I’ve spent a lot of time talking with not-for-profit clients and friends of our firm that are frustrated with their existing accounting or enterprise resource planning (ERP) system. Many are convinced, at first, that the problem lies with their technology, but I’m a huge advocate of addressing people and process issues first, before tackling systems. You can have the best technology in place, but if the people haven’t been trained to use it, and the processes aren’t aligned with how the system is set up, the output won’t meet the needs of your organization.

After spending time to truly understand the root causes of many not-for-profits’ frustrations, I’ve identified three common themes and solutions below.

Mindset/People

Many not-for-profit staff are already strapped for time to get their daily functions done, which makes taking on additional projects a challenge. I often hear, “I don’t have time for that” or “We’ll deal with it later” when talking about how staff are addressing missing functionality within the accounting system or the communication gaps between departments. However, by spending a little time today, organizations can see time savings and efficiencies almost immediately.

Solution

Embrace a new mantra that investing staff time and effort in the short-term to fix issues will benefit both the organization and its people. By implementing a philosophy of change management — an umbrella term for approaches taken to prepare, support, and help individuals, teams, and organizations make structural change — you can gain long-term benefits with incremental changes.

To implement the change management strategy:

  • Set up a meeting to specifically talk through a problem or issue.
  • Put together a cross functional team with a project champion to tackle a barrier collectively.
  • Block time daily or weekly on your calendar for problem solving.

Policies and Procedures/Process

When improving your processes, the first question to ask is, “Are my finance and accounting policies and procedures documented?” About half the time the answer is no. Even if they have been documented, your organization may not have reviewed or updated policies and procedures for a while.

Most not-for-profit organizations made adjustments to their processes during the pandemic and some of those changes are here to stay. The most common workflow impacted by the pandemic typically involved accounts payable, which could affect your capitalization policy, signing authority, information retention location, approval process, security protocols, and utilization of ACH capability. To keep your organization running smoothly in today’s environment, it’s time to invest in updating practices!

In addition to looking at the impact of a hybrid work model on processes, don’t forget about:

  • New accounting standards such as leases and contributed nonfinancial assets, and new procedures your auditors may be required to perform related to your annual report.
  • Data contained in spreadsheets that could potentially be tracked within the accounting system.
  • Painful reconciliation processes between departments, especially related to donations, grants, and impact metrics.
  • Internal controls and new risks that might have emerged due to new funding streams or changes to your operations.

Solution

Reach out to your CPA or consulting firm to discuss the desire to either document, review, or update the organization’s existing policies and procedures. This could include facilitating a conversation between departments to strengthen communication and reduce excess reconciliation of data at month, quarter, or year-end.

I recommend putting together a project plan to tackle individual pieces. This would include getting time on the finance committee agenda for policy review and the board of directors’ agenda for policy approval.

Efficiency Review

Typically, after helping not-for-profit organizations identify the required functionality they need in new technology for the entire organization, and comparing those needs with their existing accounting/ERP system functionality, there aren’t as many gaps as originally suspected! These suspected gaps can usually be attributed to not investing in training due to “not having enough time” and not solving the problem before setting up a spreadsheet or buying a new add-on tool as a “quick” fix. Embracing that training, and staying current on updates or enhanced functionality within the accounting system, is a mandatory part of the job and will reduce the band-aid ‘solutions’ that often happen to the systems, chart of accounts, and the creation of reports in Excel.

Solution

Reach out to your software implementer or consulting firm to get an efficiency review on your existing system. This will help identify new functionality, determine if reports need to be written, the chart of accounts updated, or staff trained, etc.

Conclusion

I hope this article gave you time to pause and reflect! Without a change management mindset, even a new accounting/ERP system won’t solve the underlying people and process problems. If the organization isn’t ready to tackle change now, consider revisiting the conversation every three months for progress check-ins. Some topics to discuss are auditor comments, staffing limitations, or if your software support is sunsetting. If you are ready for change, get input from staff on their top three biggest frustrations or time wasters. Then compile the list, identify trends, determine the return on investment of making a change, prioritize them, and tackle one a time.

If you are looking to brainstorm solutions, or for thought leadership, please reach out, and I’d be happy to chat.

© Clark Nuber PS, 2023. All Rights Reserved.

This article contains general information only and should not be construed as accounting, business, financial, investment, legal, tax, or other professional advice or services. Before making any decision or taking any action, you should engage a qualified professional advisor.