Category

Accounting

Aug 30
0

Choosing the Right Nonprofit Accountant

By | Accounting, Nonprofit | No Comments

Why hire an accountant who specializes in nonprofit accounting? Why not keep managing the books on your own or hire your third cousin, who was once a small business bookkeeper, to manage your accounts?

If you’re looking to cut corners and save budget—don’t do it when hiring an accountant, especially a nonprofit accountant. Choosing the right nonprofit accountant is one of the most important decisions when managing your organization. Here’s why you need a great nonprofit accountant and where to start your search.

Why Look for an Accountant with Nonprofit Experience?

Nonprofit accounting is different from for-profit accounting. Okay, this may be an obvious statement, but it’s often surprising that some organizations fail to recognize this critical fact. Nonprofits must comply with extensive regulations and requirements to maintain their tax-exempt status. Failing to do so can be catastrophic to an organization.

Many corporate or small business accountants do not have the experience or knowledge of nonprofit accounting to manage some of the issues facing nonprofit compliance. An experienced nonprofit accountant knows what to look for and where to go for more information and can confidently steer your organization’s finances.

The Right Nonprofit Accountant Helps Improve Efficiency

If you’re the CEO or president of your organization, and you’re the one still managing the accounting function, think of the time you could save if you had an experienced, trustworthy, and knowledgeable accountant handling it instead.

How many hours do you spend daily, weekly, or monthly completing routine accounting tasks? What about advanced accounting and financial needs such as forecasting, budgeting, analysis, and planning?

A nonprofit account will bring with them many years of experience. They will know the steps to take and the systems to put into place to streamline your organization’s accounting processes.

Another area in which a nonprofit accountant plays a pivotal role is selecting software to improve efficiency. This may mean accounting software, but it could also be in choosing the best grant and donor management software, data and analytics processing software, or other types of software that can improve sales, marketing, and operations efficiency.

Having a true accounting leader on your team will free up considerable time, ensuring that the financial items are handled appropriately, quickly, and confidently. It will greatly improve efficiency both for you and your entire team.

Improved Protection Against Fraud

It’s a sad fact that fraud continues to plague the nonprofit realm. According to the Association of Certified Fraud Examiners (ACFE) 2020 Global Study on Occupational Fraud and Abuse, 35% of nonprofits lack internal controls. Internal controls are systems and processes that prevent common types of fraud, such as stealing cash, padding expenses, etc.

In over 17% of the cases cited in the study, audits or internal management spotted the fraud. In many cases, nonprofit management received a tip that fraud was occurring.

With the right nonprofit accountant on board, not only can you put strong internal controls into place to guard against fraud, but you’ll also have a leader available who others can trust with information about possible fraudulent activity. Thieves often act impulsively, taking advantage of opportunities (such as an unlocked petty cash box). Having someone experienced in nonprofit accounting leading the efforts against fraud and theft within the organization can make a significant impact.

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 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.