A not-for-profit’s accounting function is its financial backbone. Efficient accounting processes along with sound controls to monitor them will put the organization on the right track for financial stability and growth.
Are you satisfied with your not-for-profit’s accounting function? Does it seem less efficient than you think it could be? Here are some suggestions for improving this important piece of your operation.
Create Time Saving Policies
A good first step toward accounting function improvement is creating policies for the monthly cutoff of invoicing and recording expenses. For instance, require all invoices to be submitted to the accounting department by the end of each month. Too many adjustments, or waiting for tardy employees or departments to weigh in can waste time and delay the completion of your financial statements.
Another time saver: You may be able to spare days at the end of the year by reconciling your bank accounts shortly after the end of each month. It’s a lot easier to correct errors when you catch them early. Also reconcile accounts payable and accounts receivable data to your statements of financial position.
Collect Information Efficiently
Designing a coding cover sheet is another step toward boosting efficiency. An accounting clerk or bookkeeper needs a variety of information to enter vendor bills and donor gifts into your accounting system. Speed up the process by collecting all of that information on one page. The cover sheet should list your not-for-profit’s general ledger account numbers so that the employee entering data doesn’t have to look them up each time.
Additionally, cover sheets should indicate whether the invoice is to be paid by check, electronic transfer or credit card and provide a place for the appropriate person to approve the invoice for payment. Use multiple-choice boxes to indicate which cost center the amounts should be allocated to. The invoice or copy of the donor’s check can be attached to the cover sheet for reference.
Another invoice tip: Don’t enter only one invoice or cut only one check at a time. Set aside a block of time to do the job when you have multiple items to process.
Stick with Your Accounting Software
Many organizations underuse the accounting software package they’ve purchased because they haven’t invested enough time to learn its full functionality. If needed, hire a trainer to review the software’s basic functions with staff and teach time-saving tricks and shortcuts.
Become more efficient by avoiding any calculations or financial report presentations in Excel or other spreadsheet programs. Standardize the reports coming from your accounting software to meet your needs with no modification. This will reduce input errors and will also provide helpful financial information, not only at month end but throughout the year.
Consider performing standard journal entries and payroll allocations automatically within your accounting software. Many systems have the ability to recall transactions and can automate payroll allocations to various programs or vacation accrual reports. Make sure to review any estimates against actual figures periodically, and always adjust to the actual amount before closing your books at year end.
Accounting systems can become inefficient over time if they aren’t monitored. Look for labor-intensive steps that could be automated or steps that don’t add value and could be eliminated.
Make sure that the individual or group that’s responsible for the organization’s overall financial oversight (for example, your CFO, treasurer or finance committee) promptly reviews monthly bank statements, financial statements and accounting entries for obvious errors or unexpected amounts.
Free Up Time
Make sure that you’re optimizing your accounting resources. Considering the growing list of tasks that arise, implementing one or more of the above processes can help free up valuable time. This will allow management to focus on larger projects or initiatives as well as the big picture.
If you have questions on how to make the accounting process in your not-for-profit more efficient, don’t hesitate to reach out to us.