As nonprofits work to combat the accounting and staff shortage, finding ways to increase efficiency is a top focus. With the new year underway, it’s a great time to consider making resolutions or re-evaluating decisions around streamlining financial processes to create a solid foundation for growth in 2024.
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As nonprofits work to combat inefficiency, here are a few resolutions to consider adopting to start your new year building towards sustained growth:
Resolution 1: Leverage and consolidate technology
When it comes to solving for inefficiency, nonprofits can examine current reporting processes. If your organization is using several technology platforms to accomplish similar workflows, is there an opportunity to streamline the workflow and the technology behind it?
Consolidating to one system can ensure complete visibility into finances, and creating financial reports to demonstrate your organization’s commitment to its mission can identify opportunities for efficiency and growth. Consider if your technology quickly provides reports around:
Grant reporting is a critical aspect of understanding your organization’s health. If you’re looking to move beyond spreadsheets or unspecialized software to track grants, consider software that has grant management functionality built in. Your technology should track details like grantor name, grant official, contact information, grant period, reporting periods, indirect cost rate, and more. These details show how your organization operates and are crucial when you apply for new funding. Using one system reduces errors and creates efficiency.
Your budget is the roadmap your organization follows year-round, and it should be a living document. Use software that has a budgeting module which lets you model forecasts, make live adjustments on the fly, and pull in historical data. Creating, forecasting and reporting on your budget should be easy. Using a streamlined process that starts with a template from last year’s budget and can easily create multiple budget versions, like original, revised, operating, capital, multi-year and hypothetical, is the best way to ensure your organization runs efficiently and identifies growth opportunities throughout the year.
When it comes to audits, your software should make audit preparation easier and complement your efforts. Internal controls and audit trail reports simplify the audit process and make it simple to identify irregular transactions or potential fraud quickly. Internal controls that monitor user access and permissions along with a transparent audit trail report that produces a log of who has accessed financials, what changes they’ve made, and provides the workstation address at which they’ve made the changes, gives auditors peace of mind you’ve been proactively preventing fraud throughout the year. Organizations can consider granting a read-only license to their software for auditors to access financial information, simplifying audit preparation and significantly reducing the time spent preparing for an audit.
Resolution 2: Use best practices for reporting
If it’s taking hours to create financial reports, consider opportunities for increased efficiency:
- Maintain visibility into mission-focused metrics
Ensure your reports reflect progress towards mission-focused key performance indicators, whether financially or narratively focused. Present your financials appropriately to your audience.
- Favorite frequently created reports to save time
Consider if your software has a favorite reports feature so you can consistently and quickly provide that report to stakeholders at a regular cadence or extract the data for inclusion into a reporting pack. Creating reports for your stakeholders regularly increases fiscal transparency and allows your audience to compare reports across different periods.
- Consider the details for your audience
Providing a narrative along with the numbers helps your audience engage with the data in a more compelling way, ultimately helping comprehension and alignment to your mission. Consider if you’re using the right reporting format and presenting data they want to see. For example, finance departments want technical, direct accounting reports, whereas program managers want detailed non-financial and financial reports. Present your financials appropriately to your audience.
- Report early and often, regularly
Use reports to communicate with stakeholders frequently. Your finance team is often leaned on to provide leadership and insight into an organization’s health. Set up regular meetings to discuss your organization’s financial position.
How your organization uses reports to tell its financial story matters and sets the stage as you work to accomplish your mission in 2024.
Resolution 3: Automate to increase efficiency
- Automating manual workflows
Manual workflows make it difficult for your organization to scale and grow. Plus, they increase compliance issues by elevating the risk of human error, creating inefficiencies based on employee variation, and reducing visibility into your company. Embrace technology that allows for easy data import and export and automatically compiles your financial information in the proper places.
- Automating reacquisitions and purchase approvals
Automation improves processes and administrative tasks. For example, you can automate the requisition and purchase approval processes. Your team can create a workflow to handle purchase requests and electronically submit them for approval, ending with a purchase order being automatically generated once approved.
- Automating bank reconciliation
Automation also helps with bank reconciliation. Instead of manually reconciling bank transactions, technology can process and match bank account transactions automatically within your books, displaying any anomaly as an outstanding item for your team to address.
Automation is a small step that makes a big difference in team satisfaction and efficiency and helps your team do more in 2024.
While we could all use the occasional reminder with our resolutions throughout the year, these new technology resolutions will help your nonprofit finance team be more efficient this year and every year.
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