How Cloud Approval Workflow Can Improve Accounting in NFPs
Running a not-for-profit (NFP) organization is incredibly challenging. It’s not easy to make positive changes in the world, and to do it efficiently and with limited resources.
Accessing funding and attracting skilled professionals are just two of the major obstacles the NFP sector faces. But have you ever wondered how they manage the basics, like accounting and approval management?
Many of our clients are social enterprises or non-profits. In this article we’ll take a look at their major accounting challenges and how an approval management system can help solve them.
Significant Not-for-profit Challenges
Compliance with Regulations
One of the big challenges for NFPs is complying with governmental regulations. Many NFPs receive government grants, and this money needs to be carefully accounted for. It’s an area which often gets overlooked and has led to cases of funding misuse due to poor record keeping, a lack of financial visibility, and a high turnover of accounts staff.
Also, changing financial reporting standards can come into effect at any given time, altering the way non-profit organisations report their activity.
Accountability & Audits
As profit is not the most important thing for many NFPs, it can be tough to measure success and demonstrate it to key stakeholders.
What’s more, the key stakeholders for an NFP will usually have limited visibility over the performance of the organisation. This can lead to inconsistent levels of reporting, transparency, access and integrity. And reports are often produced in all types of formats, from handwritten accounts, to excel spreadsheets and computer generated reports.
Additionally, NFPs may be obliged to undertake independent audits should donations exceed a certain amount, or should they pursue funding via government initiatives or bank loans. These audits can be made all the more challenging when adequate accounting and approval processes are not in place.
Solution: Improve Quality of Accounting Data + Approval Process
Similar to many for-profit businesses, the majority of our NFP clients use Xero as their accounting system. It’s quick and easy to use, and because many NFPs have a volunteer bookkeeper, it helps keep their lives free from stress.
Using Xero, they can improve efficiency, save money at audit time, and fully explain how they used government and philanthropic funding.
Approval Management System
As we mentioned above, NFPs are subject to tighter regulations and their spending frameworks are different to those of commercial organisations. An approval management solution meets these needs with granular approval workflows, exception handling, audit trails, and reporting.
Here are the select benefits of using such system:
- Internal delegation and decision-making controls are in line with regulatory requirements.
- A log of activities can be provided during an audit, showing that compliance processes have been followed to the letter.
- The expense process can be controlled by showing what was spent according to budget and outside the budget, and showing the appropriate approvals for either spending.
Continue Doing Good with ApprovalMax
At ApprovalMax we’re huge supporters of the good work not-for-profits do. Our software helps you stay on top of your non-profit organisation, anywhere, anytime.
We aim to bring more transparency and higher integrity information, resulting in the continued delivery of those worthy and important objectives.
Do you work for or oversee a not-for-profit organisation? Share your biggest accounting and workflow challenges in the comments below.