Identify and Document Your Organization’s Pain Points

By February 22, 2023Technology
person "juggling" a file folder and shared documents in his palm

In our previous articles, we’ve talked about the importance of digital transformation as well as one of the initial steps in the process—a systems review. At the end of the systems review process, we recommended listing all the bottlenecks or pain points experienced in your organization as a step to identifying software needs to improve productivity and efficiency.

Today, we’re going to dig a little deeper into how to identify and document bottlenecks, pain points, and basically, all those things that keep your organization from working at peak efficiency.

Mapping Internal Processes

Each process within your organization includes multiple steps. Mapping an internal process means identifying and organizing the steps necessary to understand how the process unfolds. Once a process is mapped out, it quickly becomes evident when there are bottlenecks in the process that software is either helping or hindering.

Here’s a quick example: Nonprofit A reimburses employees for valid business expenses such as meals when traveling. Employees are required to submit their receipts and a form listing each vendor, expense category, and expense amount. They must staple the receipts to the form and a manager must sign the form. Then, the form is submitted to the Accounts Payable person, who enters the information into the accounting system. If approved by the CFO, the AP person issues a check to the employee.

Note how this example (which may be typical of small or startup nonprofits) relies heavily on manual forms, data entry, and checks. What if this could be automated?

This is a simple example of an internal process that, once mapped, demonstrates many areas where automation can improve efficiency. Newer accounting software may enable users to scan receipts, with software that decodes the scanned text and enters it automatically into the requisite fields. The request for reimbursement can be routed via email to the appropriate managers and electronically approved. And, in the revised scenario, reimbursement can be issued via direct deposit to an employee, another step towards improving efficiency.

However, without mapping out the internal process in a stepwise manner, it is difficult to see areas in which automation improves efficiency. The old, comfortable familiar, established may simply be taken for granted. Until it is mapped and examined, it may remain as a hidden or obvious bottleneck to organizational efficiency.

Where to Begin Process Mapping

The accounting department is a logical place to begin mapping internal processes. Examples include:

Accounts Payable and Disbursements

  • Expense approvals
  • Document management
  • Credit card management
  • Procurement
  • Vendor information such as new vendor information
  • 1099 Processing
  • Payment to vendors
  • Positive Pay File with Bank

Revenue and Accounts Receivable

  • Invoicing and statements
  • Customer tracking
  • Donor tracking
  • Events
  • Grant management (and restrictions on use of funds)
  • Revenue recognition
  • Receiving payments
  • Cash receipts (not AR) entry
  • Prepayments
  • Deferred revenue

General Ledger

  • Segmented/Dimension COA
  • Fund Accounting Systems (balancing)
  • Auto reversal of entries
  • Inter-company entries and eliminations
  • Batch processing and posting
  • Fiscal year/period close (soft/hard)
  • Allocation of time entry
  • Statement of activities
  • Functional statement of revenues and expenses
  • Accrual vs cash accounting
  • Report on multiple periods

As you can see, there’s a lot of ground to cover—and many processes to map. Once you’ve completed this step, however, you should have a clear picture of where automation can help remove bottlenecks.

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.