NFP Partners offers the benefits of experienced accounting professionals at a fraction of the in-house cost. Our outsourced accounting services range from total operation and management of the finance function to higher-level CFO support.
Managing your accounting department does not have to be a struggle that keeps your organization’s leadership awake at night and distracts from the main mission. Consider outsourcing some, or all, of your accounting functions to achieve strong financial management and enjoy peace of mind.
Find out how our outsourced accounting services can help your nonprofit organization and get your questions answered by exploring the topics below:
Are You a Good Candidate For Outsourced Accounting Services?
The fact that you are on this page probably pre-qualifies you as a candidate for outsourced accounting services. You may have overt evidence that your organization’s financial management is deficient, such as a critical audit report, the recent termination of your primary financial manager, or lost funding. On the contrary, you may be absent any immediate crisis and instead just have this intuitive sense that things are amiss and are not sure what to do about it.
Some of the general characteristics of nonprofit organizations are conducive to using outsourced accounting services as the primary strategy are:
- Some organizations, which are constrained by choice or circumstances, do not grow beyond a level where a full-time finance staff is required.
- The CEO and the Board want to control administrative overhead costs, but at the same time, understanding their fiscal responsibilities and risks, want to follow best practices and set a high standard for financial reporting.
- An organization is in the early growing stage with an operating budget of $500,000 to $4,000,000.
- The financial tracking and reporting requirements are at least moderately complex and require specialized nonprofit accounting expertise and software tools that otherwise may not be readily available or affordable.
- The organization requires an
audit orexpects to fairly soon.
- Management is focused on the mission, programs, and fundraising, leaving little time for attention to finance and accounting functions.
- Management is attuned to modern workplace practices that are facilitated by technology.
Why You Should Be Interested In Outsourced Nonprofit Accounting Services?
Nonprofit organizations in every growth phase – from startup to maturity – can benefit from expert outsourced accounting assistance. A CEO or executive director is generally focused on the organization’s mission, programs, and fundraising. Thus, managing in-house accounting, especially during the early and middle growth phases, often leads to weak financial management. This condition, unfortunately, characterizes too many nonprofit organizations. In spite of your efforts, here are a few of the reasons why your nonprofit’s financial management is dysfunctional:
- Your organization needs, at various times, multiple financial skills but can’t afford to hire a financial staff on a full-time basis.
- The organization may experience high turnover in finance and accounting positions resulting in an ongoing, on-the-job training program.
- You need stronger basic internal controls, such as having someone who handles your money separate from someone who accounts for it.
- There are problems in accounting and reporting on grants and restricted funds.
- Your organization is growing and you need to hire people who can raise money or deliver services, not finance.
- The nonprofit and its keyboard members may lack basic financial knowledge and are not getting support from your primary financial staff person.
- You simply don’t have reliable financial information, allowing you and your Board to make good decisions.
What Benefits Might You Experience Through Outsourced Accounting Services?
Outsourcing your accounting can result in significant cost savings. While results vary from organization to organization, the cost of outsourcing generally does not exceed the true cost of maintaining the function in-house. Likewise, outsourcing will result in a major lift in the quality of financial information and internal control. Some benefits you may expect are:
- Allow the CEO to focus on the mission and program delivery with minimal distractions.
- Provide relevant, accurate and timely financial information to the various stakeholders (internal managers, Board, donors, funders), resulting in better decisions.
- Operate within a system of internal control that reduces the risk of fraud and misallocation of assets, while satisfying audit requirements.
- Reduce the number of internal accounting staff through process standardization and training, allowing for greater productivity.
Additional benefits to expect are listed below:
- Defer the need for a full-time financial professional.
- Minimize internal staff distraction and external fees for audit preparation and support.
- Facilitate transition to a professional in-house staff when growth requires that step.
- Assure continuity of the finance function upon personnel turnover.
- Board and CEO receive knowledgeable advice and mentoring from a trusted financial professional.
- Eliminate the need for separate in-house installed accounting software and IT maintenance costs.
- Enjoy certainty and peace of mind that financial management is working.
Take this self-quiz. If you can answer yes to some of these you may be a perfect fit for our services.
Are You Ready To Explore Outsourced Accounting Services?
Do You Want to Take a Deeper Dive Into the Accounting Services Offered?
articles on outsourced nonprofit accounting servies
Accounting software should help your nonprofit grow without causing sleepless nights and consuming valuable staff time. Because of such, we are discussing six questions to ask your outsourced accounting provider as it relates to your accounting software.
1. Can my nonprofit continue to use our present accounting software?
The outsourcing provider should have experience with the more popular accounting software applications used by nonprofits. More specifically, some examples of these applications include QuickBooks, Abila MIP Fund Accounting™, Blackbaud Financial Edge, and Sage Intacct.
The provider will require access to the software through a secure Internet connection. Is your software presently deployed on an in-house server or PC? If so, the provider may recommend that it be moved to a hosted, off-site environment for 24/7 access by on-site personnel and the outsourced accountants.
In some cases, the present accounting software may not be the best solution for your nonprofit. If this is the case, the outsourcing provider will recommend upgrading the software to a later version or an entirely new product. This decision will help your organization fully realize the benefits of improved financial management.
Furthermore, the decision would have to be made sooner or later, regardless of if your nonprofit outsources its accounting. For help on deciding which accounting software is best for your nonprofit, click here to read “Importance of the Right Accounting Software.”
2. What are the “must-have” features to expect from nonprofit accounting software?
The accounting software recommended or deployed by the outsourced accounting provider should minimally provide the following functionality:
- A general ledger account structure that supports multi-dimensional reporting by natural account, program, funding source, and optional segments as applicable.
- Is in full compliance with generally accepted accounting principles for nonprofit organizations.
- Budget development and management.
- Routine processing of accounts payable invoices and payments, accounts receivable and cash receipts, and bank reconciliations.
- Ability to use credit cards and electronic funds transfer technology for payments and receipts.
- Dashboards for real-time financial information to management.
- Integration with third-party systems for payroll.
- Financial reporting capability and flexibility for internal management, Board of Directors, funders, financial institutions, tax authorities, and other stakeholders.
- Easy preparation of the accounts for the outside auditor.
- Ability to interact with the accounting system via smartphones and other mobile devices.
3. What other automated accounting technology capabilities could the outsourced accountant provide?
A major advantage offered by the outsourced accounting vendor is integration with specialized applications that automate much of the day-to-day drudgery and inherent inaccuracy of handling paper. A primary third-party resource is a cloud-based accounts payable application that automates invoice data capture, approval, payment, and vendor management. Does your organization process 50 or more invoices monthly? If so, outsourcing all or part of accounts payable generates a direct saving of personnel time in addition to improved accuracy and timeliness.
Other candidates for integration are applications for employee time and expense reporting, advance budgeting and forecasting, and payroll and human resource management.
4. Does the nonprofit outsourced accounting firm provide accounting software implementation services?
The outsourced accounting firm normally works with the software vendor on behalf of the client to plan and manage the implementation. Furthermore, this service offers training to key personnel as appropriate to the level of accounting services provided.
For the more common accounting software applications, the client should expect the outsourced accounting provider to have personnel who are trained and certified on the applicable software, for example having QuickBooks ProAdvisor or a Certified Abila MIP Fund Accounting™ Consultant on staff. As the outsourcing organization has been involved in numerous software implementations, the time and cost are minimized in relation to a client working directly with the software vendor.
5. Will my nonprofit’s data be secure and easily accessible?
Accounting applications hosted in the cloud are inherently more secure than if run within on-premises’ servers. Applications are usually subject to extraordinary measures to protect access and physical security (e.g., mirror processing at a separate server-site). Further, the provider should offer cloud storage of accounting source documents with tools for easy access.
6. Can our nonprofit organization expect the outsourced accounting provider to stay current with technology upgrades and take advantage of them to our benefit?
To remain competitive, the outsourcing firm must stay current with technological developments. Additionally, these developments should offer significant benefits in efficiency and effectiveness to client organizations. One can expect technologies now on the leading edge such as artificial intelligence, machine learning, internet of things, software connectivity and blockchain are already being implemented to varying degrees and will become commercially viable in the foreseeable future for most organizations. As a result, providers of outsourced accounting services are in the best position to implement the innovations and pass along the benefits to their clients. Those who don’t will fail.
For more information on NFP Partners’ outsourced accounting services, click here.
Since you’ve read all of NFP Partner blog and newsletters, you know how to read financial statements. If you don’t, please read this article to get up to speed.
After reading the article, you should now know the three major financial statements and what to look for. Now, we are going to determine what your nonprofit should do with what you are seeing.
Your nonprofit’s statement of financial position
One of the first statements usually presented is the Statement of Financial Position, also known as the Balance Sheet. This statement presents the nonprofit’s assets, liabilities, and net assets (fund balances). This report details the assets and the liabilities and is used to determine the overall health of a nonprofit.
The asset categories generally include cash, prepaids, receivables, and other assets. When comparing these to current and long-term liabilities, look to see if the assets can cover those liabilities. They can be accounts payable, accrued payroll, or other short and long-term obligations.
If the current ratio (current assets divided by current liabilities) is above 1, it indicates the nonprofit’s assets can cover their short-term liabilities. No further action is necessary. However, if the current ratio is below 1, it indicates the nonprofit may not be able to meet its short-term liabilities. In this case, further research is necessary. (more…)