The world of nonprofit accounting is typically straightforward: accountants in these organizations either work on budget and spending cuts or become request generators during audit season. Despite this pared-down nature, the accounting department role at a nonprofit is very nuanced and challenging. Luckily, there are three key areas that finance leaders can work toward in order to assist in those efforts.
Leadership & Guidance
Finance leaders can provide much needed guidance and assistance to leadership as they determine the organization’s approach to developing and managing the overall nonprofit’s financial strategy. This may include support with:
- Providing financial monitoring and oversight.
- Development of multiyear scenario planning, forecasting, and the annual budget.
- Examining and reviewing financial reports.
- Reporting to the finance committee and presenting the annual budget for approval to its board of directors.
Overall, finance leaders can help craft strategies and support the overall vision of the organization while ensuring financial success.
Preparation, Timing, & Building Trust
To effectively manage and perform all accounting functions, it is essential that finance leaders properly prepare and establish timelines for their routine responsibilities. This allows for all tasks to be completed consistently, accurately, and in a timely manner. Examples of this include:
- Monthly, quarterly, and annual close and reconciliations to help ensure the financial accounting data is accurate and reliable.
- Creation and development of the annual budget and projections, as well as other departmental, programmatic, and grant budgets.
- Oversight of the audit process and compliance with all requirements.
- Development and presentation of financial reports to the board and leadership.
As part of the preparation, finance leaders must continue to monitor and recommend effective financial policies and procedures. This is pivotal in supporting an organization. Not only will this work help meet operational goals and deliver timely and accurate reporting results, but it also allows a nonprofit’s accounting department to build greater trust and maintain integrity across the organization.
Process Flows & Documentation
Finance leaders are responsible for overseeing daily finance- and accounting-related processes and duties. This entails the management of various activities such as:
- Processing payroll, accounts payable, and accounts receivable.
- Managing and entering invoice payments, creating deposits, and submitting funder invoices.
- Overseeing the accounting system (including entering and reviewing the budget, payroll, and all other journal entries).
Therefore, routinely developing and maintaining the documentation of current processes can assist an organization in identifying key steps and maintain clear, concise processes. Doing so can allow an organization to streamline and automate processes while effectively carrying out core accounting functions.
These are just a few ways that leaders can assist their accounting teams. The smoother the accounting department functions, the more reliable and timelier the reporting will be. This continuity of operations and workflow will support decision makers in furthering a nonprofit’s mission.
For more information on nonprofit financial management, please reach out to a professional at FORVIS.