{"id":4247,"date":"2023-08-28T19:35:09","date_gmt":"2023-08-28T19:35:09","guid":{"rendered":"https:\/\/duganlopatka.com\/?p=4247"},"modified":"2023-08-29T20:10:26","modified_gmt":"2023-08-29T20:10:26","slug":"outsourced-accounting-makes-nfps-more-efficient-effective","status":"publish","type":"post","link":"https:\/\/www.duganlopatka.com\/outsourced-accounting-makes-nfps-more-efficient-effective\/","title":{"rendered":"Outsourced Accounting Makes NFPs More Efficient & Effective \u00a0"},"content":{"rendered":"

Like many nonprofits, Midwest Shelter for Homeless Veterans<\/a> (MSHV) relied on their own staff to manage their finances.<\/p>\n

And, like many nonprofits, they found themselves balancing the financial management of their organization with the pursuit of their mission.<\/p>\n

\u201cFinancial management of social impact organizations is key to growth. You need the right oversight and skills to achieve maximum effectiveness. How you balance that oversight expense \u2013 without losing the utmost investment in program impact funding \u2013 is a strategic challenge all organizations in our industry face,\u201d says Christine Lewis, Executive Director of Midwest Shelter for Homeless Veterans.<\/p>\n

As a result, staff found themselves spending valuable time on bookkeeping and other administrative matters. Management sought to find the guidance and information they needed to make key decisions. At the same time, building an internal accounting department with the proper skills, resources, and capabilities was a challenge, from both a staffing and budget perspective.<\/p>\n

And as Midwest Shelter for Homeless Veterans grew, so did the burden of financial management.<\/p>\n

Then they made a simple decision that changed everything: They outsourced their accounting to a trusted CPA firm.<\/p>\n

\u201cOutsourcing was transformative for our organization,\u201d Christine says. By outsourcing, staff could focus optimal energy on fulfilling program goals. Meanwhile, management and the Board of Directors received timely month-end financial statements. With accurate, up-to-date information and guidance from knowledgeable CPAs, they could make decisions with clarity and approach audits with confidence.<\/p>\n

\u201cHonestly,\u201d Christine says, \u201cI think more nonprofits would outsource their accounting if they understood it and the powerful effects it could have on their program outcomes.\u201d<\/p>\n

The Power of Outsourced Accounting<\/h2>\n

We agree with Christine (and not just because her organization is our client).<\/p>\n

Today, far too many nonprofits attempt to handle every aspect of their own financial management. It\u2019s tempting to think this is a good way to save money. However, far from being efficient, staff at these organizations spend more time on administrative duties and tend to find themselves in over their heads.<\/p>\n

In today\u2019s blog, we\u2019re taking a look at outsourced accounting for nonprofits: what it is, how it works, and how it helps organizations be more efficient and effective.<\/p>\n

But first, let\u2019s start with an important distinction that every nonprofit should know…<\/p>\n

Bookkeepers vs. Accountants: What\u2019s the Difference?<\/h2>\n

The terms \u201cbookkeeper\u201d and \u201caccountant\u201d are sometimes used interchangeably. But while they have some overlapping responsibilities, there is a big difference between the two roles and how they approach financial management.<\/p>\n

A bookkeeper is primarily responsible for record keeping.<\/strong> <\/span>They may manage your day-to-day transactions for accounts receivable and payable, as well as payroll, sales and more. They may also prepare basic financial statements, usually for recordkeeping purposes only. As the term suggests, bookkeepers keep the books.<\/p>\n

An accountant takes a significantly more active, hands-on role<\/strong><\/span> in the organization. Whereas the bookkeeper keeps financial data organized, the right accountant will use data, along with industry experience and specialized knowledge, to help your management team make decisions and your business achieve its goals.<\/p>\n

Accountants can serve as essential advisors to nonprofit organizations, helping them navigate the challenges of their industry, stay compliant, pursue growth strategies, manage cash, and forecast what\u2019s ahead.<\/p>\n

What Can the Right Accountant Bring to Your Nonprofit?<\/h2>\n

None of this is to downplay the important role that bookkeepers play at countless nonprofit organizations. Keeping accurate financial records is critical, and a good bookkeeper can help management stay focused on running their organization.<\/p>\n

At the same time, bookkeeping is far from the only financial management service that a nonprofit needs, particularly when it\u2019s a larger organization and\/or entering a growth period. These NFPs are confronted with a complex environment of regulations and cashflow management. They need a wide range of services that are far beyond the capabilities and qualifications of bookkeepers (as well as some accountants, who essentially function as bookkeepers).<\/p>\n

At D+L, our CPAs work directly with nonprofit management teams to:<\/p>\n