single large grant to fund multiple program activities may be in deep trouble if the grant doesn’t continue, for example. A diverse income stream of donations, fees for services or goods, grants, and other sources of income ensures that even if trouble hits one category, it won’t jeopardize the entire budget.


Expenses refers to everything your organization must spend money on to keep running: operational costs (overhead, utilities, telephone and internet expenses, professional fees, insurance), rents or licenses, fixed assets such as furniture and computers, marketing and sales, salary, and benefits. You must track all your expenses to ensure that you have a clear and detailed view of how your organization spends its money.

Once you track expenses, it becomes clear which categories are consuming the largest share of the budget. You can then take steps to either minimize this spend or manage it prudently. There are many areas where expenses can be cut without compromising the quality of the services you deliver. For example, you may be able to cut back on insurance expenses by shopping for and comparing different policies and coverages. Or you may find that hiring remote employees helps you keep rent costs low because you don’t need as large an office building. These are just examples of how expenses can be managed to keep them low.

The Most Common Types of Budgets Used by Nonprofits

There are many ways in which you can create a budget. If your organization has a budget in place, you may use that as a starting point each year and adjust income and expenses based on projections. You may also find that a new approach to budgeting is helpful.

The three most common types of budgets used by nonprofits include:

  1. Program-Based Budgeting: This approach is widely used by nonprofits as it aligns budget allocations directly with the organization’s programs and initiatives. It allows for clear tracking of resources allocated to each program, making it easier to assess the effectiveness and impact of those programs.
  2. Zero-Based Budgeting (ZBB): While not as prevalent as program-based budgeting, ZBB is still commonly used by nonprofits, especially those seeking to ensure maximum efficiency and accountability in resource allocation. ZBB encourages a thorough review of all expenses, promoting cost-conscious decision-making throughout the organization. Zero-based budgets start at zero each year, with budgets built from scratch. Each expense and income must be estimated from scratch based on current conditions.
  3. Outcomes-Based Budgeting: Nonprofits are increasingly adopting outcome-based budgeting to demonstrate the impact of their activities and investments. By linking budget allocations to desired outcomes or impacts, organizations can better prioritize resources and measure their effectiveness in achieving their mission.

Ready, Set, Budget! The Budgeting Process

Creating a good budget takes time. Leave at least several weeks to build your budget and, if you need to gain approval from your board or managers, time for review, feedback, revision, and final approval.

Depending on the type of budget you are building, there are several ways to begin the process. You’ll need to understand all the categories you have to account for in the income and expense areas. Gather the necessary information: previous years’ income statements and cash flows, sources of revenues, and the like, as well as expenses.

Determine a reasonable percent by which you think you can increase both income and expenses. It’s natural to hope for the best, but it’s better to conservatively estimate increased income. If you plan to increase income, will you need to spend more on specific activities, such as marketing and donor relationships, to achieve your goals? All of these must be considered as part of your strategic plan as well as the budgeting process.

Your organization’s accountant or bookkeeper is instrumental in the budgeting process. Schedule time to review income and expenses together. Then, connect with staff as needed to gather additional input.

A budget is a living document. Like a good strategic plan or marketing plan, adjustments should be made to it as the year progresses (it’s not a once-and-done activity). Schedule periodic budget reviews and make necessary adjustments to income projections or expenses as you need to ensure an end-of-year surplus that can be invested back into the organization’s mission. A quarterly review may be sufficient. Some organizations conduct budget reviews monthly, others quarterly or twice a year. At a minimum, an annual budget review and budgeting cycle are necessary for a healthy financial picture.

Tools to Make Budgeting Easier

There are several types of accounting software that can make nonprofit budgeting easier. Spreadsheets are frequently used but have several drawbacks. They must be manually updated and can grow to be quite complex depending on the number of programs you’re managing. They also lack good reporting functions.

Many small business software packages seem like they would be a good step up, but these also have several drawbacks. While they can automate many tasks and produce good reports like balance statements, cash flows, and similar reports, they may require extensive customization to track income and expenses by program, or track donation information. They are not built for the unique requirements of nonprofit accounting.

Nonprofit accounting software is built specifically for nonprofit budgeting. There are packages for nonprofits and government accounting, so you start with a system designed with your specific income and expense needs in mind. Some offer cloud or browser-based versions, which make it easy for remote employees and auditors to log into the system to perform the work.

Welter Consulting

Whether you are new to nonprofit budgeting or highly experienced at it, if you need assistance choosing your budgeting method, selecting nonprofit accounting software, or moving from spreadsheets or another software to a new nonprofit-specific accounting platform, contact Welter Consulting. We are happy to help.

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.

Reduce Spreadsheet Use and Improve Productivity with the Right Accounting Software

By | Accounting, Accounting Software, Nonprofit | No Comments
person in office at desk with laptop, calculator, and phone with clipboard in hand.

Despite the apparent drawbacks, many organizations continue to rely on spreadsheets for their accounting needs. Spreadsheets are cumbersome to interlink, for example, making it necessary to manually rekey data to produce graphs, charts, and reports using data from two or more spreadsheet-based sources. One error accidentally introduced into a single formula can throw off the entire total and give a false picture of the data. And let’s not forget the time it takes for data entry, formula lookup, and formula entry.

It’s easy to understand why many organizations still use spreadsheets. They’re familiar and bundled into office productivity suites, so the cost is minimal. Also, they can be used by anyone with rudimentary computer skills.

However, given the numerous drawbacks of continuing with spreadsheets and the many benefits of shifting accounting into a modern, computerized system, it makes sense to move to accounting and financial management software for your organization’s accounting needs.

Five Benefits of Moving from Spreadsheets to Software

Every organization can reap enormous benefits from moving away from spreadsheet use and tapping into the power of cloud-based accounting and finance platforms. Five benefits almost all companies experience include:

  1. Greater efficiencies: Every accounting function is easier in an accounting software system. Accounting software enables you to enter checks efficiently and quickly into a digital check register, confirm payment receipts and expenses, and track them against specific accounts. Reports can be run with the click of a button: balance sheet, cash flow statement, unpaid receivables, income statements, and more. Additionally, some software comes with the ability to generate charts and graphs. What used to take you hours will take mere minutes with the right software. Additionally, advances in the use of artificial intelligence (AI) enable workflow automation that saves additional time.
  2. Improved clarity: Spreadsheets make viewing progress towards goals across multiple programs or funding lines difficult. With an accounting program, you can access numerous metrics and track them more easily against Key Performance Indicators (KPIs) and other goals.
  3. Faster and easier reconciliation: If it takes forever to reconcile banking and credit card statements at the end of each period, you’ll find it much easier and faster to do so in a computer program. Both processes are more efficient and make it easy to spot discrepancies in the reconciliation.
  4. Enhanced forecasting: Manual forecasting that relies upon spreadsheets is time-consuming and error prone. Using accounting and financial management software enables more accurate forecasting. It also makes it possible to extend forecasting timelines, which is nearly impossible with spreadsheets.
  5. Time saved: Software enables you to complete tasks in minutes what used to take hours. Reducing spreadsheet reliance immediately saves hours per week that can be spent on other tasks such as budgeting, consulting with program managers on their financial and accounting needs, and more.

Accounting and Financial Software for Modern Nonprofits

Many accounting and financial software packages are on the market today, some explicitly geared to nonprofits. It is recommended that nonprofits avoid “off the shelf” business accounting software packages. Many of these lack the functionality nonprofits need to track revenue and expenses against program lines, for example.

Sage Intacct is a cloud-based accounting and financial software package created specifically for nonprofit organizations. Over 11,000 for-profit and nonprofit companies worldwide use it. It enables fast, accurate accounting, enhanced visibility into KPIs and forecasting, and excellent reporting. Perhaps most importantly, it automates workflows, making it a time saver for a busy accounting department.

There are many more accounting software choices available, and it can be confusing to review and compare them. Working with a consultant who understands nonprofit organizations’ unique needs and challenges is the best way to select the right accounting and financial software package for your needs.

Moving from spreadsheets to software is essential for nonprofits. While it may be tempting to continue using spreadsheets to save money, the time saved by transitioning to an accounting and financial software system is priceless. It’s time saved that can be put towards achieving your mission—and isn’t that worth it?

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.

Top 3 Challenges Faced by Nonprofit CFOs

By | Accounting, Accounting Software, Nonprofit | No Comments
woman standing at desk looking down at laptop computer

Nonprofit CFOs face many challenges, but the following three may not be ones that immediately come to mind. We often assume that our own challenges are unique—that no one else suffers from spreadsheet overuse, for example—or other organizations are more efficient than we are. But we can tell you from experience that nonprofit CFOs all face similar challenges. And the solutions to these challenges are similar, too.

Challenge 1: Over Reliance on Spreadsheets

Spreadsheets are everywhere. They are easy to use and come with most office productivity suites. Most accounting and financial professionals know how to use them and are very comfortable with them. They enable nonprofits to get their accounting up and running quickly. We’re not knocking spreadsheets, but if your organization is past the startup phase, it’s time to think beyond spreadsheets and look for a more robust accounting solution.

They are myriad problems with using spreadsheets for complex accounting functions. Problems include:

  • Unless cloud hosted, spreadsheets are single user, meaning that only one person at a time can work with a spreadsheet. They must be emailed after updates.
  • Working with complex financial analysis across multiple spreadsheets can be extremely time-consuming and difficult.
  • Formulas are notoriously finicky—one mistaken input and suddenly the whole sheet is off. Worse, mistakes multiply if copied and pasted, making it very hard to find and fix them.
  • They aren’t secure. You can password protect a spreadsheet in some programs, but they can be shared and accessed easily. A compromised password can make them accessible. A computer virus can make them completely inaccessible. They are very risky.

Solution: Transition Your Team to an Accounting Program

It is vital to transition your team away from spreadsheets as soon as possible. Cloud accounting software made specifically for nonprofit organizations provides the structure and resources needed to handle the complex needs of nonprofit finances.

Sage Intacct is an excellent cloud-based accounting program for nonprofits. It offers a cloud-based solution that requires no special hardware to run. The chart of accounts can handle the often-complex reporting needs of nonprofits, and it includes multiple nonprofit-specific accounting functions, such as grant management, FASB accounting accommodations, and more.

Challenge 2: Reports Take Too Long to Produce

Another challenge many nonprofit CFOs face is producing accurate and timely reports. This challenge often goes together with reliance on spreadsheets which produce only limited reports.

Accurate and timely financial reports enable nonprofit managers to make smart decisions about using organizational resources. Without insight into the finances, managers lack an important piece of information.

The solution is to find a good nonprofit accounting program that enables on demand reports. Flexible, customized reporting would be ideal, since managers can then run the reports they need. Automating your accounting will shift the burden of producing reports from the CFO and enable more self-service reporting.

Challenge 3: Billing mistakes.

Nonprofits using spreadsheets often fail to account for their employees’ time properly. They may under- or over-count billable hours, miss expense reports, and generally struggle to adequately track billable time and projects. This can result in a significant shortfall over time and a huge, missed opportunity.

Using Sage Intacct and/or a time tracking software can help you more accurately track such expenses. And, by aligning staff time with specific programs, you can judge how effective specific programs are and whether such time is being used wisely.

Financial Software for Nonprofits

Although spreadsheets can adequately handle basic accounting, they quickly become inefficient as a nonprofit grows. The recent trend towards cloud accounting software has added additional value to software licenses, making them more affordable than ever. If the challenges outlined in this article resonate with you, we invite you to explore Sage Intacct or other cloud accounting solutions through Welter Consulting.

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 Welter Consulting at 206-605-3113 for more information.