Happy New Year! As a new decade dawns, there’s never been a better time to improve financial operations in your nonprofit organization. While you certainly may have more important goals for the coming year – from solving world hunger to saving endangered species – don’t forget that the achievement of those goals depends on maintaining a sustainable, financially solid organization. Below are a few simple resolutions recommended by our nonprofit accountants to help ensure your financial stability for years to come.
1. Get organized. Whether you’re tidying up a messy desk or overhauling your chart of accounts, this is the perfect time to make a fresh start. If there are any financial processes that always cause headaches (like expense reporting and reimbursements) take this opportunity to wipe the slate clean and set up a new, more organized system.
2. Cut back on your paper habit. It’s more efficient to store your documents digitally. Instead of digging through boxes of paper files, you can quickly locate documents with a simple keyword search. Online banking and electronic bill payments can also reduce your paper usage. Your digital needs might be satisfied with nothing more complicated than a scanner and Google Drive, but if you’re considering investing in a cloud-based file sharing system, do your homework to find the right fit for your organization.
3. Set a schedule – and stick to it. It’s easy to get off-track with your accounting if you don’t have a schedule in place. Every nonprofit is different, but there are a few things that must be done on a regular basis – reconciling your bank and credit card accounts, preparing financial statements, running payroll, etc. Keep a strict checklist for weekly, monthly, quarterly, and annual tasks. And don’t forget that many annual filings (like W-2s and 1099s) are on a calendar-year schedule, regardless of when your organization’s fiscal year ends.
4. Use the tools available to you. If you’re not using your programs and applications to their full potential, you might be missing out. For example, many nonprofits think they need to invest in a specialized fund accounting system, but good old QuickBooks Online has a few tricks up its sleeve that make it easy to track grant funding and simplify small transactions. Take a closer look at what your existing programs offer, and make an effort to learn them inside and out – it may save you some unnecessary costs in the long run.
5. Commit to a greater understanding of your financial environment. Nonprofit finance is complicated, but it’s important to dedicate the time to understanding it. From revenue recognition to financial statements, the rules don’t always make sense at first. But a lack of understanding can have serious impacts on the financial health of your organization. If it feels like you and your accountant are speaking different languages, ask for clarification before moving forward.