Nonprofits come in all shapes and sizes but with common characteristics, principles, and needs. While for-profit organizations focus on profitability, nonprofits focus on providing for the community around them and managing incoming funds. Nonprofit organizations are held to certain standards in order to maintain their tax-exempt status, which requires full financial transparency and reporting. Cloud-based accounting solutions can be an incredible tool for nonprofits, streamlining processes and providing a clear financial picture. What exactly can a cloud-based accounting app do for your nonprofit?
The app that provides a solid foundation for nonprofit accounting
First things first, a nonprofit needs a solid accounting foundation. Nonprofits are held to strict local, state, and federal standards, which means meticulous financial reporting is essential. Every dollar that comes into and leaves the organization must be accounted for. Nonprofits also require additional internal controls and approval processes to ensure all funds are properly allocated.
Xero is our top pick for a cloud-based accounting app that gives nonprofit organizations the ability to record, track, and report all incoming and outgoing funds. The bookkeeping process is streamlined, giving all users the ability to view statements and reports from the easy-to-navigate dashboard. Internal controls and approval processes can also be established from within Xero in order to ensure all funds are used for their intended purpose. With a live bank feed and up-to-date accounting, board members and staff can access current financial information from their computers or mobile devices at any time.
We believe all nonprofits should be using an accounting system that enables them to easily accomplish the following:
1. Deliver nonprofit financial reports in a few clicks
Because nonprofits are held to strict standards that require additional reporting on a regular basis, a system that makes pulling reports easy is absolutely essential. Whether the nonprofit does all accounting in-house or outsources the books, providing reports to donors, volunteers, board of members, and other stakeholders is simple. Best yet, many processes can be automated and/or streamlined to ensure the books are always up to date and reports accurately reflect the organization’s financial status at any given time.
2. Monitor cash flow
A nonprofit organization relies on cash coming in to meet the financial aspects of accomplishing the organization’s mission. Xero provides a user-friendly dashboard where users can monitor cash flow, stay on top of donations and expenses, and plan ahead with the cash summary report. A cash summary report can show just how the funding from grants, fundraising, and other revenue streams is being used within the organization.
3. Manage the budget
One of the most important accounting aspects for a nonprofit organization is budget management. A nonprofit organization will have certain restricted funds, which lead to a budget management process that’s very different from that of a for-profit organization. Most organizations adopt a budget at annual meetings and allocate funds throughout the year. A nonprofit budget should include expected revenue (using historical and projected figures) along with an expense budget. Xero makes the budgeting process a breeze, with the ability to pull historical reports for revenue and expenses. Xero also provides users real-time insight into the organization’s finances, helping nonprofits stay on budget and be aware of any unexpected expenses.
4. Payroll for nonprofit employees
It’s important to stay on budget and in compliance when it comes to managing payroll. Gusto is a third-party cloud-based accounting app that seamlessly integrates with Xero. Hourly employees of the nonprofit can use the app to track their time. The bookkeeper or accounting department can then approve, pay, and file payroll taxes with the click of a button. Payroll is automated, saving valuable time and the potential compliance missteps of a the manual payroll
5. Nonprofit accounting from anywhere
Cloud-based accounting apps are easily accessible from any smart device. When you’re on the go, volunteering at an event, or hosting a gala, nonprofit members can easily record donations on the sport. With thousands of third-party integrations, tasks like payroll, expense reimbursements, and inventory management can be done on the spot with no need for double entry, transferring donations, hours, and expenses from a spreadsheet into an accounting software.
Nonprofit accounting done right
If your nonprofit books are stuck on someone’s hard drive or in Excel, it’s time to digitize the back office. Cloud-based accounting apps streamline processes and make staying in compliance easy, ensuring you don’t jeopardize tax-exempt status or fall into legal trouble. If you’re ready to take the first step, send us a message. Our team of business accountants has years of experience working with nonprofit organizations of all sizes, across different industries. Whether you need a hand integrating cloud-based accounting apps into your back office or are in need of full services accounting, we have a solution for you.