Category

Accounting

Aug 25
0

More than Numbers: The Changing Role of the CFO

By | Accounting, Corporate Culture, Nonprofit | No Comments
person standing in office space to represent CFO

The role of the Chief Financial Officer (CFO) has been evolving for many years, and it is changing at the speed of light. Gone are the days when the CFO was solely responsible for the company’s financial health. Today’s CFO, while most likely holding an advanced degree in accounting or finance, must also be equally savvy in information technology. This role now interacts equally with IT, Sales, Marketing, and Operations, adding a valuable perspective to other areas within an organization.

Here, we look at the changing role of the CFO and what it might mean to your nonprofit.

The Modern CFO: Where Technology and Finance Meet

Throughout the accounting profession, technology has become an ever-present companion to the routine of credits, debits, invoices, payments, and payroll.

Smart accountants keep up to date with the latest tools and technologies available to enhance their productivity:

  • Cloud-based accounting programs that provide robust yet cost-effective financial management
  • Data and analytics programs that provide additional insight into forecasting, analytics, and financial health
  • Grant and donor management software which enables organizations to manage financial outreach activities more effectively and track activities to income
  • SMS and text messaging platforms that can be linked with donor management programs for immediate financial outreach
  • Artificial intelligence as incorporated into existing financial tools to pinpoint errors and speed lookup of important information
  • Developments in blockchain, cryptocurrency, and related fields
  • Cybersecurity, so as to protect critical information in the finance department from theft, hacking, and extortion
  • Best practices from the for-profit world in sales, marketing, and operations, which may be adapted to the nonprofit world

As you can see from the list above, the CFO, as leader of the organization’s financial team, needs to stay abreast not just of the typical regulatory compliance issues but the realm of software and technology.

CFO and CIO: Collaboration to Achieve the Same Goals

Although the daily tasks of the CFO and CIO may differ, there are many areas of overlap between their roles today. Shared goals among the C-suite leaders of an organization mean that the two roles must work in tandem to achieve positive outcomes.

The CFO should be included in any major software selection processes. Many become the Executive Sponsor of a software project, providing teams with a valuable link to the leadership team to represent their work. Their unique insights into how a particular platform or software will impact efficiency, productivity, financial health, etc. are invaluable.

Other areas where the CFO may be concerned with technology include protecting critical data. The finance or accounting team may process donations, membership fees, and other financial transactions that contain personally identifiable information. Such information is a tempting target for thieves. The CFO must know the basics of cybersecurity and work closely with the CTO or CIO to ensure data is kept secure. This includes customer information, donor information, credit card information, and sensitive organizational financial data.

Because the CFO understands all areas of the organization, they should be an essential voice in any decision involving technology. But don’t limit your CFO to money and tech. They also play a vital role in marketing, sales, and operations, sharing their experience and a keen eye for efficiency and cost savings with the team.

The changing role of the CFO has opened exciting vistas for this once-strictly financial position. Variety is the spice of life, and for those interested in finance and accounting, embarking on a career that leads to the CFO chair means an ever-changing field of growing opportunities.

‌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.

Aug 23
0

Five Financial Forecasting and Analytics Best Practices

By | Accounting, Nonprofit | No Comments
people in office space with graph printouts on table

With the right software and data, financial forecasting and analytics best practices can inform decision-making to help an organization grow.

Unfortunately, many organizations only conduct financial forecasting and analysis at the start of their fiscal year. Periodically reviewing the data, updating your analysis, and providing updated forecasts can help managers adjust their plans to compensate for new insights.

Using these five financial forecasting best practices, your organization can proactively adjust course before significant changes impact your organization.

Best Practices for Forecasting and Analytics

  1. Evolve beyond budgets written in stone. Many organizations start their new fiscal year with a budget. Managers take the approved budget as if it’s written in stone. Instead of treating forecasting and budgeting like an unshakeable law, approach it as an ongoing conversation. It helps to work with managers frequently on their budgets to assess how they’re tracking against goals, KPIs, and budgets.
  2. Share the results of working with data. It can be challenging to ask managers to spend time working with their data in preparation for forecasting and analysis. Some may view the request as a waste of time. Share with managers how their data impacts important choices within the organization so that they feel empowered and invested in the analytics process.
  3. Ask the right question: Far too often, forecasting conversations become more of a conversation of expenses than how spending aligns with the organization’s mission, vision, and strategic plan. By asking the right questions, you can help people think differently about budgeting. Good questions include: What happened last (month, quarter)? Does this match what you expected? If there’s a difference, what is it, and why did it happen?
  4. Focus on tasks with strategic importance: All too often, forecasting and analysis get pushed to the side to make way for urgent tasks like reconciling credit card and banking statements, sending invoices, and other more pressing accounting tasks. Block time on your calendar, monthly or quarterly, to work on forecasting and analysis.
  5. Automate the process: The right software dramatically improves accounting efficiency. This is especially true when managing budgets, forecasting, and analysis. Accessing timely and accurate data through a software program is much easier (and faster) than managing multiple spreadsheets and reduces the chance of data entry mistakes. It also makes the process less painful for managers since the data they need is easily accessible.

Automation Helps You Move Forward

Nonprofits that thrive throughout changing conditions do so through smart strategic planning. This includes budget analytics and forecasting. The right software solution enables users to improve efficiency.

If your organization is still managing its financial processes via Excel spreadsheets, it’s time to consider updating your accounting program. Newer, more cost-effective cloud-based platforms offer nonprofits accounting software options made for nonprofit budgeting. These programs include features such as tracking expenses and income back to specific programs or budget items, grant reporting, data and analytics, forecasting, and more.

Now is a great time to consider your options and incorporate accounting best practices such as nonprofit accounting software.

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.

Jun 28
0

Closing the Books, Part 2

By | Accounting, Nonprofit | No Comments
person writing in ledger and Welter Consulting logo

In Part 1 of Closing the Books, we shared tips for making month-end close smooth sailing. Now, let’s delve into year-end close.

Year-End Close Considerations

As your fiscal year draws to a close, it’s time to look at:

  1. Receivables and payables
  2. Salary fringe allocations/accruals
  3. Worker’s Comp/Unemployment Insurance
  4. Year-end postage (and other supplies)
  5. Reclassification of temporarily restricted/unrestricted net assets
  6. Reconciling statement of position (balance sheet) and closing/opening accounts

Receivables and Payables

At year-end, it is important to review all receivables and payables to ensure they are attributed to the correct year. If any are “subsequent events,” they need to be adjusted so they reflect the correct fiscal year.

Salary Fringe Allocations/Accruals

Review all entries pertaining to salaries and benefits. Make sure that any benefits, including bonuses, are attributed to the correct fiscal year. Carry over any Paid Time Off (PTO) or other benefits that accrue year-to-year.

Workers Comp and Unemployment Insurance

These expenses should be evenly apportioned among programs. You can do this via journal entries. Workers Compensation insurance may have varying rates; however, workers comp insurance for specific positions may be higher than for others.

Year-End Postage and Other Supplies

Postage and other supplies that are not carried as prepaid expenses or inventory assets should be moved from the expense account to the prepaid inventory account and then reversed in the opening month of the new fiscal year.

Reclassification of Temporarily Restricted/Unrestricted Net Assets

If you have fulfilled the restricted purposes or conditions of any net assets, the balance of the net asset categories must be updated. It’s a good idea to do this monthly or quarterly, or you can do it at the end of the fiscal year via a journal entry.

Reconciling (SOP) Statement of Position (Balance Sheet) and Closing/Opening Accounts

When you receive the auditor’s year-end adjustments, double check that your financial statements match the audit figures. This check helps with several things. First, it ensures that you have entered all the audit entries correctly into your accounting software. It also ensures that all subsequent statements will be correct. This is especially important for SOP account balances; they carry over from year to year. Statement of Account (SOA) ending balances should also match your system so that you can view accurate year-over-year comparisons.

Make Year-End Close Easy

Although taking time from your busy day to complete monthly and year-end closing can be challenging, failing to do so can lead to many problems. Your accounts can quickly get out of sync, showing incorrect assets and liabilities; amounts won’t tally with bank or credit card statements; and you’ll quickly lose sight of the big picture of your organization’s finances.

Using the outline in Part 1 and the next steps detailed here in Part 2 of the various steps needed to close monthly and end of year accounting, you will make this process smooth and easy—and gain an accurate and complete picture of your organization’s finances.

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.

May 31
0

Closing the Books

By | Accounting, Nonprofit | No Comments
person with calculator and ledger at desk

Month-end close for everyone in accounting can be a stressful time. From the people involved, documents needed, processes to follow, and books to reconcile, closing the books is a task that you might not be looking forward to. The good news is, there are some best practices that we can offer to help streamline your end-of-the-month routine, making it more efficient and less stressful.

Teamwork Makes the Dream Work

Start by taking a look at your team. Every person in your accounting department plays a crucial role in the success of your end-of-month closing. Ask yourself, is everyone on the team properly trained? Do they understand their tasks and goals? Most importantly, do they feel motivated and empowered?

You can help motivate your team in many ways. Setting daily deadlines to keep everyone on track is a good place to start because it removes any ambiguity when it comes to employees understanding their roles. But more importantly, find time to celebrate and acknowledge when employees hit milestones, conquer large projects, or just for sticking with the team during the good times and the bad. Days off and bonuses certainly help, too. But also, you can offer opportunities to cross train when it’s not so busy, so that as a group, you’ll gain different perspectives and understanding on the overall closing process.

Go with the [Right] Flow

What does your close process look like? First and foremost, you should absolutely have a structured procedure, preferably with a checklist document available to everyone on the team. This keeps things clear and organized not only for month’s end, but quarterly and year’s end, too. If your team doesn’t have a checklist, now would be a good time to come together and create one. Find out where the gaps are, if there’s any overlap, and then assign accordingly.

Be willing to adjust the checklist as needed, too. Times change. Departments change. Technology changes. Being willing and able to adapt as a team will help prevent your close from becoming inefficient and cumbersome.

Finally, might we suggest giving your team a “rest day” after that whole checklist is complete? Coming back to the idea of the team feeling motivated and empowered—knowing there is a light at the end of the close-out tunnel and something nice is waiting for them is sure to boost some spirits when stress is running high.

Document Management

For the most part, gone are the days of file boxes and manila folders as companies embrace digital folders instead. The problem is, if there’s no organization to this electronic filing system, your team can very quickly have a spaghetti bowl of information needing to be meticulously sorted through every month.

Creating an organized document hierarchy can provide your team with an easy to navigate, top-down approach to digital filing. For example, a structure may look like this:

“Entity > Year > Month > Process > Policies/Procedures/Supporting Docs/Reconciliations”

Having a periodic folder structure allows the team to easily view the monthly close, make the review process faster, and provide a central location for all related documents. Plus, it allows for repeat usage year after year.

Reconciliation: Excel and ERP (Enterprise Resource Planning)

Excel is widely known and widely used in the accounting industry. It’s safe to say that almost every accountant knows their way around Excel. But when it comes to the end of the month’s reconciliation, does Excel provide the most efficient options? Whereas it’s a familiar program that most accountants are comfortable with, it lacks the ability to automatically integrate input from disparate data silos, typically leaving one person in charge of manually managing it. ERP is an integrated suite of software applications that businesses can use to run almost every aspect of their organizations. Disparate systems often hinder data sharing, too. It’s hard to get what you need when you have to ask colleagues to run reports or wait for someone to come back from vacation to access a system. With a good ERP, access can be shared among all employees. Levels of data visibility can be controlled; of course—the CFO needs different data than the receptionist. But all employees have the opportunity to view many aspects of organization wide data. This enables shared, improved decision making and collaboration, reduces data silos, and makes it much easier for all to work towards finishing that close-out with ease and while reducing risk of errors.

Challenges and Opportunities

There are many challenges and opportunities available in the Closing of the Books process. Being aware of various challenges in each step of the analysis process can help you avoid or overcome them.

Data has always provided accountants with powerful information. Now, more than ever, with access to so many software tools to gather and utilize data, accountants can provide useful and valuable insights to benefit others. And with the right combination of employee satisfaction, clear and concise processes, document management, and reconciliation tools, your close outs can become a little less daunting and a little more efficient.

To learn more tips for Year End Close, read part 2!

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.