Overcoming Common Challenges in Nonprofit Accounting
Learn how a focus on the right priorities can help you manage and overcome three of the greatest challenges facing those who work in nonprofit accounting and leadership.
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Published by LTBD, P.C. | August 23, 2017
The arguments in favor of migrating the accounting operations of your business, association or nonprofit to an outsourced provider are powerful and compelling. Outsourcing solves numerous challenges that CEOs face — while providing considerable benefits, including these:
These are just a few of the benefits that outsourcing officers, but they bring together three key priorities: people, processes and proactive engagement with the right expertise.
That all sounds great, but how do you make sure it really happens? After all, accounting is a complex function with a lot of moving parts. You can’t afford to just ‘turn the switch’ and hope that everything works out. That’s why the process you use to migrate to an outsourced approach is absolutely critical. Here are three essential steps you can take to achieve a smooth transition to outsourced accounting for your business or organization:
Despite it seeming obvious that you don’t just want to ‘box up’ your current accounting activities and ship them wholesale in a FedEx box to your new outsourcing vendor, that is actually what happens in a surprising number of cases. This nearly guarantees that accounting deadlines and key process steps will be missed, your outsourcing partner will get frustrated fast, and the new partnership will end very soon (but only after some serious damage is done). That’s why a responsible outsourcing partner should insist on the same first step that you should request: an assessment.
A proper accounting assessment has to be your first step, because without knowing how things work (and how well they work), neither you nor your outsourcing partner can make meaningful progress in achieving and sustaining a well-structured, efficient and transparent accounting system. This is even more critical when you consider that one reason a lot of businesses seek out an outsourced accounting partner is precisely because they’ve come to the realization that they don’t do a good job with accounting on their own. The very last thing that you want to do is take a sloppy or ineffective accounting process and hand it over to an outsourcing partner so they can continue to run that dysfunctional accounting process on your behalf.
The assessment phase should involve a review of your organization and it’s structure; the factors that impact how complex your accounting processes are (such as processing volume, number of employees and taxing entities, among others); the structure of your management and/or ownership; and your current financial health as well as the finance infrastructure currently in place (from accounting software to documented processes, and from your chart of accounts to your depreciation schedules).
>> Learn more about LTAssess, the LTBD process that aligns with this step.
After the assessment is complete, it’s time to take the information that was gathered and put it to good use. This means achieving three objectives:
These three components ensure that you and your outsourced partner have successfully configured a winning strategy and an effective system that aligns with ‘best practices’ and maximizes your utilization of the software and systems that are at the heart of your accounting operations. Configuration is essential because it sets you up for success. By the time the configuration step is completed, there should be no questions and no surprises waiting ‘around the corner’ for you or for your outsourced accounting provider and its assigned team.
>> Learn more about LTConfig, the LTBD process that aligns with this step.
Now that we’ve fully assessed the current accounting operations and then configured and prepared a comprehensive and effective accounting program and strategy, we’re ready to implement. The first two steps are what enable you to reach this stage with a high degree of confidence, at which time you and your outsourced accounting partner can get started on the day-to-day work while feeling confident that the outcomes will be solid, the deadlines will be met, and the results will be clear to see.
From payables and receivables processing to cash management, month-end close and internal financial reporting, the key is to start this third step in the process with everything documented and defined clearly and effectively. This also ensures that if anything does go sideways, you have the right points of reference to use in evaluating what was missed -— or how a given ‘real-world’ scenario might diverge from the documented process in ways that weren’t previously identified. Either way, you and your outsourcing partner will be able to respond to issues quickly, correct them effectively and improve operations to take new factors into account for the future.
>> Learn more about LTEngage, the LTBD process that aligns with this step.
By taking this clear, steady and well-defined three step approach, you and your outsourced accounting partner will create a proven foundation for shared success and the beginnings of a long-term partnership that maximizes the benefits of an outsourced accounting model for your business, association or nonprofit. If you’re considering outsourced accounting options, consider focusing only on firms that are committed to this strategic, three-step approach, like LTBD.
To learn more about how the LTBD process has effectively worked in serving the outsourced accounting needs of organizations just like yours, review the LTBD Process online, or contact LTBD today to request a free initial consultation.
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