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Nonprofit

Feb 14
0

Using Data and Analytics to Improve CFO Decision-Making

By | Accounting, Accounting Software, Nonprofit | No Comments
Using Data and Analytics to Improve CFO Decision-Making

The CFO’s role is constantly evolving, with an increasing reliance upon data for decision-making. CFOs have always been data-driven, using economic and organizational data to shape their recommendations. However, with the advent of advanced technology, including nonprofit accounting systems, integrated donor and grant management portals, AI enhancements, and other enhancements, CFOs now have many resources at their fingertips for data-driven decision-making. Here are some factors impacting data use for CFOs, as well as various tools and platforms that enable better data use. 

The Continuing Accounting Talent Shortage

We’ve written before about the accounting talent shortage. Fewer people are choosing accounting majors in college, shrinking the available resources pool. With fewer junior-level accountants entering the workforce, there are fewer people rising through the ranks to the CFO chair. Kiplinger calls it the “graying” of the accounting workforce as the more seasoned professionals reach retirement age, with insufficient young recruits to replace them. 

Even though it is becoming harder to fill vacancies in the accounting department, newer technologies are filling some of the gaps. Automation tools built into existing accounting systems can route approvals, invoices, and reminders efficiently, saving a great deal of time. AI enhancements are also able to find information quickly thanks to AI’s inherent ability to parse large quantities of data. And many modern accounting platforms have robust reporting capabilities, which enable the CFO to generate much-needed reports without exporting data and manipulating it in spreadsheets. Although each of these time-savers seems small in comparison to the workload of a CFO, they add up, making it easier to gather data and derive useful information from it. 

Unified Systems for 360-Degree Visibility

Unified or integrated systems are necessary for today’s data-driven nonprofit. Systems that ‘talk’ to one another can share data across platforms to provide users with 360-degree visibility into their data. Consider a nonprofit accounting system that exchanges data with customer and donor relationship management software, grant and funding software, and similar platforms. The reports generated through such systems contain rich, robust data that significantly improves decision-making. 

Of all the tools in the CFO’s arsenal, having data visibility and integrated systems is the key to using data wisely and making data-driven decisions. When systems are integrated, they provide robust reports that CFOs can analyze to make decisions. Instead of generating separate reports from multiple systems and comparing them manually, or extracting data and manipulating it in spreadsheets, the CFO can access data quickly and efficiently. 

Managing Risk Through Data

CFOs must assess risk to the organization’s financial health. But this can be challenging without accurate and timely data. Newer technologies including cloud platforms ensure that system data is accurate and timely. Integrating these systems with other data points, such as economic, demographic, and other forecasts, provide the enhancements that CFOs need to assess risk and develop appropriate what-if scenarios and recommendations. 

Leveraging Technology for Better Decision-Making

As you can see, technology is the key to improving efficiency and clarity with which CFOs can make decisions. Data flowing freely through integrated systems ensures that the CFO has the insight and transparency needed to make data-based decisions. The right systems, adequately integrated, make this possible. 

What if the right systems are lacking? Then, planning, budgeting, and exploring new technologies should be on the organization’s task list for the new year. CFOs must have accurate, timely, and complete data to make decisions crucial for an organization’s success. This is another reason CFOs must be part of the selection committee for new software. Not only are many decisions made with the data captured by the software, but the software itself can help CFOs in their role as analysts, planners, and forecasters. 

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.

Jan 22
0

Improve Your Expense Management This Year

By | Accounting, Nonprofit, Technology | No Comments
person at laptop computer using Expense Management software

The expenses related to a nonprofit’s budget rarely come from one big item. Instead, small expenses often accrue, resulting in a significant financial drain on revenues. Surprisingly, these small expenses are often technology expenses: site licenses, cloud SaaS platforms, and smaller apps or programs used by only a handful of people. If reducing expenses is one of your goals this year, examining your technology expenses should be the first step to improving expense management.

The Hidden Costs of Technology

We often discuss how cloud-based software is more cost-effective than site-based systems and frequently recommend cloud accounting programs to our clients. Yes, these platforms are often more cost-effective for the average nonprofit than investing in site-based systems and the accompanying hardware and personnel needed to manage them. However, hidden expenses can arise. Here’s what to look for:

Align Technology Expenses with Organizational Goals

Conduct an annual review of existing technology expenses and compare them to the organization’s plans for the upcoming year. All technology expenses should support business goals in some way. If they do not, discuss with current system users why they need the software. Can their needs be accommodated by using another system so that you can sunset one and its related expenses? You will need to take this case-by-case, but any systems that do not currently support organizational goals and objectives should be evaluated.

Audit Recurring Software Expenses

Recurring software expenses are often a significant expense. Those small, sneaky annual fees can quickly add up to quite a large expense. Many examples abound of recurring software expenses: photo editing software, social media automation, and apps that perform single functions. Perhaps these were needed last year for a project but are no longer necessary today. The accounting team should conduct an annual audit of all recurring expenses and discuss with users whether they are still needed. You may save considerable money by canceling unused software or app licensing fees.

Check Site Licenses

Another technology expense that, if it is not monitored, can quickly add up is licensing fees. Some software companies charge by the user; for example, 1-5 users incur a certain charge, 5-10 users another charge, etc. Or you pay for each individual. If your staff has changed over the past year, you must check each license to see if you can drop to a lower tier or retire individual licenses.

Where NOT to Cut Expenses

Trying to eke out another year or two from existing hardware is tempting. However, hardware such as computers, laptops, networking equipment, and mainframes often have a limited ‘shelf life’ as established by the manufacturer. Check with your managed services provider or IT department and follow their recommended replacement schedule. It is not smart to wait until things break before replacing them. When it comes to hardware, replacing aging equipment before it completely fails can prevent bigger issues, such as lost data, time, or productivity.

Other technology expenses that you probably shouldn’t trim include cybersecurity licenses, such as anti-virus software and patches, and updates or upgrades to existing technology. Support for Windows 10, for example, will end on October 14, 2025. This means that Microsoft will no longer provide security updates or patches after that date. Your systems may be vulnerable to attack if you do not upgrade to Windows 11. It is “penny wise and pound foolish,” as the old saying goes, to delay this upgrade, for a cyberattack can be stressful and costly – and possibly prevented by simply having the latest operating system on your organization’s computers.

There are more places where you probably shouldn’t cut technology expenses. However, by carefully evaluating your existing software needs, recurring expenses, and site licenses, you may be able to reduce your organization’s technology expenses significantly.

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.

Jan 15
0

How to Improve Cash Flow Forecasting Accuracy

By | Accounting, Nonprofit | No Comments
person doing a demo of Cash Flow Forecasting software

Accurate forecasting of your organization’s cash flow is vital for healthy operations. According to the National Association of Nonprofit Organizations & Executives (NANOE), one reason that nonprofits fail is poor accounting and money management. Cash flow management is money management, or the management of cash on hand, related to expenses. If you aren’t managing your cash flow, you are potentially putting your organization in financial jeopardy.

Fortunately, there are many steps you can take to improve cash flow forecasting. Understanding how to improve cash flow forecasting and accuracy is the first step to shoring up your organization’s finances and ensuring you have enough money to pay for upcoming expenses.

What Is Cash Flow and Why Is It Important?

First, here is a quick definition: What is cash flow? Cash flow refers to the movement of money into and out of the organization’s accounts over a specific period. It includes all cash transactions related to operating activities (such as donations, grants, and expenses), investing activities (like purchasing or selling assets), and financing activities (such as loans and fundraising events).

Essentially, cash flow measures the liquidity and financial health of the nonprofit, indicating its ability to generate cash to meet obligations, fund programs, and support its mission. Accurately forecasting cash flow ensures the organization has the funds it needs to meet current and future expenses.

Five Steps to Better Cash Flow Accuracy

There are several steps you can take to improve the accuracy of your cash flow forecasting.

  1. Establish Lines of Communication: Effective cash flow forecasting requires input from various individuals within the organization to provide accurate figures and insights. A central source of financial information, such as nonprofit accounting software, can help everyone in your organization provide timely input into expenses and revenues.
  2. Cash Flow Differs from Revenue: Cash flow and revenue are related but distinct concepts in a nonprofit organization. Revenue refers to the total income generated by the nonprofit from its various activities, such as donations, grants, membership fees, and fundraising events. Cash Flow refers to the actual movement of cash into and out of the nonprofit’s accounts. Cash flow measures the liquidity and financial health of the organization, indicating its ability to generate cash to meet obligations and fund its programs. Revenue shows the total income earned; cash flow provides a more comprehensive picture of the organization’s financial health by tracking the available cash. Understanding the distinction between these two terms is vital to track cash flow accurately without conflating it with revenue.
  3. Identify Your Inflows and Outflows: Carefully monitor all cash inflows and outflows. Periodically review this data with your entire team to ensure it is up to date.
  4. Visualizing multiple future cash flow scenarios helps in adapting processes quickly. You can then monitor the situation and determine your next steps based on the previously developed ‘what-if’ exercises and scenarios.
  5. Publish the Forecast, Monitor, and Adjust Results: Continuously monitor and adjust your cash flow forecast based on real-time results. By monitoring cash flow in real time, you’ll be able to improve your forecasting accuracy and ensure adequate cash for current needs.

Nonprofit Accounting Software Makes Cash Flow Forecasting Easier

Nonprofit accounting software makes cash flow forecasting easier and more accurate by automating data entry, providing real-time reports, and offering budgeting and forecasting tools. It tracks restricted and unrestricted funds separately, integrates with donor management systems to predict future donations, and helps manage expenses by categorizing and tracking them. The software ensures compliance with financial regulations and provides transparent financial reporting, which is crucial for maintaining donor trust and securing future funding. By using these features, nonprofits can create more accurate cash flow forecasts and improve their financial stability.

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.

Jan 08
0

5 Steps to Choose the Best Fund Accounting Software for Your Nonprofit

By | Accounting, Accounting Software, Nonprofit | No Comments
two people in front of laptop computer, Accounting Software

Fund accounting software helps nonprofits manage their finances better by providing clear financial reports, separating restricted and unrestricted funds, automating compliance processes, and offering real-time information for decision-making. It centralizes information to increase efficiency, links financial activities to specific grants, and ensures resources are used effectively to fulfill the nonprofit’s mission. If you’re looking to add fund accounting software to your organization, these five steps will help you choose the right one for your needs.

Five Steps to Find the Best Fund Accounting Software

As you search for the best fund accounting software for your organization, you may feel overwhelmed by the choices available. These steps will help you organize the software selection process so that you can quickly assess the options and make smart choices about the finalists before reviewing each one individually.

Step One: Gather Your Team

Even though you’re selecting software, the process begins with people, not technology. The first step in selecting fund accounting software is to gather the right people to participate in the selection process.

First, you’ll need a project leader, someone willing to devote the time, energy, and resources to guide the project’s successful completion. This person doesn’t necessarily have to be in IT – someone on your accounting team may be willing to take the lead.

After determining the project leader, you’ll need to gather a team who will work together to find the right accounting software. This team should include at least one department representative who will use the software. End-user participation is vital to the project’s success. The software must meet their needs first and foremost, so get them involved early and often!

Lastly, finding an executive champion or someone from the executive level in your organization who will promote the project among the leadership team is also essential for success. This person may be able to remove roadblocks, approve the budget, or help you navigate internal politics to achieve project success.

Step Two:  Define Requirements

Working with the project team, define the requirements for the accounting software.

Define your requirements by asking these questions:

  • What do we want to achieve with our new system?
  • What information do we need to make better decisions?
  • How many people need to access the system, and what roles will they have? Which processes do we want to automate?
  • What other applications are we using that need integration with the accounting system?

Document the expected improvements with a new fund accounting system, including Return On Investment or ROI and total cost of ownership.

Step Three: Understand Delivery Options

Fund accounting software is available in three delivery options: on-premises, hosted cloud, or native cloud. What does each mean?

  • On-premises or “on-prem” software is purchased upfront and installed on a computer in your office. It is accessed within your network by other users but cannot be accessed remotely. All the information in the system is contained on the premises, hence “on-prem.”
  • Hosted cloud software is owned by your organization but hosted by a data center offsite. It is accessed over the internet.
  • Native cloud accounting software is also called “SaaS” software. It is housed and maintained by the vendor offsite. Your organization accesses it securely through the internet.

As a team, explore what each option may mean for your organization and review the pros and cons of each delivery method.

Step Four: Develop a Requirements List

This is the time to assemble your “wish list” of requirements. Basic nonprofit accounting software should include general ledger capabilities along with account, bank, and credit card reconciliation; financial management; cash flow management; invoicing and payments; reporting; and possibly integration with other systems, such as donor management. Look for software developed explicitly for nonprofits. General business accounting software does not track fund accounting or grant funds and may require significant (and expensive) customization, while fund accounting software is developed with the unique needs of nonprofits in mind.

It’s also important to consider any complex needs your organization may have. For example, an organization with one location has different software needs than one with 10 locations across seven states. Those operating internationally have even more complex needs as accounting requirements vary by country, and languages and currencies also vary. List these factors as part of the requirements.

Step Five: Evaluate Software Vendors

Now, it’s time to evaluate software vendors. To find possible candidates, speak with colleagues from the nonprofit world. Ask for recommendations; many will be happy to share recommendations for vendors with whom they’ve had positive experiences.

Review information about each possible fund accounting software system online, watch demos, and read information about the system. Then, with your requirements in hand, speak with vendors and make appointments for consultations, demos, and discussions.

Here are a few tips to keep in mind when speaking with vendors, software resellers, and consultants:

  • Winnow the larger list of possible vendors into a short list based on your online research.
  • Create a request for a proposal document that contains your organization’s requirements. This can be shared with the shortlisted vendors so that the responses address the same points and provide an apples-to-apples comparison.
  • Some vendors simply sell software. Others install it but do not provide training. Ask what each vendor includes in their package.
  • Assess how well the vendor’s approach fits your organization. Ask who will work with you on the implementation and what support is provided. Ensure you “click” with the person you’ll be working with since you will spend considerable time together on this project.

Need More Help Choosing Fund Accounting Software?

If you are looking for fund accounting software such as Sage Intacct, MIP Fund Accounting, MIP Cloud, and more, we’d love to help you. With over 500 implementations, we bring extensive experience and expertise to the table.

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.