Expectations around nonprofit stewardship and transparency have increased in the digital age. Donors expect nonprofits to minimize administrative costs, maximize finance and accounting efficiency, and provide clear proof of financial accountability. Adopting paperless finance and accounting automation enables organizations to streamline operations and direct more resources toward their mission.
The Definitive Guide to Driving Nonprofit Finance Efficiency with Paperless Automation
Download your free e-book
This article will explore how paperless nonprofit finance automation helps organizations maximize impact by increasing efficiency, reducing costs, and enhancing transparency. We will share nonprofit finance leaders’ automation priorities and provide some good sense advice on transforming your organization’s finance workflow in ways that maximize stewardship and impact.
Nonprofit finance leaders identify top automation priorities
When Sage asked nonprofit finance leaders to rank the most important automated functionality needed to run an efficient, effective finance and accounting team, automated reporting topped the list. The responses below were in the same priority order as they had been in surveys conducted in 2021 and 2022; however, the frequencies in which they were selected differ.
Last year, 63% of nonprofit finance leaders prioritized the ability to automate financial reporting, and this number climbed to 72% for 2023. Reporting is essential to good stewardship and accountability. It is how organizations measure and demonstrate financial performance.
Additionally, 51% of leaders noted the importance of automating outcome metrics—up from 35% in 2022. Outcome metrics help nonprofits tell the story of mission achievement to donors.
A cloud financial management solution, like Sage Intacct, helps nonprofits achieve better stewardship and transparency by automating all of the accounting and finance tasks listed above, and more. Read on to learn more about how automation frees time and improves transparency.
Increase strategic time by automating routine tasks
As a nonprofit organization, your time is precious. Unfortunately, most nonprofit finance teams spend about 75% of their time on manual, transactional accounting with only 25% of the day left for strategic tasks. Make a greater mission impact by automating routine accounting tasks and freeing time for strategic thinking and analysis. Here are nine finance and accounting tasks begging to be streamlined through paperless automation:
- Multi-entity consolidations: Nonprofit organizations often operate as a collection of individual entities, each with its own books and records. Manual consolidations can be difficult and time-consuming. Automated consolidations enable leaders to access rolled-up financial performance data anytime.
- Currency conversions: A cloud accounting solution with multi-currency functionality can track expenses in local currency, then convert them to another currency for consolidated reporting. Automating the process of currency conversion makes it much faster and easier and can help ensure accuracy by using real-time exchange rates.
- Intercompany eliminations: Intercompany eliminations are used in the process of allocating expenses between different departments or divisions within an organization. Automation can generate the necessary ledger entries to assign expenses to the correct department or program.
- Revenue recognition: The right financial automation can simplify and streamline the nonprofit revenue recognition process for time savings and improved accuracy.
- Reconciliation of data between systems: With cloud accounting software, nonprofits can easily integrate different software systems and synchronize data in real-time, without the need to do double data entry or manually reconcile data.
- Allocations: When your organization needs to share program or administrative costs, financial automation can apply the correct rules and streamline allocations.
- Vendor payment approvals: Create an automated digital approval chain instead of passing paper around the office. Approvals will move faster, and details will remain stored in your system for full visibility.
- Reporting: Does it take your team days to weeks to close the books? Automated reporting can shorten your close by up to 90%, saving countless hours and allowing you to deliver fresh reporting and insights to decision makers.
- Audits: A clean audit result helps reinforce your organization’s financial accountability and stewardship for donors. Superior data organization and tracking guarantee a transparent trail from reports and reconciliation all the way back to individual transactions. Auditors are able to test processes more quickly, reducing the time required to complete their work and possibly lowering the overall cost of the audit.
With automation ensuring superior accuracy and efficiency, nonprofit finance leaders can concentrate on adding strategic value. Spending more time on insights and analysis will elevate your role and help drive greater mission impact.
Keep a lean and highly effective finance team
Maintaining a lean finance team while ensuring they are still highly effective helps maximize nonprofit stewardship. Here are three tips to help you do just that:
- Keep financial data organized and accessible. Having a well-organized nonprofit accounting system in the cloud ensures all of your financial data is stored in a central location that can be easily accessed by everyone on your team.
- Make use of reporting and analytics features. Most nonprofit finance teams spend too much time on manual reporting, leaving less time for analysis and decision-making. Robust reporting and analytics features can be extremely helpful to get a better understanding of how you can further optimize your operations and to demonstrate accountability to donors.
- Stay up-to-date on best practices. The world of nonprofit accounting is constantly changing, so it’s important to stay abreast of best practices. Attend conferences, read industry publications, and network with other professionals to pick up tips for leveraging automation in new ways.
There are many reasons for nonprofits to embrace paperless accounting automation. By streamlining financial processes and eliminating manual tasks, automation frees your team to focus on more strategic initiatives. As a bonus, automation can help with recruiting; 74% of respondents in the 2023 Nonprofit Technology Trends Report said they are more likely to accept a position at an organization that has modern, cloud-based technology. From daily accounting tasks to monthly reporting to annual audits, automation enables nonprofits to spend less time on routine tasks and focus more on analysis that drives great decision-making for better stewardship. To learn more, download our The Definitive Guide to Driving Nonprofit Finance Efficiency with Paperless Automation e-book.
Recommended Next Read
Financial planning and analysis (FP&A) strategies for SaaS CFOs during a recession