Category

Accounting

Oct 21
0

Accounting Excellence: What Nonprofits Can Learn from Accounting Firms

By | Accounting, Nonprofit | No Comments

How can you measure accounting excellence? And what tools, systems, and processes support excellence?

A recent report from Karbon, a software company specializing in practice management, examined the changes in performance of accounting firms before and after the COVID-19 pandemic. Their findings indicated that organizations that focused on several areas improved practice excellence. These areas included business processes, talent management, and the right software to support operations. Here, we take a look at these three areas and provide recommendations for nonprofits to adopt these lessons for their own accounting departments.

Two financial accountants analyzing business spreadsheets on laptop computer.

Measuring Practice Excellence

Before looking at the results, it’s important to understand how Karbon conducted their study. They measured practice excellence across “four pillars”: strategy, efficiency, growth, and management. The four pillars are then further subdivided into a total of 12 areas that the firm explored in 20-minute telephone surveys with participants. The resulting interviews were distilled into the findings of the report.

Efficiency Drives Success

The main finding throughout the entire study was that improving efficiency drives success for accounting firms. Firms that prioritized efficiency were also the most successful. These companies embraced new technologies, and by doing so, improved operations. The resulting improvements carried over well beyond the pandemic.

There’s also a strong correlation between focusing on business process improvements and overall practice excellence. The study found a 71% correlation between Business Process Excellence and Practice Excellence scores. Accounting firms that spent time examining and improving business processes made improvements across their entire company, resulting in higher scores in Practice Excellence.

Closing the Talent Gap

We’ve written many times about the talent shortage in the accounting profession and how companies, as well as the AICPA, are addressing this gap. Another important finding from the Karbon report is that accounting firms that were intentional about closing the talent gap were more successful than their peers who did not take steps to find, recruit, train, and manage talented people. Factors that improved talent management and retention among successful accounting firms included a thorough onboarding process, searching for candidates with higher emotional intelligence scores and attributes, effective meeting management, and 360-degree performance reviews. It is worth noting that managing meetings effectively is an integral part of the overall talent management cycle. It may be inferred that “meeting creep” (i.e., too many meetings, unfocused meetings, unproductive meetings) exhausts talented people. Or at least that’s what we think!

Adopting the Right Technology Is Critical for Efficiency

Among the many findings in the report, one thing stands out: adopting the right technology is crucial to support efficiency and practice excellence.

The “right” technology differs among firms, of course. A large accounting firm with multiple offices needs a different system than a nonprofit or a government accounting department. Matching accounting software with an organization’s needs is a crucial factor in driving success.

The study found three types of software supported practice success:

  • Business intelligence 
  • Practice management 
  • Communication 

Each type of software supports excellence in different ways:

  • Business intelligence software enables companies to measure performance through visualizations that are often easier to read than standard reports.
  • Practice management software helps accounting firms centralize workflows and streamline operations.
  • Communication tools enable secure real-time messaging.

Key Takeaways for Nonprofits

At Welter Consulting, we help nonprofits find solutions that work for their unique needs. Our key takeaways for clients, based on the Karbon report, are that the right software, matched with the right client, does wonders to improve performance and drive excellence.

Nonprofit accounting software can help nonprofits transition from spreadsheets or general-purpose small business software to nonprofit-specific platforms that support their unique accounting needs. Such software enables program-specific metrics tracking, can integrate with donor and grant software, and supports many of the efficiencies cited in the paper as drivers of practice excellence. Talent management software also supports recruiting and training talented individuals, a challenge that nonprofits often face.

As the Karbon report indicates, accounting firms that not only survived the pandemic but thrived afterwards focused on improving efficiencies. They did this by examining and enhancing business practices, improving talent management, and adopting the right software. Nonprofits can learn from this example and adopt these ideas to further improve their own operations and accounting groups.

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.

Oct 07
0

The Right Nonprofit Accounting System for Your Evolving Organization

By | Accounting, Nonprofit | No Comments

Organizations grow and change over time just like people do. They start small and grow in new and interesting ways. As a nonprofit grows, its accounting needs change, too. Often, organizations begin with simple spreadsheets or out-of-the-box small business accounting software. There comes a time, however, when spreadsheets take more time than you have in your day to update, or when your software is sluggish, overburdened, or simply not flexible enough to meet your current requirements.

In this article, we’ll explore what to do next if you’re unhappy with your current system. We’ll discuss the steps to evaluate your needs and select a flexible nonprofit accounting system that supports your current growth and future needs.

person using a tablet for accounting

Symptoms of Accounting System Growth Pains

Doctors ask patients about the symptoms of their maladies. What are the symptoms of accounting system growth pains?

  • A system that makes it difficult to get the reports you need – you find yourself exporting data into spreadsheets, then manipulating spreadsheets to generate the charts, graphs, and reports you need.
  • After typing data into your accounting system, you need to key the exact same information into another system because the systems don’t ‘talk’ to each other.
  • Duplicate data is rampant because everyone must type information into multiple systems. Even something as simple as typing “Rd” instead of “Road” leads to duplicate information and problems.
  • Month-end closing takes hours, even days, when you feel like it should be much easier.
  • It’s almost impossible.


Sounds familiar? If any of this sounds like your situation, you may be experiencing accounting system growing pains. It’s like a pair of shoes that no longer fit – they pinch because your feet have grown. It’s time to get the right size.

Imagine the Possibilities with a New Nonprofit Accounting System

Now imagine the possibilities with a new nonprofit accounting system. Cloud systems provide a comprehensive solution that includes accounting, finance, operations, human resources, and other systems all in one interconnected platform. Information entered into one part of the system flows naturally into other parts, providing unmatched real-time visibility. Preparing for audits, sharing information, and even simple monthly reconciliations are all much easier with a modern cloud-based accounting platform.

Searching for a New Accounting System

How do you begin the search for a new nonprofit accounting system?

  • Select a team from within your organization to steer the search. The members don’t need to be IT experts. A cross-sample from across multiple departments is the best way to steer a software selection team.
  • Work with a consultant. A good consultant who understands the nonprofit world and its unique accounting and reporting needs will save you time and effort by steering you towards software that supports your organization’s growth.
  • Make a list of the current pain points with your existing system and the wish list of what you’d like to see in your new one.
  • Take your time. Your new nonprofit accounting system will be with your organization for many years to come. Take the time now to research, review, and select the best one to support your growth.

It can be challenging to know the next steps when your organization has outgrown spreadsheets and standard accounting programs. With the right partner by your side, you can step forward into the search for a new nonprofit accounting program with confidence.

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.

Sep 02
0

ACA Compliance for Nonprofits: New Penalties, New Priorities in 2026

By | Accounting, Government, Nonprofit, Tax | No Comments
clipboard with paper which says ACA affordable care act compliance for nonprofits 2026

The IRS recently released Rev. Proc. 2025-26, providing the indexing adjustments for the upcoming calendar year 2026. These indexing adjustments affect applicable large employers (ALEs) starting next year. ALEs are defined as entities having 50 or more employees. Such organizations must either offer minimum essential coverage that is affordable (i.e., provides minimum value to full-time employees and their dependents) or make an employer shared responsibility payment to the IRS, all part of the Affordable Care Act’s employer shared responsibility provisions.

Nonprofit status does not matter in the context of this law; it’s the number of full-time employees that counts. If your organization employs 50 or more full-time employees, it’s important to understand the indexing adjustments to ensure full compliance with the ACA and avoid potential penalties.

What Is an Employer Shared Responsibility Payment?

The Employer Shared Responsibility Payment is a financial penalty imposed by the IRS on ALEs who fail to meet specific health coverage obligations under the Affordable Care Act.

To avoid the ESRP, an ALE must offer its full-time employees and their dependents health insurance that:

  • Qualifies as minimum essential coverage
  • Is affordable based on IRS standards and
  • Provides minimum value, meaning it covers at least 60% of expected healthcare costs

If an ALE does not offer coverage to at least 95% of its full-time employees, or if the coverage offered is unaffordable or inadequate, and at least one employee receives a premium tax credit through the Health Insurance Marketplace, the employer may owe one of two types of ESRPs:

  • A penalty for not offering coverage to enough employees
  • A penalty for offering coverage that fails the affordability or value tests

These payments are calculated monthly and assessed annually, with amounts indexed for inflation. Importantly, ESRPs are non-deductible and apply regardless of an employer’s tax-exempt status.

IRS Implements Updated Penalty Amounts in 2026

Beginning in 2026, the IRS will implement updated penalty amounts under the Employer Shared Responsibility Provisions of the Affordable Care Act. Nonprofit organizations classified as Applicable Large Employers (ALEs) must be especially mindful of these changes. If an ALE does not offer minimum essential coverage to its full-time employees, it may face a penalty of $3,340 per employee annually. Alternatively, if coverage is offered but is deemed unaffordable or does not meet minimum value standards, the penalty rises to $5,010 for each affected employee. These penalties are indexed for inflation and apply to plan years starting after December 31, 2025.

ESRPs are non-deductible expenses, meaning nonprofits cannot offset them through tax savings. This can pose a significant financial strain, especially for organizations operating on tight budgets or relying heavily on grant funding and donations.

Avoid the Penalty and Stay in Compliance

To avoid the Employer Shared Responsibility Payment, companies must first determine whether they qualify as an Applicable Large Employer, which generally means having 50 or more full-time employees or full-time equivalents in the previous calendar year. If they meet this threshold, they are required to offer minimum essential health coverage to at least 95 percent of their full-time employees and their dependents. This coverage must be affordable according to IRS safe harbor standards. It must also provide minimum value, meaning it covers at least 60 percent of expected healthcare costs.

Employers should also accurately track employee hours to determine full-time status and use IRS-approved methods for measurement. In addition, they must report coverage information to both the IRS and employees using the appropriate forms, such as Form 1095-C and Form 1094-C. If contacted by the IRS regarding a potential penalty, employers have a 90-day window to respond and provide documentation. Monitoring and meeting these requirements can help your organization avoid steep penalties from the IRS.

Preparing Nonprofits for ACA Compliance: Why Early Action Matters

As the 2026 updates to the Employer Shared Responsibility Payment take effect, nonprofit organizations must recognize that compliance affects them too. These provisions apply equally to tax-exempt employers as well as for-profit companies. If you don’t follow the IRS rules, your organization will face a steep penalty.

By understanding the rules, evaluating coverage, and proactively preparing for the new thresholds, nonprofits can protect their budgets and continue focusing on their mission. Early planning and informed decision-making will ensure your organization remains compliant and avoids costly penalties in the years ahead.

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.

Jul 22
0

Choosing New Accounting Software? Tips to Find Great Software

By | Accounting, Accounting Software, Nonprofit | No Comments
person at desk using accounting software

What’s driving your need to choose new nonprofit accounting software? Some frequently cited reasons for shopping for a new system include legacy systems struggling to keep up with demand, the need to export data into spreadsheets to use it (or run reports), lack of integration, and lack of modern features, such as AI.

But if these are the reasons driving your software search, slow down. Shopping based on features is often a recipe for failure. Here, we share with you the best practices and tips to truly find the right nonprofit accounting software for your organization.

Don’t Shop Solely by Features

It’s tempting to make your wish list of features and go forth and shop. But it’s not the best idea. Although features are easy to understand, see, and experience, they aren’t always the best indicator of a good fit with your needs. Many packages come with more “bells and whistles” than the average accounting department needs. Such packages may be over-engineering for your organization, and over your budget, too. Although features are important – after all, you don’t want to be exploring spreadsheet data to run your reports anymore – there are more considerations than features alone.

Implementation Speed

One consideration is implementation speed. As you weigh your new software choices, ask the consultant or vendor how quickly the system can be up and running. Longer implementation times can be a sign of a system that’s more than you need or a vendor who can’t give your organization the personal attention it deserves.

How long is too long? Anything longer than six months is a sign of potential misalignment with your needs. And timelines stretching past a year are untenable for the average organization. Changing systems is disruptive, and lengthy timelines exacerbate the disruption. Look for reasonable timelines for weeks, not months, to help you transition efficiently to the new system.

Support and Training

Another important consideration for new software purchases is support and training. A good implementation team is critical, but so is the post-implementation support and service. No matter how tech-savvy your team is, there will be some level of customer support needed. Having local support is ideal, but if that’s not possible, a hotline that puts you immediately in touch with an expert who can walk you through troubleshooting or answer your questions is the next best thing. Read through the vendor’s materials carefully and ask clarifying questions to fully understand the support available to your team.

Training is also essential both to learn the new system and to maximize its use over time. Choosing a power user or super user, someone who will receive additional training, ensures that you have an expert in-house who understands advanced functions in the new system.

A single one-hour training session with the vendor probably won’t be enough. Discuss with the vendor or consultant providing the new software the length and type of training available as part of the implementation package. Different user groups may require varying levels of training, too, so consider that as part of the overall training approach.

Total Cost of Ownership

Lastly, the total cost of ownership (TCO) should be one of the deciding factors in your software choice. Software costs are only part of the equation. Factor into the costs any integrations or customizations required, as well as training and implementation time, and you’ll gain a much clearer picture of the TCO for the software.

Seek Expert Advice

Choosing the right nonprofit accounting software can be a daunting task. It helps to have an expert by your side who knows the right questions to ask and the often-overlooked aspects of software shopping that the average person doesn’t know. Welter Consulting is happy to assist you with your software choices and can guide you through the process from start to finish.

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.