5 Nonprofit Accounting Software Mistakes to Avoid

by | Jun 24, 2021

nonprofit accounting softwareThere are more than 1.5 million nonprofit organizations currently registered globally. Part of what helps a nonprofit organization continue to run is the organization’s financial department. These strategies are for tracking and managing everything on the financial side of things.

If you’re beginning a nonprofit or are looking for ways to improve in the financial department you’re in the right place.

We’re going to share some nonprofit accounting software mistakes that are made and ways that you can avoid them. Avoiding these mistakes now will save you from the challenges that these mistakes cause in the future.

1. Not Spending Enough or Spending Too Much

Accounting software is used in nonprofits to help make the accounting and bookkeeping process much easier. Instead of relying on your staff to handle the books, the software will keep everything organized.

It will also help with keeping records more accurate and make the process of data transfer quick.

The first mistake you’re going to want to avoid is over or under-spending. This happens when you’re purchasing the software that your nonprofit organization will use. Those that don’t want to spend a ton of money might opt for a basic form of software.

Software that doesn’t include all the add-ins needed to run the accounting side of things.

Whereas, those that spend too much get caught up in all the features offered. They pay for them all regardless of the notion that the extra features won’t be used.

To avoid making this mistake, we recommend assessing the needs of your organization before purchasing software.

Once you’ve made this assessment, you can then move forward with finding software that will meet and exceed these needs. Also, keep in mind the availability of the tech support offered by the software company you’ll use.

If something occurs, you don’t want to get stuck waiting for days for a response from customer service before the issue is resolved.

2. Buying Software Because You Have to

Have you ever purchased something because you needed it, but don’t consider things like:

  • How it works
  • What is included in the purchase
  • The overall cost of the goods or service

Some nonprofit organizations, only understand that they require some accounting software, and they grab the first thing they see. This isn’t right for several reasons, including not having software that will support things like required reports that must be kept and so on.

The best way to avoid making this mistake is to consider your options carefully. Ensure that you’ve checked that your specific industry doesn’t need a particular type of software before making your final purchases.

If the software you’re thinking about buying doesn’t include the solutions needed to solve your accounting and bookkeeping issues, it’s best to continue your search. After you’ve compiled a list of possible software’s that you’re going to use keep narrowing the list.

3. Not Getting Help

Most of the decisions made for a nonprofit will be made by the staff internally, which also includes volunteer staff. While this might save money, it doesn’t leave you choosing the best option possible.

Someone else should be involved in deciding the accounting software that you’ll be using, and that person is your accountant. After all, they are the ones responsible for keeping the finances and fundraising of your organization in order.

Your accountant can help you do several things before choosing the right type of software, including:

  • Decide on a budget for the software
  • Assess nonprofit accounting needs
  • Decide if you need to upgrade your software or find a different one

Not only will your accountant help with the things that we’ve mentioned above, but they will also help you put the software to work. This is useful when it’s time to implement it throughout the nonprofit.

4. Poor Integration Model

Although technology has evolved, some companies still have people manually entering data into the software application. While this isn’t a horrible idea, it’s time-consuming, and there is room for effort.

If you’re looking to streamline your accounting process, you need to find software that allows for seamless integration. This means that no matter where in the office a staff member is, financial information can be uploaded to the software with ease.

A good system should also be easy to access, even if you’re accessing the software from a mobile device. Keep in mind everyone in your organization doesn’t need access to the accounting software if it’s not necessary.

5. Not Upgrading on Time

Whenever you use software or other services, you’ll receive a notification when it’s time to upgrade your system. Often people ignore these notifications and don’t upgrade because they assume they don’t need them.

You don’t want to make this mistake because not upgrading can leave holes in your system and cause issues with overall accounting systems. If you’re using outside services, they can remind you when it’s time to upgrade your system or automatically upgrade the system for you.

Nonprofit Accounting Software: Mistakes to Avoid

When it comes to nonprofit accounting software, there is no doubt that your organization needs it to continue thriving. We’ve listed the most common mistakes that organizations make in the software department.

As well as ways that these mistakes can be avoided.

If you need help with the software, your nonprofit uses, request a meeting with The Charity CFO. We know that part of the battle for most nonprofits is in the accounting department and want to give you some peace of mind when it comes to the organization’s finances.


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