When we speak of accounting for nonprofits, it is a prudent exercise to have a clearly defined mission statement at hand. Not only it helps define goals for the employees and clients, but it also serves as a basis for a healthy culture that is built around that objective.
Non-profit organizations are complex entities. They demand many of the same skills and abilities which one would need to work in the private sector. With complex functions like capital, contract management, cash flow budgeting, and forecasting, there is always a possibility of finding themselves oversee the core operational responsibilities. And one such area is where they deal with accounting and bookkeeping services.
Taking care of accounting services is essential for a nonprofit organization as it serves as the basis for measuring accountability and operational effectiveness. No matter, small or big, in this complex scenario of accountability and operational transparency, nonprofit organizations of any scale can find it difficult to cope up with the challenges that come with taking care of the accounting and bookkeeping services.
Bikham as a provider of outsourced accounting services has therefore combined some information for you to address the challenges you face, in an effective manner.
Managing the Cash Flow
The most important part of the responsibilities that the accounting and finance department undertakes is managing the cash flow effectively.
Managing the same requires a clear understanding of fund requirements that a business has and a willingness to turn down funding sources or agreements that would jeopardize the organization’s cash flow requirements. It is often suggested that you prepare a monthly budget and look at each month’s expense activity.
One can then prepare a report for each activity, have each of the programmatic budgets roll up into an overall budget and ensure they are maintaining everything as a whole.
The process of tracking revenue involves multiple touchpoints. The priority being, effective tracking of funds, requiring careful coordination in preparing the chart of accounts to ensure they are appropriately designated with clear records maintained.
The key challenge with many nonprofits is tracking the reception and disbursal of funds. Tracking the same is essential not only to ensure that future fund disbursement is done effectively but also to protect one’s ability to apply for any future grants. Therefore, you must maintain a clean process for tracking the cash inflow.
Managing staff enrollment and payroll
Staffing issues in nonprofit accounting firms can be very complex in such an environment. Where the private sector is focused more on the bottom line, nonprofit leaders at the same time struggle to make changes in the staff.
In this practice, nonprofit accounting firms can either outgrow the skills of long-term employees or may find themselves overstaffed in times of a financial challenge.
Furthermore, the tendency to prioritize the mission can also skew hiring decisions toward having a less-skilled workforce. The enthusiasm in this less-skilled workforce can only be utilized by providing them appropriate guidance, training, and supervision. Otherwise, this highly engaged but under-skilled workforce can put the organizational health and long-term viability at risk.
Allocating the right position to the right people can help ensure that the organization’s staffing is “right-sized” and effective. At the same time planning for employee benefits must also be a core priority.
The Key to Success
The key lies in understanding various components of accounting operations having a strategic commitment to focus on opportunities that help support your business’s core mission, and needs. By committing to a well-defined accounting strategy, a professional nonprofit accounting firm can set itself on a long-term path to sustainability and success.