Phew! Now that the long search for the right person to fill your nonprofit organization’s position of Finance Director (or senior financial manager) has come to an end, you release a huge sigh of relief. But your job is not done. There needs to be intentional and appropriate training for the Finance Director (FD) for the transition to be successful. Too often the new FD is siloed and not integrated into the management leadership.
First, the Essentials
Of course, the new Finance Director needs to meet the other staff to hear from them about their programs, roles within the office, and what financial information they will be needing throughout the year. This step happens parallel to introducing the Finance Director to your chart of accounts. The FD will be connecting names with faces and account codes with projects, programs, and grants. Knowing who can assist when the copier jambs are as important to FD as having the aging list of accounts receivable.
Hopefully, during the hiring process, you ascertained the person was familiar with your accounting software. If not, training on the accounting software is critical and may require contracting with outside support resources. Also, the new FD may not know about other software being used in your organization. Schedule time with existing staff to acquaint FD with the other software (e.g., donor database, project management, time tracking, etc.) that may interface directly with the accounting package or provide reports that are imported into accounting. Explain how files and department information are stored on the server, whether local or cloud-based and how often it is backed up. With this knowledge, the FD may decide to schedule backing up accounting data more frequently or in a more secure location.
Second, Review and Fix Internal Control
The policies and procedures manual may seem like dry reading for some people; however, they will provide the new Director with an understanding of the internal accounting control policies the department has in place. If policies and procedure are sparse or undocumented, this will create a great learning opportunity for the FD and a huge permanent contribution to the organization. FD will recognize which procedures need to be enhanced or explained to staff to ensure that the fiduciary responsibility is being met by everyone. Internal controls include who receives and opens the mail, who handles the checks and where they are stored, who approves invoices for payment, check signing, etc.
Additional Points Not to be Forgotten
As mentioned previously, handing off the accounting tasks to the new hire will not solve your problems if that person is not integrated into the management leadership. The Finance Director can be told which banks are used and shown what budgets are for each project; however, copies of the prior audited financials, schedule of items requested by the auditor, and auditors letter will give the FD the long-term perspective. Furthermore, including the FD in leadership discussions results in maximizing what the FD can provide to the organization in the long-run.
Getting to the End Game
After meeting staff, reviewing the chart of accounts, getting an overview of software and office systems, and accessing policies and procedures, the Finance Director can now comprehend the organization’s budget and financial statements from a perspective of how his or her role will enhance the nonprofit. The time spent on this initial and intentional training will mean the budget and financials are more than just numbers to the new person. The FD will see them as representations of how staff and programs interact. The Director can read last year’s statements with an eye for where the organization is heading and what is needed to reach new goals.
Having fiduciary standards that assure funders of their investment in your nonprofit entails more than depositing checks, paying bills on time and compiling financial reports. It takes time to understand your organization inside and out and the Finance Director will build his or her understanding day-by-day, so schedule the onboarding cycle to allow for this time. In the end, the sigh of relief will be even sweeter and your auditor will love you.
Nonprofit Accounting Consultant