Serenity Now: Leveraging Outsourced Accounting at Your Nonprofit

Between the Great Resignation and an aging workforce, American workers have quit their jobs in record numbers. The trend has left employers in the lurch when it comes to accounting functions. It’s a stressful time for those who remain as they take on more responsibility and train new employees. Combine that with budgets tighter than they’ve been in decades, and nonprofits in particular are feeling the pressure.

Fortunately, this stress can be eased with outsourced accounting services. With an outside firm handling the financial side of your operations, you can focus more energy on your organization’s mission.

What is outsourced accounting?

Your accounting function is more than simply balancing books and making deposits. As a nonprofit, you have a myriad of requirements unique to your industry. You’re subject to audits. You might have unrelated business income concerns. You need to know how to classify and track donations. And that’s just scratching the surface.

Diligence like that requires a multi-member department—a pricey proposition if you want in-house employees doing the work. So nonprofits often do without the help they need, thinking it’s just something they can’t afford.

Simply put, an outsourced accounting firm is your off-site accounting department. For less than it would cost to hire the necessary employees, you get the expertise and manpower you need to properly address your nonprofit’s financial concerns.

An outsourced accounting provider can handle every aspect of your accounting function. This includes:

• Maintaining general ledger
• Processing checks and payments
• Payroll processing
• Accounts receivable and payable
• Recording receipts
• Preparing month-end adjustments
• Preparing financial statements
• Overseeing annual audit preparations
• Tax work (preparation of W-2 and 1099 forms, unrelated business income tracking, etc.)
• Holding regular meetings to review activity and statements
• Financial grant reporting
• Presenting financial statement in an understandable way to the Board of Directors

Why should I consider an outsourced accounting setup?

We’ve got three words for you: peace of mind. While we can (and will!) outline the benefits of outsourced accounting, they all fall under this phrase. Your accounting is one less thing you’ll have to worry about when you hire a firm to handle it for you.

So what are those benefits?

The right expertise—and plenty of it. An outsourced accounting firm will have the knowledge needed to tackle your work. Staff members will have extensive training in all areas of accounting and controllership. And the more people your provider has, the wider breadth of experience they bring to the table (including within your industry!). So when new challenges arise, chances are someone has seen them before and can address them effectively and efficiently.

Avoid employee turnover. Finding help in general is tough enough; finding qualified accounting help is especially difficult. A 2022 Bloomberg Tax analysis found that a record number of accountants are leaving their line of work. With an outsourced accounting solution, however, your provider can assign a new person to your work if someone quits. Trust us, that will save you a great deal of time, money and stress!

Timely and accurate results. Unless you have dedicated in-house accounting staff, chances are the person doing your basic accounting wears other hats as well. This can lead to delays and mistakes as work piles up and tasks get backlogged. And we don’t have to tell you how these delays can impact your books and payroll. Having an outsourced firm perform your accounting functions means timely results —not to mention multiple sets of eyes to reduce the chance of errors.

A consistent presence that’s there when you need it. If you have one in-house accountant, what do you do when they get sick or go on vacation? Someone else has to step in; if they don’t have the right knowledge, it could be disastrous for your nonprofit. With a well-staffed firm performing your outsourced accounting, you don’t have to worry about filling in for employees taking time off. Absences are covered so you never have a gap in service.

Compliance with financial grant regulations. As you know, your nonprofit is subject to a wide range of regulations. This means your accounting processes have to be sound, and you’ll need to have proper segregation of duties. When your accounting is performed by a firm with decades of experience, it helps ensure your compliance with regulations. This in turn protects your nonprofit and your assets.

Access to critical resources. Accounting firms often have software tools to better deal with accounting changes (such as the new lease standard) instead of creating an Excel spreadsheet with countless tabs. They’re also more likely to have access to services like data analytics, human resources and other areas of knowledge that help your nonprofit thrive.

What should I look for when shopping around?

Choosing an outsourced accounting firm is one of the most important decisions your nonprofit can make. The right provider will play a significant role in the financial well-being of your organization.

To whittle down the field, look for a firm with these important qualities:

• A deep and experienced bench – The last thing you need is for your work to be performed by someone without the right knowledge or have your needs fall through the cracks. Make sure your firm has plenty of personnel on hand to get the job done right and fill in for absences.
• An emphasis on nonprofit accounting – Like we mentioned earlier, nonprofits face unique accounting and compliance challenges. Accountants who specialize in working with your industry keep track of ever-changing regulations and know what works for your organization.
• A wide scope of experience – While nonprofit expertise is crucial, you want a firm that works in other industries and disciplines as well. Sometimes the most innovative solutions come from ideas that have succeeded elsewhere. Having a breadth of experience can spark creativity and lead to amazing results.
• The latest technology – When an outsourced accounting firm uses up-to-date software and other tools, your work is done more efficiently and accurately. And isn’t that what you want when it comes to your finances?

An outsourced accounting solution means you can rest assured your needs are met. Be sure to enlist an experienced CPA firm (and in particular one with nonprofit expertise) for the best results!

All content provided in this article is for informational purposes only. Matters discussed in this article are subject to change. For up-to-date information on this subject please contact a James Moore professional. James Moore will not be held responsible for any claim, loss, damage or inconvenience caused as a result of any information within these pages or any information accessed through this site.