At the beginning of each fiscal year, you are probably planning your nonprofit organization’s budget, setting goals, and making plans. Before you and your team begin planning for the new year, it’s important to look for ways to improve and refresh your finances so you’re working with accurate, detailed, and up-to-date information. To help you get started, we’re sharing five tips to refresh your nonprofit’s finances this year.
1. Organize Your Ledger
Your accounting ledger is one of your most valuable tools, tracking cash flow, fund balances, and daily operational costs. It’s easy to get caught up in the day-to-day record keeping and use your own system for tracking. On the other hand, if your ledger is disorganized or not aligned with generally accepted accounting practices, it’s taking longer to input data, find information, and leverage that information to make plans for the future.
Take time to record transactions each day, digitize receipts and documents, and streamline your data so that other people in your organization can understand the financial goings-on.
2. Examine Your Income Sources
This year, make sure you and the leaders of your organization take time to examine income sources for the year ahead. Look at the fundraising campaigns and grant proposals that have been successful in the past as well as trends in nonprofit fundraising so you can make smart decisions for how to raise money for your organization.
Additionally, look at your trends over the past few years to see where income sources are growing or decreasing. By analyzing your data more closely, you’re able to more accurately create a budget for the year ahead rather than carry over data from the previous year that may be inaccurate.
3. Update Your Fixed and Variable Expenses
While you’re refreshing your finances, this is a great time to take an in-depth look at your finances and update them in your budget. This may not be too challenging as the majority of nonprofits’ expenses are fixed costs, like rent, utilities, and payroll which are all very predictable from month to month.
However, your variable costs, such as how much you plan to spend on events, marketing, and fundraising are much more difficult to pinpoint. Looking at what was successful in the past year or two, as well as trends in nonprofit growth, you can look at where to shift your budget. For example, as we move out of the pandemic, event planning may need a more strategic budget boost than it did in the prior two years.
4. Elevate Your Accounting Software
If your nonprofit organization is relying on Excel or basic accounting software designed for businesses, you may want to focus your financial refresh on making the transition to accounting software specifically for nonprofit organizations. We recommend and provide training for both Blackbaud’s Financial Edge NXT™ and MIP Fund Accounting. Both of these are comprehensive accounting solutions that reduce your operating costs and streamline your workflows by providing you with:
- Easy to use, intuitive interface
- Efficient tracking across dimensions and categories
- Customizable organization and management
- Budgeting systems
- Fund accounting
- Reduction in manual processes with automated data entry
5. Improve Your Financial Reporting Methods
If you struggle with reporting, it may be time to extend your reporting capabilities to gain more insight into your finances. Using Power Cloud Reporting with Financial Edge NXT, you can elevate your reporting capabilities to achieve greater insight into your finances, create custom reports with visual aids and charts, and manage budgets and forecasts more efficiently.
This software integrates Financial Edge NXT and Microsoft Excel so you have an intuitive, familiar interface while bridging the gap between NXT and Excel. Features include:
- Drill Around to pinpoint transaction details, accounts, and scenarios
- Statistical reporting;
- Consolidate multiple Financial Edge databases;
- Customized layouts with charts, graphs, and Excel formulas
- Improved security to allow or restrict access based on reports, segments, projects, or department
- Generate income statements for funds, departments, and projects on separate Excel sheets
- Budget vs. actual reporting in real time
Schedule a Consultation to Discuss Your Nonprofit Accounting Software Solutions
If you are ready to update your accounting methods, refresh your reporting, and streamline your bookkeeping operations, we can help you find the right solutions to meet your goals. Schedule a consultation with a member of our team by calling (843) 971-9061 or filling out the form below to get started.
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