How Non-Profits Can Do More with Technology
Nonprofits are able to see a need and create innovative programs and solutions to offer assistance for the common good. These programs come in many forms, whether it’s cleaning oceans, aiding in disaster recovery or teaching kids to code, and behind the scenes it involves passionate employees and volunteers and the goodwill of donors.
One thing nonprofits aren’t known for: big budgets. Consistently, nonprofits must rely heavily on strictly limited funds and minimal employees to meet their mission as an organization.
Fortunately, technology empowers nonprofits with opportunities to maximize time and resources – especially for the back office processes. After all, each process run more efficiently means that employees have more time to invest back into the cause.
Are your cost-cutting practices really working?
Cost control is something that many nonprofits must abide by in order to ensure that they keeping everyday back office tasks inexpensive. One example of this attempt is the use of paper checks for AP. According to a recent report, each invoice paid by paper check costs up to $22 to process. Including, reviewing bills, routing them and then printing, signing, mailing, and reconciling paper check payments.
While $22 appears minimal alone, its cumulative impact can add up to be substantial for a nonprofit. For instance, if an organization pays 100 bills a year with paper checks, that results in over $26,000 spent on processing those payments (not including late fees, supplies, etc.). Additionally, the expense of employees who are handling the highly manual process are not included in that total.
What can you do about it?
According to Goldman Sachs, this study concludes that business payment solutions can aid in reduce AP expenses by up to 75%. Through the transition of paper to an online platform, nonprofits have the ability to control costs, save time, and ensure proper approval workflows for AP and AR.
Cost Control like a pro using digital solutions:
Nonprofits considering cloud-based digital business payment solutions have the ability to cut costs and time when it comes to AP and AR.
Here is why:
Digital business payment solutions allow the cloud to direct billings through their indicated approval workflows and ensure the proper separation of duties. This entire process takes place online and each activity – from review to comments to payment – is tracked and audit-ready. For instance, a bill arrives for two replacement laptops. The vendor emailed it to your nonprofit’s digital payment solution address. It appears on your nonprofit’s dashboard electronically. After a quick review, it automatically enters the appropriate review cycle based on the organization’s guidelines. Each person involved is invited to review the bill, comment on it, and/or approve the expense. The process continues through to payment, made by digital means such as ACH transfers, EFTs, or international payments as needed.
A digital solution like we discussed above means that there is no need for a paper bill. Eliminate the need to search for associated contracts and payment history and other manual processes. Automation keeps track of the entire process. With accounting solutions like Sage Intacct, ensure that all records are updated in real time.
2. Mobilization of payments
Nonprofit executives and board members at nonprofits consistently need to be on the go visiting donors, or working to fulfill the organization’s mission. Give them access to a mobile platform to access payments and eliminate risk of being late.
These leaders are often responsible signing paper checks – meaning payments must wait until they’re back and the chances for late payment can increase. By giving them mobile access to accomplish this, they can easily use a smartphone app to access outstanding bills, research vendors and payment history, and approve payments. And again, every payment-related activity is tracked within the digital business payments solution, which comes in handy for the next item on the list.
Audits are a necessary task for nonprofits, who must undergo them for the government to remain as a 501(c)(3) or similar designation. With paper as the primary information source, audits become time-consuming, ambiguous endeavors. Typically, an auditor lands in a conference room crowded with paper files and printed bank statements (among other forms of data). The auditing process can take multiple days (or more) as the auditor culls through it all.
Through moving payments online and in one digital business payments platform, nonprofits have already done the heavy lifting for audits. The entire workflow for payments is audit-ready, from inception to payment to canceled check image. A nonprofit can grant audit-level access to an auditor, and that auditor can perform his or her duties from anywhere, at any time.
As one accountant describes it: “Auditors tell us that their time in testing, AP and AR cycles have been reduced by approximately 35% when using Bill.com because they can access check images, vendor invoices, EFT confirmations, and date/time stamps of vendor invoice approvals on the AP side. On the AR side, auditors can access billing invoices and EFT notifications of payments that have been received.”
It’s hard to get the information you need, when you need it. Maybe it takes too long to create or customize reports for things like billing, payments, budget rollups or sales forecasts because people have to re-enter and reconcile information from different systems and spreadsheets—which also increases the risk of errors.
Is your nonprofit ready to take advantage of digital business payments?