Why Your In-House Accounting Isn't Working

MORE MONEY, MORE PROBLEMS?

Maybe you are managing a nonprofit and are having hiccups in your accounting process, or, maybe your team is not operating as efficiently as you’d like.


As your nonprofit continues to grow, the accounting becomes more complex.


What I’ve found is that usually as nonprofits start to grow, they face the dilemma of whether or not to grow their in-house accounting team. Are you going to hire internally? Are you going to outsource to help you manage the day-to-day accounting operations?


I think it's important to think about the fact that we are in a digital-first society now... thank you COVID-19.


If your in-house accounting isn't working, typically, it boils down to a few different scenarios. I won’t go into all of them here, but let’s hit a few of the highlights.

FIRST THINGS FIRST...ROLES

My experience has been that small to mid-sized non-profit organizations typically have a team of about three to six people. This usually consists of your bookkeeper, staff accountants, senior accountant, and then the controller to whom everyone else reports. These roles tend to make up the non-profit fiscal department.


There is also the contracts and grants manager. This role is important because depending on the type of programming that you manage and what your funding sources are, you’re quite possibly going to have different contracts that have certain requirements; which typically requires a dedicated person to manage.


The cost to build your team can add up quickly, especially as you begin to add new team members. Throw in professional development training for your team to grow their skillset, and it can get expensive.


The “growth period” in an organization, especially rapid growth, can be the “acid test”. Take it all in though! This is actually a great time to identify if you have established clear roles and responsibilities and if your processes and procedures are standardized.


The first reason why your in-house accounting may not be working is staffing.


Most often organizations are too short-staffed to adequately handle the volume of work coming in. It can be too much and even if you have processes and procedures in place, things can go sideways quickly, leading to operating in disarray and chaos even.


I remember being part of a team of about three people with a very good skill set between us, but it just seemed like we couldn't get it together. We couldn't close the books on time, billing seemed to be delayed, the board tended to have to wait on reports, and what it really boiled down to, was that we were severely short short-staffed for the size of the organization and the volume of grants that they were managing.


A lot of work and not enough people, that’s pretty common in the nonprofit space. This can be sticky as it relates to fiscal management because as a nonprofit accountant, you are expected to be very meticulous, detailed, and exact with how you are managing the funds of the organization. People ultimately want to know what you have done with the money that was donated and if you don’t have the proper staff in place with the proper skillset, then you potentially risk the reputation of your nonprofit due to items being done incorrectly.


The second reason why your in-house accounting may not be working is skill gaps.


This also is typically common. Here are some possible reasons why:

  • The department tends to be made up of those who started off as volunteers, they were completely invested in the mission of the nonprofit, they wanted to help, they wanted to join in, but they may have not had the skillset.

  • Another reason could be that who you hired, initially, had the skill set, however as your organization became more complex, they did not develop their skillset beyond what the position originally required.

We all know “this person”, the person who has been in that same position for 20 years, who will only do “their job” and, unfortunately, they have no desire to further their skill set, and this can create a disconnect.


With all the different hats we sometimes have to wear in the nonprofit sector, “one-trick ponies” will only go so far.

  • Lastly, the people that are managing your accounting, simply aren’t accounting professionals. Like that volunteer who may not have the skill set needed. Or in my experience, the operations person typically ends up doing some of the “grunt work” as it relates to the organization’s finances and they are poorly equipped to do so. And let’s be honest, it’s not really their job right. They are juggling competing priorities and finance tends to be low in priority.

These are just a few reasons why your in-house accounting possibly isn’t working.

LEFT BEHIND…

I've also noticed that there's a lot of hesitancy around outsourcing or moving to the cloud, which can also help you to run more efficiently. Because of that hesitancy, organizations and businesses tend to be behind or delayed. What we've seen in 2021 is that those organizations and those businesses that are willing to pivot and adapt quickly are the ones that thrive.


Outsourcing and moving virtually gives you access to an essentially limitless talent pool. Think about that for a minute... The person doesn't have to be located where you are and you also have the option of fully outsourcing and partnering with an accounting firm that can support you in not only streamlining your process but also managing that day-to-day for you.


Before the pandemic, you had nonprofits that didn't even have up-to-date websites or a website at all! But we have to grow with the times. We have to grow as the world grows, and right now the world is digital-first. Being hesitant to make the move to be more virtually inclusive, will ultimately leave organizations behind.

PAIN IS THE CORNERSTONE OF GROWTH

Have you have had the thought “I have people, I think they know what they're doing...Why is this still not working?”


Usually, it’s because you're growing, it's growing pains. You're short-staffed, and your organization may just not be equipped to manage it.


If you are in the place where you want to have access to timely reporting, you want to have meaningful financials, and you want your audit process to run smoothly, then I invite you to book a call.


We support clients by not only streamlining their accounting process but also by managing the day-to-day accounting operations. When the audit comes up, you're prepared, when the applications to the funding, the grants, and the contracts go live, you're prepared. And when that CPA comes in and says, it's time to file your 990, you have all the documentation and information that you need.

No longer do you have to feel like you’re trying to keep your head above water. You can actually thrive and have consistent financial support while doing so.