Financial Technologies & Management- E-Newsletter for February

Upcoming Live Webinars

Dear {CONTACT.SALUTATION} 

We hope you find our monthly E-Newsletter useful for your nonprofit organization. We are pleased to provide you with access to our knowledge articles and live webinars!!

These live webinars will help Nonprofit Leaders, Treasurers, Executive Directors, Finance Directors, Finance Staff, and other Nonprofit Staff.

Our upcoming live webinars for financial management training are broken into the following areas.   Please feel free to click on any of these areas to learn more and register for these upcoming financial management training.

• Financial Management Training-Topics include Overlooked Benefits of Outsourcing Nonprofit Accounting or Why your Nonprofit should be using Nonprofit Accounting Software?
• Nonprofit Financial Forum and MIP User Group-Our plan is start these back up in March so stay tuned
• MIP Fund Accounting-General Ledger, Accounts Payable, Accounts Receivable, Reporting, Financial Statements, and Drillpoint-Each webinar is 2 hours.
• Nonprofit Finance Certificate-Effective Financial Management and Leadership-first part is focused on bookkeeping and accounting; and second part is focused on controller, CFO, and leadership roles.

Please contact us if you have any questions or feedback about our upcoming live webinars.  Feel free to check out our FTM blog or book a meeting on my calendar.

Best Regards,

James Simpson, CPA, CFE, CITP, and CGMA.

Common audit pitfalls and misperceptions

One reason a nonprofit might conduct an audit is to demonstrate the organization’s commitment to financial transparency and accountability.  Also, you many have specific grantor that requires an audit or maybe you have any audit if you suspect fraud or illegal acts.  And while a nonprofit can spend considerable resources for its annual audit, it is important that it consider the following to ensure the audit is a success.

• No delays
• Minimal accrual and year end adjustments
• Minor board and management comments
• No material weakness or significant defieiency
• Nonprofit should prepare audited financial statements and related disclosures
• Fraud detection is not purpose of audit
• Auditor does not guarantee financial statement accuracy

The full article provides further details on how to eliminate these common problems with nonprofit audits.

Top Indicators of Nonprofit Financial Health

Nonprofit leaders have a difficult mandate to constantly balance money and mission, while collecting and sharing data on social and financial performance.

How can nonprofit executives, funders, and advisors identify what matters most when examining finances? What are some trends and indicators that can guide us through an abundance of data and help assess true financial health?

The following list of financial indicators based on our experience providing nonprofit accounting solutions.

• Revenue reliability
• Consistent financial surpluses
• Working towards full cost coverage
• Appropriate liquidity
• Ability to manage debt and steward facilities

The full article provides a detailed explanation of these top indicators.

Managing Cash Flow

While standard nonprofit financial reports – the budget, income statement, and balance sheet – provide important management information, these statements alone do not tell whether there is enough cash on hand to pay for an unexpected repair, to take on a new program opportunity, or even to cover payroll next month. For this, effective cash flow management is essential.

It is important to manage cash flows especially when operating with a financial deficit and unexpected events.  Also, when your organization is undergoing financial changes like changes in funding or new programs and staffing.

You can start to manage your cash flows by developing cash flow projections that look forward up to 12 months.  

Once you develop cash projections, you can then work to develop cash flow management strategies.  The following are cash management strategies:

• Speed up the receipt of income
• Slow down payments
• Increase Cash Receipts
• Reduce Cash Disbursements

Best practices to avoid cash flow problems include:

• Develop realistic budgets each year
• Operate with goal of obtaining a financial surplus
• Build cash reserves over time
• Be aware of cash flow and budget assumptions and react to changes as they occur
• Maintain good relationships with funders, donors, and vendors and keep them informed of cash flow issues

Please click the full article for more detailed description of managing your cash flows including what to do when developing financial projections.

Eight reasons to outsource your nonprofit accounting

The current employment market has nonprofits looking more externally to obtain necessary accounting talent and seeing significant increases and retention issues with internal accounting staff.  In this current environment, organizations need to look at where they should hire internal staff or externally outsource various accounting functions of their organizations.

Nonprofits typically outsource accounting already for payroll processing and audit services so it is not surprising that nonprofits are looking at other aspects of the finance and accounting department to outsource.  With limited resources, a nonprofit can outsource some or all its financial functions, which can help a nonprofit efficiently staff and conduct its financial operations. It also respects the board and executives limited time or expertise to manage the finance functions, and allow more allocation of resources toward mission and program outcomes.

Many nonprofits lack the funds to hire a full-time accountant and usually hire an unqualified and untrained employee ends up performing the accounting role with no backup plan if this employee leaves the organization.

Here are eight overlooked reasons to outsource accounting

1. Improved efficiencies
2. Reduce costs
3. Reduced fraud threats
4. Higher level of expertise
5. Ability to scale
6. Accounting software expertise
7. Manage your finance and accounting function
8. Stay current with regulations and laws

Please click for the full article for detailed description of the these eight reasons.

Our firm provides all the levels of accounting your nonprofit needs including bookkeeping, accounting, controller, CFO, and software advisory services for nonprofit accounting software including MIP, Microix, QuickBooks, Sage Intacct and AccuFund

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