Nonprofit accounting is challenging. Nonprofits are under close scrutiny to follow strict reporting guidelines, while also dealing with demanding donors wanting to see a full-disclosure of financial records.
To help give organizations a clear view of how they are performing, it’s necessary for nonprofits to implement best financial practices that everyone follows and understands, in addition to using the right fund accounting software.
Is your nonprofit using these best financial practices?
- Create an Annual Budget. Without an annual budget, you don’t know your expenses vs. your income. Creating the budget should be your first priority come first of the year, ensuring that it aligns with your organization’s annual plan and goals. The budget should include guaranteed and as-yet-unidentified income, with your Board and nonprofit leaders aware of the unidentified income so as to plan fundraisers throughout the year. Once you create the annual budget, be sure to check back and reevaluate the budgeted expenses so you can meet your financial goal.
- Cash Flow is a Priority. Nonprofit leaders need to be effective cash flow managers, helping the accounting department create accurate cash flow projections. Cash flow problems will occur making it critical for nonprofits to have a plan in place to solve any issue that comes up. Using fund accounting software, your nonprofit can manage cash flow easily by timing payments and receipts, and tracking spending trends. These reports can be run on a regular basis to help address any cash flow problems that occur.
- Understand Your Fund Accounting Software. Your fund accounting software is an essential tool in getting accurate and timely data on your nonprofits financial situation. Make sure that there are clear processes in place for updating and editing information, running reports, and understanding how the software works. By investing in a strong fund accounting software, you’re giving your nonprofit the ability to succeed.
While using best financial practices is ideal, it’s only going to work if your nonprofit organization has invested in a quality fund accounting software. Learn more about Abila MIP (formerly Sage MIP), the preferred nonprofit financial management solution by contacting Bob Schilling at 877-889-0629 or email firstname.lastname@example.org. You can also request information by filling out our online contact form.