Why Weekly Cash Flow Forecasts Are Worth Your Time
Do you really need to create weekly cash flow forecasts when you already create monthly profit and loss statements (P&Ls)? Actually, yes!
P&Ls are not a true indicator of an organization’s inflow and outflow of cash. For instance, they don’t show the cash used to make payments on loans—only the interest you’ve paid on the loan. Also, they don’t tell you whether you’ve received cash for the revenue billed or whether checks have been written for the expenses recorded.
Benefits of Weekly Cash Flow Forecasts
The many benefits of weekly cash flow forecasts include that they:
- Provide an early warning of both positive and negative cash situations
- Offer insight into when funds are expected to come in and be paid out
- Can be used to plan cash movements to maximize investments and ward off cash shortfalls
- Are useful for evaluating liquidity
- Help predict line of credit needs
- Can help you maximize purchase discounts and avoid late fees
- Can assist with the timing of inventory purchases
- Help gauge the impact of grant funding and billing delays
A Real-world Example
Imagine that your organization experiences a four-week delay billing due to an employee being out on medical leave, resulting in a shortage of cash and a need to draw on a line of credit. The P&L would show the total revenue billed but not when it was billed or when funds were expected.
With a weekly cash flow forecast, you would not only see the impact on cash but also be able to time the line of credit draw.
Challenges of Creating Weekly Forecasts
If they’re so helpful, why do some organizations choose not to create weekly cash flow statements? Mainly because it can be difficult to pull together timely, accurate forecasts on a weekly basis. The statements need to be simple enough to be read quickly and, as forecasts, they’ll undoubtedly include constantly changing data.
Weekly forecasts are nonetheless worth creating for organizations that are willing to devote themselves to three key areas:
- Critical thinking: Some data will be subjective and hard to find, so you need to be able to dig into difficult questions, make judgments, and have conversations with the right people to get answers.
- Data collection: To get meaningful data, you need reliable financial systems and people who can provide up-to-date reports and information.
- Smart models: You’ll need to decide whether to rely on a canned model for your statement or build your own model in Excel.
Need a Helping Hand?
Developing a helpful weekly cash flow forecast requires human interaction, good data, a hint of intuition, and experience. Insero & Co. can help you weigh the benefits of forecasts and, if it’s the right step for your organization, help you get started.
Why and How to Go Paperless
Some people still use flip phones, and some businesses and nonprofits still use paper. If you’re among the holdouts still hanging on to the old-school comfort of printed handouts and boxes full of documents, it’s time to take a deep breath and embrace a paperless world—a world that will be better for your organization.
Why Go Paperless?
There is an overwhelming list of benefits to going paperless—it really is a smart move for just about every type of organization imaginable. The benefits include:
- Cost savings: Imagine not having to buy paper, copier ink and toner, envelopes, and file storage solutions!
- Time savings: No more manually filing and searching through reams of paper documents—a few mouse clicks is all it takes for employees to find whatever they want.
- Space savings: Paperless offices have less clutter on desks and fewer storage needs. Now your organization can grow without requiring more space.
- Environmental benefits: One office does make a difference, given that it takes one small tree to produce about 10,000 pieces of paper. By going paperless, you can do your part to leave more trees in the ground, where they benefit people and the environment.
- Better access: Need to read a document while on the road or at home? If it’s stored digitally, you can always access what you need.
- Stronger security: More than a decade ago, it made sense to question the security of cloud storage, but now the cloud is far more secure than your office, where theft and natural disasters are a continuing threat.
How to Go Paperless
Probably you already recognize the benefits of going paperless, but how do you get unstuck and actually make the change? Start by making a plan that covers these and other concerns:
- How will you convert physical files to digital files? It’s going to take some time, but it’s a one-time process. Decide what you need to scan, who will scan it, and when and how they’ll dispose of the paper documents once they’re done.
- How will you convince employees to change their behavior? Employees might resist a top-down announcement, so you might want to involve them in the process, including listening to their ideas for making the transition successfully.
- What will your new processes be? Decide how current paper-based processes will change. You might need new business software to help.
- Where should we start? You might want to start going paperless by tackling “low-hanging fruit.” Can you shift to electronic billing statements, for instance? Achieve success in one area, and use that to build momentum leading to other changes.
Need a Helping Hand?
Insero & Co. provides audit, tax, outsourced accounting, and business advisory services to help you through every business transition. Contact us to talk about how we might be able to help you improve efficiency through the use of cloud-based software and other solutions.
Is It Time to Automate Your Accounts Payable?
Doing the work is only step one. Step two is getting paid and paying others—the vendors, contractors, and others your organization depends upon. And it’s step two, the accounts payable process, that presents both challenges and opportunities for businesses and nonprofits.
You probably experience the challenges every month. Bills stack up. Invoices are in various stages of the approval process. Checks are … Where are the checks again? Being printed, waiting to be signed, in the mail? These details and many more need to be recorded, without a single error, over and over again.
And therein lies the opportunity. If you can find a faster, more accurate way to handle accounts payable, you can devote more staff time to more valuable projects. Plus, you can build your organization’s reputation and keep vendors and contractors happy. That’s the opportunity available when you switch to an automated accounts payable solution.
Is Automation for You?
Small businesses might not need to switch to an automated accounts payable solution—at least not yet. But if your business is growing, or you expect it to soon, automation is likely to be a smart investment, so you can stay ahead of increased workloads.
Other signs to look for that will indicate you should seriously consider an automated solution include:
- Missing payment deadlines
- Making data entry errors
- Struggling to get payment approvals
- Losing track of bills or constantly swimming under a stack of them
- Hiring new accountants who prefer or are accustomed to automated solutions
The Advantages of Automation
A variety of automated solutions are available, the best known of which is probably Bill.com. With these automated systems, you no longer have to manually perform every step of the accounts payable process, from processing and routing bills to getting approval and recording transactions.
Instead, you simply create bills, enter them into the system—often a cloud-based payment platform—and move on to other tasks since the payments are sent automatically. If bills require approval, you enter approvers into your account, and they’re automatically notified when they need to review a payment, which they can do in seconds.
You’ll want to make sure that whichever automated accounts payable solution you choose, from QuickBooks to Sage Intacct, will sync with your accounting software. That way, you can ensure that your accounting books are always fully up to date.
Need Advice or Support?
Whether you want advice on switching to an automated accounts payable solution or are considering outsourcing some or all of your accounting functions, Insero & Co. can help. Our financial professionals have decades of experience working with nonprofits and businesses and are available to help you find smart, efficient solutions to your accounting challenges.
The Costs of Building an Internal Financial Team
If you have a financial team in place that possesses all the expertise and experience your business or nonprofit requires, count yourself lucky. Many organizations find it increasingly difficult to find, train, and retain employees who can provide all the needed services at a high level of excellence for years on end.
The eternal search for that perfect fit can be costly, as demonstrated by the following three challenges of building an internal team.
Do They Know Your Industry?
Every organization has specific financial requirements that vary in sometimes obvious and other times more nuanced ways. Finding financial team members who understand the ins and outs of your industry can be difficult—and if they lack that knowledge, they could make mistakes or overlook new options or changing requirements, which could cost your organization in lost hours or fines.
Do They Have the Right Skills and Experience?
Accounting and financial management require a variety of technical skills, including expertise on the specific types of software you use. Employees also need to have both deep and broad experience in their specific field—years or preferably decades of experience.
If your employees lack adequate skills and experience, that means a lot of training and management time for you, which increases your operational costs. On the other hand, hiring—and keeping—top-end accounting staff typically requires paying them high salaries.
Will They Stay?
Every time an employee takes substantial time off or moves on to another job, you have to go back to the beginning—back to hiring and training another newcomer, which is a costly and time-consuming process. In addition, employees sometimes take critical knowledge with them, leaving you in a scramble to figure out how to plug the gaps they’ve left behind.
Time to Outsource?
If you have encountered these and other challenges in building your internal financial team, it might be time to consider outsourcing some or all of your accounting and financial management needs.
Insero & Co. has decades of experience working with hundreds of nonprofits and businesses, providing each with a dedicated team of experts who offer the service you’d expect of an internal team, combined with the cost-efficiency you can only get with an outsourced provider. Contact us today to talk about our outsource accounting and financial services and how they might be able to help you redeploy your internal staff to focus on more mission-critical work.
What Nonprofit Board Members Need to Know About Financials
As a board member, you’re expected to use your skills and experience to help the organization achieve its goals. For nonprofits, that usually involves raising money. For any organization, it likely means providing management and oversight, assisting in specific areas of operation, and helping the organization through transition periods.
A key piece of all these endeavors is understanding the organization’s financial position. Without timely financial information, it’s simply not possible to monitor progress or make informed decisions about the future of the organization, not to mention the fiduciary responsibility of every board member.
The Numbers Board Members Need
Each year, every nonprofit board member should receive IRS Form 990, which provides broad information about the organization’s mission, programs, revenue sources, and more. Form 990 is only the beginning, however, as board members also need monthly or quarterly updates on the organization’s financial information, typically provided in the form of:
- Statement of financial position (balance sheet)
- Statement of activities (income statement)
- Cash flow forecast
- Actuals versus budget
- Other operational figures
If you are not receiving timely financial updates from staff, ask why this might be. If time or reporting capability is an issue, the organization should look in to upgrading to better financial software.
How to Make Metrics Meaningful
Reviewing the financial statements on a regular basis is the first step. The second is making sure that the reports you are receiving are easy to understand, relevant, and concise. Most board members do not have extensive financial or accounting expertise, and you shouldn’t need to! Ask your staff to think about the following when providing their board reports.
When possible, graphs should be used in lieu of tables of numbers or detailed line items. Trends should be shown, providing continuity between one report and the next. It’s also helpful to provide some explanation around significant items. For instance, the report might point out places where there is significant variance between expected and actual outcomes, and explain why that’s the case.
Ideally, organizations should be able to customize their dashboards to quickly provide the most relevant information to board members. Leading cloud-based accounting software solutions such as Sage Intacct provide powerful report visualizations, as well as real-time reports that make it easy to drill down to the details that matter.
The latest software makes it possible to view project profitability and other up-to-date metrics at a glance, as well as to easily flag trends, key comparisons, missed or hit targets, outliers, and other information that can give board members more helpful insights into the organization’s financial well-being.
Do You Have the Details You Need?
Even if you don’t serve on financial or accounting committees, as a board member you have a responsibility to know the financials of your organization. Insero & Co. has decades of experience working with nonprofits, businesses, and their boards. We’ll make sure you have the real-time, detailed, and easy-to-use financials you need to make the right decisions to move your organization forward. Contact us to learn more.
Phishing still a threat on “Dirty Dozen” list
The IRS warns taxpayers to remain vigilant when it comes to fake emails and other internet phishing scams used in an attempt to steal personal information. If you get an unsolicited email or social media message that appears to be from either the IRS or an organization closely linked to the IRS (like the Electronic Federal Tax Payment System), you should report it by sending it to firstname.lastname@example.org.
Protect your personal info
To safeguard against identity thieves who continue to steal large amounts of data, the IRS urges taxpayers to take the following steps to protect personal information:
- Use computer security software (including firewalls and malware protection).
- Use strong passwords.
- Be cautious of email attachments.
- Avoid oversharing personal information on social media sites.
- Keep old tax returns and records in a secure place.
Reminder: 2019 alimony rule change
Alimony is no longer a tax deduction for those paying it, nor income for those receiving it. This rule change does not impact divorce agreements reached before 2019. Now is the time to review any prenuptial agreements and exercise caution when changing an existing divorce arrangement.
Second-quarter interest rates stay the same
Interest rates for the second quarter in 2019 have stayed the same since the first quarter. The rates are as follows: 6 percent for overpayments (5 percent for corporations), 3.5 percent for the portion of a corporate overpayment over $10,000, 6 percent for underpayments and 8 percent for large corporation underpayments.
As always, we hope you find our tips and news for businesses valuable, and look forward to receiving your feedback. Companies focused on growth have sought the help of Insero & Co. for more than 40 years. During that time they have consistently experienced the peace of mind that comes from knowing their CPA firm takes the concept of integrity seriously. Should you have any questions, please contact us directly.
The New Age of Accounting
Change has always been a constant in the accounting industry, from the days of calculators to the advent of the personal computer and Excel spreadsheets. But today is different: The pace of change is accelerating, and the tools and technologies available today are not simply advancing accounting but revolutionizing it.
There are tremendous opportunities in this new age of accounting. Accountants who keep adapting and learning can use the latest innovations, from machine learning to automation, to accomplish more in less time and benefit their organizations in previously unheard-of ways.
More Data, Deeper Insights
Many of the advancements in the digital era revolve around data—gaining visibility into more data, analyzing it quickly, and visualizing it in more insightful ways. Implementing the latest data analytics tools, including artificial intelligence (AI), can provide a significant competitive advantage by increasing productivity and improving decision-making.
AI may still sound like a new-age idea to some, but it has already been implemented successfully by leading accounting firms. Its applications will no doubt increase in the years to come, but already AI is being used to digest and analyze large volumes of data at speeds humans simply can’t match. That accelerates and expands data analysis, and it frees employees to shift from manual data entry and basic analyses to higher-level strategic planning and other mission-critical work.
In addition to AI, accountants can benefit from advances such as cloud-based accounting systems that streamline information and provide secure access, anytime and anywhere, to workers and clients. Integrated cloud-based systems can provide significant cost benefits compared to expensive on-site solutions, as well as accelerating decision-making and providing improved visibility into data from across the organization.
Next-Gen Accounting Skills
To take full advantage of the new age of accounting, accountants need to develop and focus on a new set of technical capabilities, as well as honing some old-fashioned skills.
First and foremost among the new digital skill requirements is the ability to understand and work with big data using the latest software and features. With masses of business-wide data now being analyzed in minutes, accountants need to be able to quickly assimilate all that information, interpret findings and trends, and make informed recommendations to the executive team.
At the same time that digital literacy requirements are increasing, some old-school skills are becoming increasingly valuable. In particular, modern accountants need to be highly skilled at both verbal and written communication to express complex concepts clearly and convincingly. The ability to collaborate, both in person and digitally, is also vital as the accounting team becomes more involved in making strategic business decisions.
Prepare for the Future
Accountants in today’s fast-paced digital world need to stay up-to-date with the latest tools and technologies. To be sure, that can be a challenging task given how quickly innovations are emerging. But, as with many other advances in today’s world, adapting to these innovations is not a choice but a necessity. Embracing the revolutionary changes underway right now is the only way to future-proof your organization and help it become more competitive and productive, both now and into the future.
We get it: Outsourcing your accounting tasks is a big decision that requires a great deal of trust. The firm you choose should earn that trust by proving that they have extensive experience and a dedicated team that will give you the expertise and service you deserve.
To that end, here’s a brief primer on Insero & Co., which is one of the premier firms in New York, providing audit, tax, outsourced accounting, and business advisory services.
Insero has been providing outsource accounting services for more than 20 years and has served hundreds of clients, from small nonprofits to large corporations. We’ve worked with more than 200 organizations across New York State, meaning we have experience working inside organizations just like yours.
What does all that experience mean for you? It’s not just that we’ve seen it all and can help you through everything from budgets to bookkeeping. It’s that we’ve learned from every engagement and have refined our processes, so you can count on us to deliver what you need, when you need it, with no surprises along the way.
A Team You Can Trust
The people on your team will be full-time employees of Insero—that makes a big difference in continuity. You won’t be working with temps looking elsewhere for employment or professionals doing this as a side gig, so you can relax knowing that staff turnover is not a concern.
Your dedicated team will include employees with high-level accounting knowledge and expertise. Instead of cookie-cutter solutions, our experts will tailor their services to your needs, adjusting as they go to make sure you’re getting exactly what you need.
Every firm says they’re dedicated to client service, so what does that mean? It means we invest heavily in developing the highest level of service, including training everyone in the firm on how to deliver it. We also ensure that every client is receiving regular communication and follow-through, as well as the personal attention that sets our firm apart.
The Insero Difference
Of course, the best way to get to know Insero & Co. is to talk with us. What you’ll find is that our people are both knowledgeable and personable, and the firm as a whole is large enough to provide the resources our clients need, yet still small enough to provide flexible, relationship-based service. Contact us today to discuss your needs and find out if we have the experience and team you’re looking for to handle your outsource accounting needs.
How Automation Can Help Nonprofits
Many nonprofits spend years relying on manual data entry, spreadsheets, and basic financial tools like QuickBooks. Why? Because those processes work…at least at first.
As your organization grows, you might find that the time you’re spending on repetitive manual tasks is growing too, with month-end closes growing longer and longer, until they seem to take up most of the month. All those tedious, time-consuming activities can lead to a dash to the finish line that causes oversights and errors.
To address these challenges, many nonprofits are moving to Sage Intacct and other cloud ERP solutions that automate key processes, including close management, saving time and improving accuracy.
Spend More Time on What Matters
The primary benefit of automation is that it saves time—often hours and hours of time every month. When you fully automate your month-end close, for instance, you basically move into a perpetual state of close, so there’s no months-end rush where you’re digging through data and struggling to reconcile budgets.
Organizations that automate can take the hours employees formerly spent on mind-numbing manual tasks and instead devote them to bigger-picture, more intellectually demanding activities. That means more time developing and executing new strategies, cultivating donors, improving marketing, and performing other mission-focused work.
The Right Numbers Every Time
Another challenge with manual processes is that they are inherently error-prone. Even the most diligent of employees will make the occasional mistake, which can lead to hours or days of confusion. Worst of all, if data entry or other errors aren’t caught right away, they might be seen by donors and board members, which can do real damage to your nonprofit’s reputation.
By streamlining and automating data flow and reconciliation steps, you can reduce the risk of human error and gain more confidence in the integrity of your processes. And you can still maintain control over your automated processes—updating and fine-tuning as needed to address changing requirements.
Time to Automate?
Insero & Co. can help you decide whether it’s time to automate your processes and, if so, how to make the shift as seamlessly as possible using best-in-class software. Our team has decades of experience helping hundreds of nonprofits through these and other challenges. Contact us to talk about the relationship-based services we provide and how they might help save you time every month.
Foundations for Board Governance
Looking to increase the effectiveness of your nonprofit’s board? RSM’s guide highlights common problems and practical solutions related to board governance.
The evolving role of outsourcing within nonprofit organizations
Adjusting existing outsourcing strategies can help streamline service delivery and further increase efficiency and productivity.
Phishing awareness: Recognizing, addressing and avoiding threats
Phishing is one of the most common and most successful forms of cyberattack. Learn how to recognize the warning signs of potential phishing.
IRS issues guidance for determining UBTI for separate businesses
The IRS issued Notice 2018-67, providing interim and transition rules for determining UBTI for separate trades or businesses.
Recorded webcast: Annual tax update webcast for nonprofit organizations
Learn about the current tax landscape for exempt organizations as well as look ahead to 2019.
View the webcast.
At Insero, we make it our business to stay abreast of the latest trends and technical updates in accounting, tax, and audit and we understand how important timely updates are to our clients. As a member of the RSM US Alliance, we also have the benefit of access to the resources and subject matter experts of RSM US LLP. This includes regular updates on the latest insights for nonprofit organizations
As always, we hope you enjoy this edition of our newsletter and we look forward to receiving your feedback. Should you have any questions regarding the information contained in the attached materials or our nonprofit service offerings
, please contact us