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.