Automation isn’t a new concept but improving nonprofit internal processes with finance automation has never been more important. During the past year, organizations accelerated their use of digital technology. Now, there’s a great opportunity to revisit how things are being done in the core process areas, making sure those processes still make sense and exploring whether new technology could bring further efficiency and accuracy through automation.
Recently, two experts on nonprofit finance automation spoke at the Sage Intacct Nonprofit Finance Leaders Forum. In their session, Jacqueline Tiso and Cheryl Olson shared advice about the best ways to get started with finance automation, plus specific tips for automating with Sage Intacct nonprofit accounting software.
With a modern cloud accounting system, nonprofits can automate many key areas to reduce stress and enhance efficiency. During their session, Jacqueline and Cheryl recommended nonprofits focus on addressing three areas of automation first because they deliver rapid benefits to the organization:
- Accounts Payable Automation
- Purchasing & Approval Automation
- Expense Management & Credit Card Management Automation
Accounts payable automation
Accounts payable automation is the most requested need for nonprofits. The pandemic increased this need exponentially. Before the pandemic, nonprofit staff could tolerate walking manual checks and approval sheets around the office for signatures. But having to drive them to multiple locations during the pandemic forced the issue of AP automation.
Before automating, consider people and processes
Before implementing automation technology, consider your people and processes. It’s critical that all staff follow common data entry protocols. This helps avoid duplicate data or inaccurate data finding its way into your accounting systems.
One process many nonprofits struggle with is setting up new vendors in their accounting system. For example, when you set up new vendors in the system, what are your policies for business names? If names start with ‘the’ will you enter that word or leave it off? How will you abbreviate address items like ‘road,’ ‘drive,’ or ‘highway’?
Automation can support internal controls
Nonprofit organizations need to document internal control practices and develop supporting policies. Good internal controls dictate that one person should not have access to everything. You need to have good segregation of duties in financial operations. Some policies and procedures to think about include the areas of capitalization policy, allocation methodology, signing authority and approvals.
Approvals are a great example of an area where automation greatly reinforces internal controls as well as improving efficiency. Use your nonprofit accounting system to automate invoice approvals and payment approvals. This gives you control over the point where an invoice goes into your system as well as the point where payment gets made.
Almost every nonprofit organization uses allocations to spread receipts or expenditures across different programs or grants. Some allocations are very complicated. Others are transaction-level allocations that can often be handled at the point of initial data entry. If there is a one-line allocation entry that is complicated or often requires correcting journal entries, you might prefer to automate the allocation process for the transaction.