8 telltale signs your nonprofit is outgrowing its accounting system

By Geniene Scherer, CPA

Carrying out your mission is a challenge when resources are tight. At a time when many organizations are being asked to do more with less, having the right systems and processes in place is critical.

This, of course, can be a challenge in and of itself: how and where do you start?

A good first step is to take a close look at your accounting and related systems and processes. To help you determine if you need to make a change, here are eight telltale signs your nonprofit is outgrowing its current system.

1. You’re relying on manual processes.

Unfortunately, manual processes often lead to inefficiencies and errors. They also require extra time and additional people, both of which are sparse given the current shortage of finance and accounting resources.

Even if you have staff available to perform manual processes, who wants to do this drudgery?

The right accounting system will do more than create efficiencies and improve accuracy—it will free up your people to focus on your organization’s mission.

2. Getting the information you need is painful.

It’s difficult to make decisions when you don’t have the information you need at your fingertips.

Your accounting system should be able to provide you and other leaders with real-time information as soon as you log in. You shouldn’t have to wait weeks or months for the information you need or have you/your team spend hours taking an export of data and manipulating it to create the report you need.

3. Your organization’s data lives in silos.

One of the hallmarks of a poorly performing accounting system is lack of integration with other critical systems (e.g., CRM and fundraising software). This often leads to data silos, which then leads to duplication of efforts, manual data entry, and, of course, opportunity for errors.

The right accounting system will seamlessly integrate with your organization’s other systems, allowing your staff to work more seamlessly with each other, too.

4. You’re experiencing compliance challenges.

If you’re struggling to maintain compliance with nonprofit accounting standards and regulations and you have long and expensive audits, your organization’s accounting system could be to blame.

At a minimum, your system should provide the ability to lock down data and segregate duties. Most important, it should give you full control of data access and data privacy.

5. Growth feels overwhelming.

The right accounting system is one that’s scalable, meaning it can support your nonprofit as it grows.

In other words, your system should continue to deliver the same level of efficiency, automation, and real-time information regardless of how complex your organization becomes in the future.

6. You’re fielding complaints from staff.

Organizations that have outgrown their accounting systems tend to log frequent complaints from staff about its usability or functionality. No one likes a clunky system! Your organization needs a system that works for (and not against) you and your staff.

7. You’re concerned about data security.

This is a significant red flag and a sign that an accounting system change is in order. Your organization’s system should provide for data security as well as backup and disaster recovery—a key benefit of cloud-based systems.

8. You’ve come up with several “workarounds.”

Your nonprofit’s accounting system should meet your unique needs—everything from the documentation it provides to the notifications it delivers. Regularly creating workarounds could be a sign that your system isn’t up to speed.

Shine a light on a better solution

Your accounting system should empower you and your staff to further your organization’s mission. If you’re experiencing any of the issues noted above, it could be time to consider a change.

The Abdo team is available to help you assess your nonprofit’s current system and evaluate your options for going forward. (My next article will focus on how to evaluate accounting systems—stay tuned!)

To learn more about how we can support your nonprofit’s financial processes, contact us today.