For accounts payable (AP) professionals in the nonprofit industry, implementing new technology can seem like a daunting task. There’s often a perceived high cost of purchasing new technology and training employees on the software, causing nonprofit organizations to adopt new technology slowly and with great skepticism.
However, nonprofit organizations don’t always recognize all of the benefits of purpose-built financial technology. In fact, a Forbes article considered the impact of nonprofits’ failure to adopt technology while explaining some of the benefits of the digital tools.
“Technology doesn’t just help nonprofits engage with donors and track outcomes, but it can also make them run more efficiently by streamlining their reporting and compliance procedures, increasing communication and cooperation (both internally and with outside stakeholders) and allows them to allocate resources more effectively," the article noted.
Nearly every aspect of nonprofits is touched by the finance department. They are responsible for crafting the budget, AP/AR, grant writing and reporting, annual audit, internal assessments and reporting, reconciling cash receipts and transactions, recording payments as well as reviewing and approving employee timesheets.
With so many responsibilities, it can be hard for nonprofit financial departments to keep up with the demands of the job. More often than not, nonprofits are short-staffed while working long hours under a tight budget with a lack of resources. Because of these circumstances, nonprofit staff often experience burnout and some employees end up leaving their positions.
Investing in modern technology such as AP automation can help create more efficient workflows while decreasing the chances of human error, especially when staff turnover is high. AP automation can also reduce burnout as the technology helps eliminate manual tasks and frees up employees to do more strategic work to fulfill their mission.
Knowing your finance team’s biggest needs
One challenge for AP departments within nonprofits is completing tedious tasks such as manually entering payments and generating invoices. Because cash flow determines nearly everything the organization can do, nonprofits can’t afford to ignore the benefits of AP automation.
As organizations grow, the sheer volume and complexity of transactions increase too. Nonprofits need to keep an accurate detailed record of every dollar spent from donation to expenditure. There’s more of a focus on accountability rather than profitability within nonprofit finance.
Nonprofit AP professionals often run into difficulties mapping each donation’s journey through the business with traditional accounting programs. However, with modern technology, AP professionals can easily generate reports for donors, board members and other stakeholders.
It’s important that every penny is accounted for, especially if a donation is allocated toward certain activities. With technology designed for nonprofits, all accounts can be reconciled on short notice if a donor requests a report. This helps to ensure that funds haven’t gone unaccounted for.
Additionally, nonprofits need to ensure that their suppliers are paid accurately and on time so the suppliers can continue to provide their services with confidence.
Benefits of purpose-built financial technology for nonprofits
Due to the massive influx of data being used in most financial departments, nonprofit organizations find it helpful to invest in technology that creates efficiencies and makes work more manageable to ensure the organization is delivering on its mission.
Other benefits your finance team can leverage with new technology:
- Payment automation
- Accurate labeling and attribution
- Robust reporting features
- Time for more strategic work
Download our eBook “Next-Level Nonprofits: Using Digital Tools to Amplify Your Mission” to learn more about how one finance director implemented purpose-built fund accounting technology designed for nonprofits.