📓 Things I've Learned | Working in Nonprofit Finance & Accounting
3 things I've learned on how to reduce the stress and headaches of nonprofit accounting & finance
The quality of your coding at the transactional level will determine how much stress you have when applying for grants, reporting on grants, creating dashboards on programs and fundraising goals, and analyzing the percentage between programs, general and admin, and fundraising expenses. The whole point of the finance and accounting team (albeit it’s almost always a team of 1 or 2) is to help tell the story of the non-profit’s mission so they can continue to receive more funding. It also doesn’t help that each funder has their own specific metrics that they want you to report on.
So, to reduce the stress, headaches, and late nights, here are three things I’ve learned:
Customize the accounting system
Control spend
Systems talk to each other
Customize the Accounting System
In order for me to pull the reports straight from the accounting system without much wrangling of spreadsheets, I needed to make sure I had the correct fields at the transactional level. Does the nonprofit want to track locations, programs, departments, etc? I needed to make sure each transaction had those fields entered. Every transaction needs to have coding past its chart of accounts in order for me to be able to use it. I also needed to make sure the chart of accounts was customized to the nonprofit. Am I able to easily read the statement of activities to understand the general operations? If it’s not telling the story you want, I had to talk to the team to understand what metrics mattered to them.
Control Spend
I’ve found that many nonprofits still operate using paper checks or one debit card. There’s nothing wrong with checks or a single debit card if you’re a team of 1. But, if you’re planning to grow or are already bringing in funding 250K+ with multiple team members, you need to have a level of control over spending. You can’t just pass around the debit card every time someone wants to buy something. Printing checks or writing checks for every vendor expense is also not sustainable — You could forget to put them in the mail or forget to check if it has been cashed or it’s still floating out there in the world. So, whenever I work with a nonprofit, I improve their spend control by implementing Ramp or using Quickbooks Online’s bill pay. With online bill pay, I can have an audit trail on the payment regardless of whether the vendor chooses to receive payment via ACH or paper check. Ramp is great because I can create different virtual and physical cards for team members while having control over the spending limit. Managers can also approve or reject a spend request on Ramp. Ramp also syncs to Quickbooks Online, which helps the accounting team immensely with monthly close.
Systems Talk to Each Other
Controlling spending and customizing the accounting system are the two major things that will help reduce the stress of nonprofit accounting. But, making sure the systems you use for both talk to each other is key to reducing any manual tasks. We’re trying to reduce the number of spreadsheets and data exports we need to do, not create more work. Connecting the systems together helps make sure that duplicate entries and work are not being done, and it also helps to reduce the time it takes to close the books monthly. For instance, you can always code and sync transactions over from Ramp on a weekly basis. Then, at the end of the month, all that’s left to do are the journal entries and final reconciliation tasks.
If you’re an Executive Director or Head of Finance at a nonprofit stressing over your financial operations, contact me! My whole goal is to make sure the financial operations of a nonprofit are streamlined and aligned with the mission. Nothing is worse than stressing over your numbers the day before a grant is due.
Woolichooks provides finance digital transformation services, which include setting up finance software systems and processes to enable companies to scale for growth.