3 More Accounting Best Practices for Nonprofits
In a previous article, we discussed three accounting best practices designed to help nonprofits reduce risks and stay focused on their mission. Here, we build on those tips to show how organizations can improve in three critical areas: regulations, budgeting, and fundraising.
Best practice #1: Keep track of the latest nonprofit regulations
As we mentioned in our earlier article, nonprofits face different accounting challenges than for-profit enterprises. That includes different tax and accounting regulations, including GAAP and IRS requirements.
As you know, GAAP, or Generally Accepted Accounting Principles, are guidelines every accounting professional has to follow. GAAP rules change in sometimes complex ways, so you have to stay abreast of how those changes affect your organization. IRS requirements for nonprofits likewise change and require constant monitoring.
Whatever regulatory changes come next, it’s essential to have flexible ERP software in place. For example, Sage Intacct, the best-in-class cloud-based accounting software solution, provides reporting flexibility and configurability to let you adapt to new requirements in minutes instead of days or weeks. You can update your reporting format simply by editing your existing reports and pointing and clicking to insert the new columns, rows, and subtotals.
Best practice #2: Create realistic budgets with better forecasting
If you’re still creating spreadsheet-based budget forecasts, there is a better way. Imagine being able to model calculations such as projected cash flow, revenue recognition options, or headcount expenses without the errors common to spreadsheets. Plus, no more hidden formulas, broken links, or version-control issues!
With more advanced software solutions like Sage Intacct, you can create multiple what-if scenarios and easily discuss them across teams—all within one secure solution. More accurate forecasts lead to more refined budgets that identify both challenges and opportunities.
Best practice #3: Set realistic fundraising plans
Set overly ambitious fundraising goals, and your development team will inevitably fall short. But if your goals are too low, your team won’t be pushed. Again, the key is to have the right accounting software in place, which will give you quick access to detailed grant, fund, project, and donor data.
Look for integrated software solutions that automatically sync your financial and donor information. Then use that data to create realistic fundraising goals, and a plan to reach them. If circumstances change during the year, you can update the fundraising plan accordingly—the right software will make it easy.
Insero & Co. is a public accounting firm with decades of experience working with nonprofit organizations. Our experts are available to help you identify the best practices that can help your organization achieve your mission.
Reduce Risk with 3 Accounting Best Practices for Nonprofits
Nonprofits want to focus on their mission, but that can be difficult to do when you’re constantly battling issues related to security, privacy, fraud, compliance, ethics, and more. These three accounting best practices can help you rein in risks and spend more time devoted to tasks that can help you achieve your goals and move the organization forward.
Best practice #1: Use accounting software designed for nonprofits
Nonprofits face different accounting challenges than for-profit enterprises, so it only makes sense to use accounting software designed to address those challenges. Look for software that’s used by nonprofits nationwide and that includes features like custom dashboards that allow you to track volunteer hours, grants, and other nonprofit-specific concerns.
Sage Intacct, the best-in-class cloud-based accounting software solution, is one such solution that can help you make everyday processes—budgeting, forecasting, grant management, fundraising, and HR management—more efficient. The software’s multidimensional database lets you aggregate transactions and activities across multiple grants, donors, locations, and more, so you can close faster and use real-time analytics to support better decision-making.
As an example of a nonprofit-specific solution, Sage Intacct and GuideStar have created a GuideStar nonprofit financial board book that delivers real-time visibility into several key facets of nonprofit operations. With real-time balance sheets, expense data, and revenue pulled directly from Sage Intacct, you can easily view financial health, mission impact, and sustainability.
Best practice #2: Implement internal policies and a code of ethics
Preventing fraud is absolutely essential, but doing so can be challenging. First, make sure you create internal policies and controls that are thorough and updated on a regular basis. Then implement a code of ethics to show your donors, employees, and board of directors the values of your organization.
Of course, creating policies and codes is only effective if they’re followed. Look for ways to involve employees, the board, and others in the creation of policies so they feel connected to them. Provide follow-up training to ensure the rules are followed and to answer any questions as they come up. And make sure that leadership sets the example and shows not only adherence to policies but an ongoing commitment to making them central to your organization.
Best practice #3: Spread financial practices across personnel
Another way to reduce the risk of fraud is to assign financial tasks to different employees across the organization. Results should remain the same. If they do not—if there are discrepancies, errors, or delays—then you can troubleshoot and determine what type of error is taking place and how to address it.
Spreading financial tasks to multiple employees also ensures that more than one employee knows how to complete each task. That’s a big help if employee turnover takes place. In the worst-case scenario where fraud is taking place, it also gives you a better chance of identifying it early so you can take corrective action.
Insero & Co. is a public accounting firm with decades of experience working with nonprofit organizations. Our experts are available to help you identify the best practices that can help your organization reduce risk, streamline operations, and achieve your mission.
Think big data is only for big businesses? Think again. With the right financial management tools, small businesses can take advantage of big data to streamline operations, forecast more accurately, and increase revenue.
What you can do with big data
“Big data” has been a popular term for a while now. It describes the growing volume of data that’s available to organizations every day. The challenge every business—large and small—faces is that it can be difficult to identify all the different types of information located in different systems and then quickly sort through the data, analyze it, and visualize it.
The reason big data, and particularly financial data, is so valuable to businesses is that you can use it to optimize nearly every aspect of your business. For instance, big data can help you:
- Track progress toward both near-term and long-term performance goals
- Make fast, accurate revenue projections
- View invoicing, payroll, and other accounting tasks in an instant for every department
- Quickly identify and act on project overruns, net profit margins, and other growth KPIs
- Share clear and detailed budgets, reports, and key financials with executives
Big data advantages of Sage Intacct
With Sage Intacct, the best-in-class cloud-based accounting software solution, small businesses can access the same big data advantages that large corporations currently enjoy. Sage Intacct enables you to view all your core financials, from general ledger to order management to cash flow, in an easy-to-read, fully customizable dashboard that’s accessible anytime, anywhere from desktop or mobile devices.
Sage Intacct is easy to integrate with your key accounting and back-office functions, so you can automatically pull data from multiple systems across your business. That reduces the workload for your internal personnel and ensures that executives and managers can view all the real-time performance metrics and projections they need to make the right strategic decisions for the business.
Because it’s a subscription-based service, Sage Intacct will also help your business reduce CapEx costs, and it can lead to lower IT infrastructure management costs. At the same time, you’re reducing expenditures, you gain access to all the latest tools to take full advantage of big data, now and into the future.
Find out how you can use big data
Insero & Co. is a public accounting firm with decades of experience working with small and large businesses. Our experts are available to help you identify the best ways to use big data to streamline your operations, compete more effectively, and grow your business.
Boost Donor Retention with Better Data
Improving donor retention is at or near the top of every nonprofit CEO’s to-do list. The eternal question is how to build better relationships with donors so they feel more connected to the organization and keep coming back to donate and support your cause for years and years.
One often-overlooked way to boost your donor retention rates is with data. Specifically, there are many ways to collect more data and use it more effectively to understand your donors’ needs and desires and to communicate more effectively with them.
Organize your data
If your employees are juggling a dozen spreadsheets and struggling to organize and streamline their fundraising and communication efforts, you’re going to have difficulties with donor retention.
A cloud-based accounting software solutions like Sage Intacct can help you streamline not only your donor accounting but also your grant, funding, and project accounting. Sage Intacct also integrates easily with third-party fundraising software, so you can automatically sync financial and donor information. The result is a more unified, organized system that can then support a more organized approach to donor retention.
Survey your donors
If you’re not sure how best to serve your donors’ needs, it’s a good idea to gather more data. Donor surveys are the fastest, most direct way to learn what donors want—and online donor survey platforms now make it easier than ever to reach donors online. Consider options like these:
- Perform a yearly survey of all donors
- Add a survey page to your donor confirmation emails
- Create multiple versions of surveys for different donor subsections
Improve your data hygiene
Take a close look at your donor database software. Is it integrated with the rest of your software? How often are duplicate and outdated entries updated? How sure are you that you’re reaching all of your current donors?
Look for efficient ways to keep donor information updated in your database. For instance, if you send out surveys, ask respondents for their current contact information and household information, so you can update any outdated entries.
Put data to work for you
Insero & Co. is a public accounting firm with decades of experience working with both nonprofits and businesses. Our experts provide CFO consulting, software implementation, and other services that can help you improve your donor retention rates.
Why and How to Modernize Your Month-End Close
The month-end close is the accounting version of deep-cleaning the kitchen—necessary, yes, but also dreaded because it’s tedious and takes time that we’d much rather spend somewhere (anywhere) else.
The thing is, it doesn’t have to be that way. Month-end closes can take less time and be less fraught with concern over errors and oversights if you modernize with industry-leading financial management software.
Invest in the right software
Month-end closes can take up nearly the whole month if organizations use disparate accounting systems and rely on in-person handoffs. Investing in a fully integrated, cloud-based accounting software solution like Sage Intacct can streamline the process and save you hours of time every month.
Sage Intacct eliminates the need for manual data entry, external spreadsheets, time-wasting handoffs, and other steps that can slow down financial reporting. With integrated financial software delivering data in real time to online dashboards, it’s easy to monitor and react to issues as they come up, relieving some of the pressure on those month-end financial reports. Talk to one of our experts to help find the best solution for your organization.
See the results
Let’s look at what a difference Sage Intacct made to one nonprofit organization: MHA, an Association of Montana Health Care Providers. MHA used to rely on Microsoft Dynamics SL as its ERP system, but as the organization grew, the finance director found that they “wasted a week every month just managing inter-company transactions and balances.”
Since implementing Sage Intacct, MHA has been able to streamline accounts payable, accounts receivable, and general ledger entries. In addition, by automating consolidations and eliminating the need to manually enter hundreds of inter-company transactions every month, Sage Intacct has shaved days off MHA’s monthly close process.
MHA has found that a further advantage of Sage Intacct is its easy integration with other software solutions for payroll, budgeting, asset management, and more. Those integrations help MHA’s finance team save even more hours that they used to spend on manually re-entering data every month.
Modernize your close
Insero & Co. is a public accounting firm with decades of experience working with both nonprofits and businesses. From audit assistance to business consulting, our experts can help you find smart ways to modernize your accounting processes to be more efficient and productive.
3 Accounting Trends for 2020 and Beyond
One thing you can be sure of: Accounting in the next decade will look a lot different than it does right now.
Emerging trends based on digital technologies, tools, and solutions will change how you do business in 2020 and beyond. It’s critical to keep an eye on what’s new, so you know which trends are worth adopting, which ones aren’t right for your business, and when to make updates that could make your business more efficient, productive, and competitive in the new decade.
Trend #1: More automation of more accounting processes
No doubt you’ve already automated some of your accounting practices, but expect to see more tools and technologies coming on the market to help you automate even more processes, and to do so with less difficulty than in years past.
At the cutting edge of accounting automation is robotic process automation (RPA), a system that manages all the transactional data flowing from IT systems and applications. We’ll be hearing more about RPA in the years to come, but in the more immediate term, take a look at cloud-based accounting software solutions like Sage Intacct that make it easy to automate basic functions like invoicing, accounts payable, and reporting.
Trend #2: Deeper insights with artificial intelligence
The rise of artificial intelligence (AI), which allows computers to make predictions and “learn” over time how to adapt to changing situations, is another trend worth following. You’re not going to go out and buy “AI,” but you will find more and more opportunities to implement software solutions that incorporate AI to perform certain functions.
For most firms, the advantages of implementing AI-based solutions are similar to the advantages of automation: greater productivity and efficiency. Look for AI-based financial solutions in 2020 and beyond that can help you streamline data entry and data analysis projects—that’s low-hanging fruit. Also, keep an eye out for AI-based software that can scan financial data and report anomalies far faster than can be done by people or traditional software.
Trend #3: Breakthroughs in blockchain
We’re still at the “What the heck is blockchain?” stage right now, but expect to see blockchain emerging in the years ahead as a significant force in accounting and financial management.
Basically, blockchain creates a single ledger that allows users to access identical information in real time; when changes are made, everyone sees them. It thus has the potential to reduce the cost of maintaining and reconciling ledgers, and it could provide certainty as to the ownership and history of assets.
By eliminating reconciliations and providing certainty about transaction history, blockchain could also streamline audits, and free up employees to focus on planning and valuation instead of recordkeeping.
Prepare for your future
Insero & Co. is a public accounting firm with decades of experience providing outsourced and co-sourced accounting services to businesses throughout New York State. From software implementation to business consulting, our experts are available to help you understand the latest trends that could help your organization be more efficient and productive.
5 Tips for Small Businesses to Save Time in the New Year
Most small businesses have innovative ideas and expert staff who are ready to carry them out. What they don’t have is time—time to develop the ideas, build smart solutions, and improve customer service. The problem is that there are too many time-sucking tasks, from basic bookkeeping to endless meetings, that get in the way of focusing on business growth.
These five tips can help you save time, so you can make 2020 a more productive and efficient year for your business.
Tip #1: Automate
Take a look at the manual tasks that eat up hours of staff time every month, and identify those that can be automated. For instance, if your month-end closes are taking half the month or your expense reporting processes are cumbersome, consider automating your accounting processes.
Moving to a cloud-based accounting software solution like Sage Intacct can help you save time each month, while also alleviating data entry errors and ensuring that you’re always in compliance with the latest regulations.
Tip #2: Outsource
Some tasks are better done by employees, but are you also paying your in-house team to perform tasks that could be done faster, and potentially better, by external professionals? Sometimes outsourcing your bookkeeping, taxes, customer support, and other tasks can save you money, and it can always save you time.
Outsourcing can be a smart move when it frees your internal staff to focus on more business-critical tasks. Outsource professionals also may have more expertise in a given field, and the latest software and tools to perform tasks faster than a small business can.
Start by outsourcing a single project or task, and see if it works for you. From there, you might find that there are multiple areas in which outsourcing relieves your team of unnecessary workloads.
Tip #3: Invest in the right technologies
It’s easy to be overwhelmed by all the innovative business technologies available today—but failing to keep up with them could put you at a competitive disadvantage. Consider the technologies you use for POS, taxes, ERP, and more, and look for opportunities to update or upgrade to new alternatives that are automated, cloud-based, or otherwise superior to your existing solutions.
If that seems overwhelming, you might want to partner with a consultant that can help you identify emerging technologies that will provide a tangible benefit to your business. Just be sure you don’t “stand pat” for so long that it hamstrings your business growth.
Tip #4: Meet less, do more
How many hours do you spend in meetings each week—and how many of those hours are actually necessary? Many businesses are implementing new meeting guidelines to prevent unnecessary and overly long meetings.
Talk with your employees to see if meetings are a concern. If so, consider instituting new policies, such as a mandatory 30-minute limit on most or all meetings. Other policies that clarify meeting practices, such as the need for an agenda and a follow-up summary, can also be helpful to reduce wasted time.
Tip #5: Go mobile
Are there tasks your employees perform every month that they can only do when they’re in the office? There may be a better way.
As more employees perform work remotely, cloud-based software solutions are making it safer and easier for them to perform tasks on smartphones. For instance, with Sage Intacct, staff can submit and approve expenses through their smartphone or laptop, which saves their time and avoids delays for others in the office.
Get the help you need
Insero & Co., a public accounting firm with decades of experience working with small businesses, can help you find the right accounting software and other solutions to help you save time all year long.
Score More Grants with Better Financial Data
You can find dozens of suggestions for how to write better grant proposals, from incorporating case studies to keeping sentences short. But one key element that deserves more attention is the need to provide clear and precise financial data.
What funders want
One leading funder, the Meyer Foundation, spells out exactly what they’re looking for when reviewing grant applications and proposals: “Meyer staff pay careful attention to an organization’s financial statements,” they say in their FAQs.
Specifically, they say they want to know how healthy your organization is. And to make that assessment, they examine your proposal with an eye toward answering these questions:
- Did revenues equal or exceed expenses?
- Did the organization end the year with positive unrestricted net assets?
- Is the annual budget approved by the board?
- Do budgeted revenues equal or exceed budgeted expenses?
- Are revenues and expenses (from the interim statement of activities) tracking in accordance with the annual budget?
Meyer Foundation expects applicants to include a Statement of Financial Position and a Statement of Activity. Beyond that? The additional reports you provide are up to you—which is why it’s so important to have the right accounting software in place.
The right software makes all the difference
One reason to implement a cloud-based accounting software solution like Sage Intacct is that it gives you the flexibility to respond to funders’ requests for detailed financial information. The advanced features of Sage Intacct make it easy to create customized reports, graphs, dashboards, and visualizations that clearly address funders’ questions.
You can take advantage of more than 150 pre-built accounting and financial reports in Sage Intacct, or build and customize your own for different proposals. Depending on what type of grant you’re applying for, you can filter, group, and summarize data by business drivers ranging from projects to departments to contracts.
Get the right data to win your next grant
With the right ERP solution, you can create detailed, visually appealing reports that give potential funders all the insights they need to gain confidence in your organization. Insero & Co., a public accounting firm with decades of experience working with both nonprofits and businesses, can help you find the right accounting software to secure more grants in the years to come.
Solve the Top Challenges of Expense Reporting
Expense reporting is a vital process to ensure that you’re maximizing revenue and accurately tracking expenses on every project. It’s also a process that employees tend to dread—which means there’s a real opportunity to make improvements that will benefit your organization for years to come.
Challenges of clunky processes
Many businesses and nonprofits rely on outdated, inefficient, and overly complicated expense reporting processes, which leads to frustration for employees. These are among the signs that your process is behind the times:
- Your travel and expense policy is complicated, requires a lot of employee time, and has resulted in multiple errors and inaccurate reports over the years.
- Employees express confusion about expense reporting, asking a lot of questions that, over the course of the year, take hours of time to answer.
- Reimbursements take a long time and are not provided on a regular schedule that employees can rely on.
- Employees can’t submit expense information using their smartphones or other mobile devices.
Tips to improve expense reporting
If your expense reporting processes are out of date, the good news is that you can make significant improvements with a relatively small investment of resources. To begin with, audit your overall process to evaluate its accuracy, timeliness, and efficiency. Find out how many hours employees are spending on the processes—the answer might surprise you.
As part of your audit, be sure to talk you’re your employees about what they like and don’t like about current policies and practices. By involving them in the review process, you can get more buy-in on the changes you eventually make.
If you find real problems with your current processes, consider investing in automated expense reporting software. For instance, if you use Sage Intacct, a cloud-based accounting software solution, you can easily integrate third-party add-ons like Expensify, which provides real-time expense reporting—you set the policy, and Expensify automates the process, including syncing all data to provide next-day ACH reimbursement.
By taking a close look at your current processes and then streamlining them with new software or other solutions, you can maximize revenue and make sure your employees stay focused on business goals instead of spending hours on expenses, accounting, and reporting.
Make the right decision for your organization
Insero & Co. is a public accounting firm with decades of experience working with both nonprofits and businesses. Our experts are available to help you streamline your processes, including providing audit assistance and business consulting.
The 1,099 Hassles of 1099s
Preparing and filing 1099s is one of those IRS requirements that can really annoy accounting teams, requiring far more hours and effort than they can afford to give to such a mundane task. While there probably aren’t quite 1,099 hassles to 1099 preparation, it certainly can feel like it when you’re scrambling to get them all prepared and filed on time.
The many challenges associated with 1099s include:
If your business or nonprofit hires independent contractors, freelancers, or vendors, and you pay them more than $600 in business-related payments, then you need to prepare and file IRS Form 1099-MISCs for them. That may sound simple enough, but there are lots of caveats, including that 1099s are only needed for provision of services, not goods, and are only for business services, not personal ones. Then, too, if the contractor provides materials as well as services, you have to separate the two.
You need to collect Form W-9, Request for Taxpayer Identification Number (TIN) and Certification, from all of your qualifying providers. It makes a lot of sense to get this upfront, but for various reasons that’s not always possible. Even if you have a good process in place to request the W-9 in a timely manner, some contractors are slow to provide it or don’t fill it out correctly, leading to last-minute requests and corrections.
Contractors need to update their W-9s every year; if you rely on last year’s, the information may be out of date. As mentioned, even when you receive an up-to-date W-9, the contractor might make mistakes, so you have to ensure that the official name and the taxpayer information number (TIN) listed on the W-9 are correct. If you have to make corrections after filing, the IRS imposes penalties that get more painful the longer it takes for you to recognize the error.
The end of the calendar year is an especially busy time, and unfortunately it happens to be the exact time when 1099 demands hit. Organizations have to send 1099s to recipients by January 31 of the year following provision of services, and a copy also has to go to the IRS by February 28. Just to make things a little harder, individual states may have additional requirements and different deadlines for reporting and filing 1099s.
Reduce your 1099 struggles
Because preparing and filing 1099s is such a tedious process, many organizations are choosing to outsource the function. If you want to discuss 1099 filing requirements or explore the possibility of outsourcing the function, contact Insero & Co., a public accounting firm with decades of experience working with both nonprofits and businesses. Together, we can explore ways to streamline your accounting functions, so your employees can spend more time on business-critical tasks.