How to Improve Your Accounting Function
A nonprofit’s accounting function is its financial backbone. Efficient accounting processes, along with sound controls to monitor them will position the organization on the right track for financial stability and growth.
Are you satisfied with your nonprofit’s accounting function? Does it seem less efficient than you think it could be? Here are some suggestions for improving this important piece of your 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 of expenses. For example, 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.
Another time saver is to reconcile your bank accounts shortly after the end of each month. You may be able to spare days at the end of the year by doing this. It’s also much easier to detect and correct errors early. Also, reconcile accounts payable and accounts receivable data to your statements of financial position monthly.
Collect Information Efficiently
Designing a coding cover sheet is another step toward boosting efficiency. An accounting clerk or bookkeeper requires various information to enter vendor bills and donor gifts into your accounting system. Speed up the process by collecting all of that information on one page. The cover sheet should list your nonprofit’s general ledger account numbers so that the employee entering the data does not have to look them up each time.
This cover sheet should also 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. You can use multiple choice boxes to indicate which cost center the amounts should be allocated to. The invoice or copy
Another tip about invoices: Do not 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.
Fully Utilize Your Accounting Software
Many organizations underuse the accounting software package that they’ve purchased, because they haven’t 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 avoiding any manual calculations or financial report presentations in Excel® or other spreadsheet programs. Standardize the reports which come directly from your accounting software to meet your needs, without any modification. This will not only reduce input errors, but will also 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 allocations to various programs. Periodically review any estimates against actual figures and always adjust to the actual amount before closing your books at year end.
Accounting systems can become inefficient over time if unmonitored. Look for labor intensive steps that could be automated, or do not add any value and could be eliminated.
Also, make sure that the individual or group responsible for the organization’s overall financial oversight (your 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’re 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. This will allow management to focus on larger projects or initiatives and the bigger picture.
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