A not-for-profit’s accounting function is its financial backbone. Efficient accounting processes along with sound controls to monitor those processes will put an organization on the right track for financial stability and growth. One may ask are you satisfied with your not-for-profit’s accounting function or does it seem less efficient than you think it could be? Here are some suggestions for improving this important piece of your organization’s operation.
Create Time-Saving Policies
A good first step toward accounting function improvement is to create policies for the monthly cutoff of invoicing and recording expenses. For instance, require all invoices to be submitted to the accounting department by the end of each month. Too many adjustments or waiting for tardy employees or departments to weigh in can waste time and delay the completion of your financial statements. By streamlining decision processes, accounting policies can make the bookkeeping process more efficient.
Another time-saver is to reconcile the bank accounts shortly after the end of each month. It is a lot easier to correct errors when you catch them early. Also, reconcile accounts payable and accounts receivable data to the statements of financial position. This process may save you a day or two at the end of the year.
Collecting Information Efficiently
Designing a coding cover sheet is another step toward boosting efficiency. An accounting clerk or bookkeeper needs a variety of information to enter vendor bills and donor gifts into an accounting system. Speed up the process by collecting all of that information on one page. The cover sheet should list the not-for-profit’s general ledger account numbers so that the employee entering data does not have to look them up each time.
The cover sheet also should indicate whether the invoice is to be paid by check, electronic transfer or credit card and provide a place for the appropriate person to approve the invoice for payment. Where applicable, use multiple-choice boxes to indicate to which cost center the amounts should be allocated. The invoice or copy of the donor’s check can be attached to the cover sheet for reference.
Another important tip about invoices is not to enter only one invoice or cut only one check at a time. Set aside a block of time to do the job when you have multiple items to process.
Sticking with Your Accounting Software
Many organizations underuse the accounting software package they have purchased because they have not invested enough time to learn its full functionality. If needed, hire a trainer to review the software’s basic functions with staff and teach time-saving tricks and shortcuts.
Become more efficient by standardizing the reports coming from your accounting software to meet your needs with no modification. This not only will reduce input errors but also will provide helpful financial information at any point during the year, not just at month-end.
Consider performing standard journal entries and payroll allocations automatically within your accounting software. Many systems have the ability to recall transactions and can automate, for example, payroll allocations to various programs or vacation accrual reports. But review any estimates against actual figures periodically and always adjust to the actual amount before closing your books at year-end.
Accounting systems can become inefficient over time if they are not monitored. Look for labor-intensive steps that could be automated or steps that do not add value and could be eliminated. Remember outdated or incompatible systems that are dependent on manual processes make it difficult for organizations to rise to the challenges of managing and analyzing their financial data.
Also make sure that the individual or group that is responsible for the organization’s overall financial oversight, for example, the CFO, treasurer or finance committee promptly reviews monthly bank statements, financial statements and accounting entries for obvious errors or unexpected amounts.
Freeing Up Time
Make sure that you are optimizing your accounting resources. Considering the growing list of tasks that arise, implementing one or more of the above processes can help free up valuable time. And that will allow management to focus on larger projects or initiatives and the big picture. For questions, contact Marva Flanagan at 312.670.7444. Visit orba.com to learn more about our Not For Profit Group.