When we first begin working with nonprofit clients, one of the first questions we ask is why did they wait so long to get the help they so desperately need. There’s this notion that pausing to break down and rebuild the accounting process will hold the organization back and cause delays with invoicing, paying bills, the audit, etc. Guess what? Most are already experiencing that when they hire us. So, what’s the difference? There isn’t one.
There are a couple of reasons why nonprofits tend to hold off on rebuilding their accounting process. It usually starts with the fact that you feel like you have no time. You’re usually in the hustle and bustle of trying to fundraise, run programs, manage the audit, etc. Also, it’s usually a consultant that would have to come in to assist which means taking the time to find someone and engage them. Other reasons include being swamped with the audit and not having qualified staff or someone to dedicate time to take over the process. These excuses are no reason to continue operating in chaos. That mindset will keep you stuck and on a hamster wheel. You can't maximize operations by always doing what you've done. You have to be in a continual state of improvement.
In the past, I worked with a $10 million organization that had about six to seven people on their accounting team. For some reason, even with a full accounting team, the executive director could not get financial statements on a consistent basis. The audits were delayed just about every year, bills were past due and no one quite knew what their role was. They were slowly sinking and needed some guidance.
It was really crucial to get a process in place or they were going to be in serious trouble. I'll be honest, when I first came in as a consultant, I wasn’t sure how long it was going to take us to fix the problems they were experiencing. It had been years of inefficiencies along with manual and outdated processes. While doing my initial assessment, I noticed that the reason it was so hard to see that they were operating in chaos was because they were in the constant flow of doing. As a result, bandaids were being put on issues to patch them up instead of getting to the root of the problem and working through them.
Fast forward to the current state of our world. Remote work is taking over and technology has significantly advanced the accounting process. There is no time like the present to rebuild your accounting process and team. Big corporations have increased their donation budget and are looking to partner with underfunded organizations. At this point, if you don’t take the time to rebuild your accounting process now, you bare the risk of losing out on funding and remaining in a cycle of inefficiencies, stress, and overwhelm. By rebuilding your accounting process, you improve your ability to have a smoother audit process, implement the latest technology, and optimize your operations. You can then ensure that you are closing the books on time and have access to timely and accurate financial statements.
Nonprofit accounting is very complex. There are a lot of areas that you have to make sure that you are accounting for properly. For this reason, you want to make sure that you are not only getting financial statements on time, but that they're also accurate. Without accurate financial data, you're not going to make the best decisions for your organization. This also extends to external decisions. For example, your qualifications for certain grants, funding contracts, etc. are dependent on your financials. If you have external users of your financial statements, you want to make sure you trust your numbers and that you’re satisfied with how your organization is depicted financially.
When we take the time to help clients rebuild their accounting process, there are so many positives that come out of that process. Some of those positives are recouping millions in outstanding receivables, organized billing and vendor management, applying for agency funding, and having an overall pulse on the financial performance of the organization.
Working in the nonprofit industry is very fulfilling because we are contributing to a greater cause. We understand that you will not be able to serve the people that you created your organization for if you’re struggling to manage your finances. If you don't have the proper infrastructure, operations, or back office support, it will be difficult to have an impact. This is why NOW is the time to rebuild your accounting process.
If you are in a space where you're feeling stressed, overwhelmed and burnt out, these are indicators that something needs to change. We’d love to help you figure out what the problem areas are and what your next steps need to be. Schedule a discovery call here to discuss what that could look like for your organization.