Outsourcing is the new wave and there’s so much discussion as to whether this is the right move for nonprofit organizations. Given that many nonprofits look for ways to save funds and reduce overhead, outsourcing can be a great solution. When managing a small budget and restricted funds, the accounting function is often the last to be considered. Many nonprofits go the volunteer route or someone in the organization usually with no financial background is tasked with managing the finances. This is a cause for concern as it can result in the mismanagement of funds and inaccurate bookkeeping. In this post, I’ll walk through three signs your nonprofit is ready to outsource accounting.
You Can't Afford to Hire a Professional
Most nonprofits are managing limited funds and have to be very cognizant with how funds are expended. In many cases, leadership is forced to wear many hats or seek the help of volunteers to manage the books. As your organization grows and the accounting becomes more complex, you can’t deny that you need professional help. But what do you do when you can't afford to hire? Outsourcing is a viable solution and cost effective. According to PayScale, the average bookkeeper’s salary ranges from $25K - $56K plus benefits depending on location and experience. By hiring an outsourced firm, a financial controller ranges from $2500-3000 a month. Going this route allows you to have access to the expertise at a fraction of the cost.
If you find that your need for financial data is increasing and hiring a full time professional isn’t in your budget, this is an alternate route to consider.
You Want Better Financial Insight
At some point, you will need financial assistance that goes beyond basic compliance and tracking your income and expenses. If you find that you don’t have access to actionable and timely reporting, that’s a sign that your organization is ready to outsource accounting.
Better financial insight looks like:
Key performance indicators that drive your business and tell you how well you’re performing in comparison to those in your industry
Profit & Loss statements by department/ program/ income stream
Metrics to measure program impact & more
By having reports that provide deeper financial insight, leadership can make informed decisions about what programs are impactful and hitting their goals, what expenses can be cut or may be draining the organization, how the organization is performing against industry peers, etc.
This information is key and when hiring an outsourced Accounting firm, you get access to the tools and applications that provide you with the data mentioned above and a resource to help you make sense of it.
Your Current Professional Can’t Keep Up with Growing Demands of the Organization
As your organization grows, so will the level of your financial reporting. If your current professional is experiencing the below, an outsourced solution is a great alternative:
Unable to close the books monthly
Can’t keep up with applicable regulations
A very manual process
Unable to produce management reports
Unable to speak to the financial position of the organization
The above tasks are just a few things that your accountant should be able to assist you with. When running your organization, it’s difficult to do so without the appropriate data and the right professional to assist you with making sense of the numbers and decisions that should be made based on the numbers.
An outsourced accounting firm will assign the right accounting professional to your organization based on your needs. At Visionary Accounting Group, we run a diagnostic when you first onboard to determine the current state of your organization. Based on the results, we provide a report that details the next steps and level of ongoing maintenance needed.
Going the outsourced route can be scary as it has always been the norm to have your accounting department in-house. At VAG, we can act as your accounting department. One of our core values is transparency so we ensure that our clients have insight into their numbers 24-7 via cloud based solutions. We also meet to discuss your numbers at a frequency agreed upon so that the lines of communication are always open. If you’re still on the fence, learn about the benefits of outsourced accounting here.