This white paper will provide the Executive Director and finance leader with information on the benefits of:
Digitizing manual bookkeeping tasks and shifting that time instead on the analyhsis and insights of the financial data to enhance strategic financial leadership
Information gained from analyzing financial data on programs, organizational resilience and sustainability
Providing the board of directors with financial analysis (information) in addition to the financial statements instead of just internal financial statements (data)
Many of my not-for-profit clients and students of the not-for-profit finance programs that I teach struggle to get through the mounds of bookkeeping tasks and eek out some time for financial analysis each month.
The work keeps piling up with each new program and with each new funder and funder reporting requirement, everything increases, so it appears, except for the size of the accounting 'department' (recognizing that often the department is 1-3 people).
The race to complete all of the bookkeeping tasks to produce financial reports in time for the board meeting and funder reporting deadlines consume all of their time.
Time-consuming, manual transaction based bookkeeping tasks such as:
processing dozens of monthly staff timesheets and expenses in Excel, or worse yet...in Word (yikes);
going to the bank to deposit receivables;
paying bills by cheques which are printed one by one and require staff to find the first signing authority...and then the second, then each cheque is stuffed in an envelope and the postage stamps are affixed;
reconciling and coding a multitude of 'cards' such as credit cards, food cards, gas cards...to each program.
Hours and weeks are spent on transactional bookkeeping duties leaving little to no time for finance staff to focus on financial analysis that will provide important information to help decision making and financial stewardship.
As we enter this fourth industrial revolution where advanced technology is now affordable by not-for-profit organizations, there’s been a quick uptake of integrated systems that help finance staff to minimize the time spent on manual, time-consuming transactional tasks and shift their time and focus financial reporting and analysis.
Across every industry, internal systems have transformed. Everything that can be digitized – is being digitized.
Digital tools automate transactional systems, weeks of manual data entry and processing is converted to hours thus shifting the focus on finance to analysis and strategic financial leadership.
Technology is now faster, more accurate, and easier to use than ever. This transformation gives staff the data they need to make strategic, informed decisions and the time they need to focus on stewardship and resilience of programs.
This flip, from financial teams spending most of their time on collecting and collating information to spending most of their time analyzing that data to generate information and insights to steward the organization in the short and long-term, is the core of digital transformation.
Using digital tools to streamline bookkeeping tasks will shrink the time spent on those tasks, likely yield a higher level of accuracy, and aggregate that data so that insight on financial performance can be more readily provided.
Digitizing enables Executive Director's and finance staff to analyze:
the short and long-term financial position of the organization
the true cost and bottom line (surplus, deficit or break-even) of each program and that trend over 5-years (based on the true and full cost method)
a 5-year revenue and expense trends for the organization and each of its programs
the quality of current funding (has funding increased in step with the cost of living and increased output requirements, what percentage of funding covers the full costs of the program, is the funding multi-year and renewable, etc.)
projections on required future funding and revenue generation
scenario and contingency planning
5-year net asset (reserve) trends and the amount of general operating, capital, and working capital reserves required
These insights provide a strategic foundation for effective decision-making that can strengthen the organization's non-profit business model (revenue, capital, and working capital structures) and thus fortify resilience and impact.
Ultimately, digital transformation helps steward not-for-profits and support effective mission fulfillment.
Digital tools are now available and more cost-effective than ever. If you are a small not-for-profit, look into apps and software to assist with: time and attendance, schedules with links to payroll processing, HRIS apps, invoice hubs such as HubDoc, expense management for staff members such as Expensify, electronic payments using your bank or tools like Telpay.
If you are a medium to large organization, consider the benefits of having a fully integrated system that will provide: robust financial reporting and analysis across a number of dimensions; streamlined funder reporting; and integrated time and attendance, schedule, payroll and HRIS systems, integrated donor and client database, electronic AP and AR.
Over time, the benefits of digitization and intelligizaiton of finance will translate into stewardship and impact. Not-for-profits that are able to secure funding for modernization efforts such as this, or if they are able to invest in a digital transformation from their cash flow or reserves will benefit from the foresight that digitization can bring.
For greater stewardship and impact - digitize to intelligize and take insights to create foresight.
To read my full whitepaper on Finance Digital Transformation for Not-for-Profits: Why not-for-profits should digitally transform their financial functions (and how to actually do it)...click on the link above.
A special thank you to Sparkrock for sponsoring this whitepaper.