Tag Archive for: pandemic
When to Look for Expert Nonprofit Accounting Services
When you are a nonprofit organization, finding expert nonprofit accounting services may not be high on your to-do list. Surely there are more important things to focus on instead of focusing on accounting, especially because your organization’s goal is not to make more profit?
In reality, nonprofit organizations can benefit a lot from nonprofit accounting. This article will go through the scenarios when you would need to look for expert nonprofit accounting services.
1. You Need to Consider COVID-19 Implications
The pandemic has resulted in a lot of changing regulations and greater overall uncertainty regarding the finances and accounting requirements of a firm. The Coronavirus Aid, Relief, and Economic Security (CARES) Act, which was passed in March 2020, affects nonprofits as well.
For organizations with less than 500 employees, you can have access to small business administration (SBA) loans or loan forgiveness. You can also access emergency economic injury disaster loans (EIDL) grants and employee retention credits.
For larger organizations with more than 500 employees, you can only access employee retention credits and EIDL grants.
The eligibility criteria and the need to report benefits from the CARES Act will mean that you can benefit from having expert accounting services providing you with greater insight. They are a lot more knowledgeable on how the CARES Act will change what you report on your statements, and they will ensure that your financial reports will accurately reflect the adjustments while complying with regulations.
At the same time, other COVID-19 considerations can cause an accounting headache for your nonprofit. For instance, you may experience modifications in the number of liabilities you have or will need some guidance with the ongoing financial concerns of your nonprofit.
The COVID-19 pandemic is an unprecedented situation, and responding to accounting rule changes can be a challenge for everyone. By relying on an accounting service, you can rest well knowing that your audits and bookkeeping are all up to par.
2. You Find it Hard to Manage Cash Flow
Managing cash flow in a nonprofit can be more difficult or unstructured than a typical company. At the same time, it’s an important thing to consider, because you need that money to keep your organization going. You will therefore be able to benefit from nonprofit accounting, which aims to both manage and improve your cash flow.
A common challenge that nonprofits face is that their greatest cash flow only happens in certain seasons or months in a year, which means they will have to allocate this money throughout the less profitable months. By taking the time to properly plan your cash flow and ensure your balances will remain positive, you will need to spend a lot of time evaluating your finances and your budget.
An accounting service can analyze the existing financial information to understand where you get most of your revenues and benefits, and whether this is enough to sustain operations for a certain period of time. They can also pinpoint risk areas, where you may be spending too much or where you may be liable to losing a lot of money.
The information they gather will allow you to make well-informed decisions regarding your cash flow.
3. You Need Better Staffing and Payroll Strategies
Payroll management is a headache for any company, and it is a particularly challenging aspect of running operations for a nonprofit. Nonprofits are usually motivated by passion, so matters of staffing changes or payroll requirements can be a bit awkward to focus on. What happens, for instance, if there are some incredibly loyal staffers who are also becoming financially burdensome?
An accounting service can provide some insight into this area by identifying cost-effective strategies and the financial impact of having a certain amount of staff members. While it may not be the easiest thing to consider, expert accounting services will be able to pinpoint areas where you will have to cut costs to ensure that your organization can succeed in its endeavors.
At the same time, you will benefit from speaking with an accountant before hiring someone new so that you can understand how this will impact your financial position in the long run.
4. You Have Difficulty Tracking Revenues
As a nonprofit organization, the way you receive revenues will be very different from the orthodox method of selling products for profit. Your revenue will come from donations and grants more than anything else. The accounting process will be different for you, but it is just as important so that you can manage cash flow and understand your company’s financial position.
By having nonprofit accounting services helping you out, they will be able to maintain accurate and updated financial records which track all the revenues you receive. This ensures that you have a sound knowledge of how well your company is doing, and also prevents the possibility of you presenting inaccurate data in your financial reports.
Tracking this information will also be important in ensuring you continue receiving grants in the future.
Situations When You Need Nonprofit Accounting Services
As a nonprofit, you can benefit a lot from accessing nonprofit accounting services. Your accounting needs may be unique, and you may not be profit-motivated, but managing your finances is essential to ensure your organization survives.
Nonprofit accounting services can provide assistance if you need help with COVID-19 considerations, if you find it hard to manage cash flow, if you need better staffing strategies or if you have difficulty in tracking your revenues.
Contact us today for expert accounting services for nonprofits.
Taking Control of Your Nonprofit Finances
Today, you might feel there are few things you have control over. Fortunately, taking control of your nonprofit finances is not one of them.
Since the novel COVID-19 pandemic has forced the world into a remote economy, nonprofits face a time of financial transition.
91% of global nonprofit organizations suffered operational damage in the crisis. This 91% is an improvement from the 96.5% recorded in March.
Waiting for normalcy is only a long-term solution that many organizations can’t afford. However, learning how to transition into a new normal can help your organization get back on its feet.
Understanding how to manage your finances is the best path to regaining stability. Here’s how you can start taking control of your nonprofit finances sensibly and effectively.
Taking Control of Your Nonprofit Finances
It’s important to consider how money transfers through different hands within your organization.
A board of directors should oversee general operations. An added financial branch of operation can still go a long way. Delegate financial tasks to a specific individual or group of individuals. That way, you centralize the information handled in the accounting process.
Along with financial managers, you can outsource your accounting tasks. Getting professional advice is a much more efficient way to get your finances in order.
Nonprofits that manage finances internally can appoint at least 2 or 3 people to manage. They can be direct points of contact between the organization and the finances.
You can also assign different functions to those in your financial branch. One member can manage executive functions while supporting members manage secondary tasks. This structure promotes organization, accountability, and transparency within your financial branch of operation.
Multiple Streams of Funding
Adding more streams of funding to your organization is essential to financial balance. Receiving support from more than a few sources adds to the revenue to collect.
It also adds more financial security. Instead of relying on one funding source, you open up more opportunities.
Collective revenue from various sources adds up and gives you more stability. If one stream dries up, you’ll still have the flexibility to focus on others in times of need.
Relevant Streams of Funding
While you grow more streams of funding, you should also make your sources relevant to the times. Prior to the pandemic, common sources of funding for nonprofits included:
- Sponsorships
- Grants
- Programs tuition
- Fundraising Events
- Donations
- Subscriptions
Nonprofits that focus more on in-person fundraising should consider more reliable funding sources.
Instead, there are more reliable, contactless methods of funding. These include sponsorships, grants, donations, and subscriptions.
Sponsorships and grants often involve some research and individual outreach. The scope of their awarding processes also requires waiting periods and gaps. Still, they’re useful sources to consider for long-term operations.
Tracking Expenses and Profits for Taking Control of Your Nonprofit Finances
Multiple streams of funding ensure that money flows into the organization.
This is a two-way stream. It’s possible for cash to flow out of an organization at a high rate.
Tracking the expenses shows you funds entering and exiting the budget. Your financial branch tracks expenses and two-way cash flow. The board of directors advises the active spending goals and habits.
The board and financial managers should meet on a regular basis. Your budget and the size of your organization should determine how often you meet.
It’s also helpful to automate some of the tracking process through software. You can use tools like Quickbooks or GetApp. Tools like these will allow you to begin taking control of your nonprofit finances.
These have specialized features for nonprofit organizations. They can also help you with the distinction between nonprofit and commercial operations. Many softwares also include tax forms and documents. You can use these to help your organization with legal compliance guidelines.
Basic Budgeting
Your organization should use budgeting to inform the other areas of financial management. Here are two basic budgeting tips to follow.
Budget Structures
Each nonprofit should have monetary goals relative to their operational goals. There are three main budgeting structures every nonprofit should know:
- Surplus budget
- Balanced budget
- Deficit budget
These structures are often used in government or commercial spending. They’re useful guidelines to help you estimate profit margins and losses.
When your fundraising efforts exceed expectations, you have a surplus budget.
A balanced budget indicates the expenses are expected to meet profits. In contrast, a deficit budget means that expenses exceed profits. So, there’ll be a margin of lost funds to recover.
Your total budget operates within these structures. As you continue to fundraise, you can determine which type of budget your organization currently operates on.
Budget Timelines
A budget should also include a realistic timeline for specific goals. Be sure to include important landmarks in the year where you need to measure performance.
You can split the fiscal and calendar years into quarters to make goals more realistic. Then expand to an annual timeline to measure more long-term growth.
Board meetings should also align with your timeline of goals. Or, you can increase their frequency to keep up with constant changes.
Taking Control of Your Nonprofit Finances: Outlining Policies
The most important step in financial management is documentation. This includes recording tangible copies of your budget, funding sources, and financial goals.
However, you should also consider implementing or updating your operational policies. This includes spending and investment policies.
Updating your policies may crossover with budgeting. Typically, a budget tends to represent your organization in numbers. A policy shows the larger investment potential.
The content in your policy may also intersect with legal guidelines. For nonprofits, these guidelines often determine eligibility for certain funding opportunities or methods.
Manage Your Nonprofit Finances Now
Financial health is an essential part of any nonprofit organization. We can show your organization how to weather the storm and become financially resilient.
With our team of experts, you can get professional accounting and bookkeeping services. We’ll tailor your financial services to the needs of your organization.
To begin taking control of your nonprofit finances today, contact us, and request a meeting.
