Decades of innovation have transformed the finance office from a mindset of processing transactions to a mindset of strategic financial management. But even with this advancement, nonprofit organizations are operating in an increasingly complex environment that requires them to balance routine and new tasks and a higher volume of information.
When the topic of efficiency is raised to an organization whose finance team is at capacity, it is not unusual to hear that the team is already using technology and that, perhaps, no further innovation is possible. However, asking a few questions helps to uncover whether the tools they have implemented are really transforming their processes or whether they have merely replaced manual processes with electronic ones.
Confusing «Electronic» With «Innovative»
Due to the events of recent years, most finance offices were forced to shift to virtual operations. Understandably, many were unable to put a strategic plan in place before making this transition and simply replicated a manual workflow that layered into it an electronic component, such as email or another paperless option. Many of these workflows are still present today but present confusing workarounds for typical tasks, such as:
- Emailing vendor invoices as message attachments, with approval indicated in the body of the email message, and then saving the email as a PDF as supporting documentation and manually entering data from the invoice for payment processing.
- Completing time sheets via spreadsheets that then are manually reviewed, corrected and compiled for manual data entry into the payroll system for processing.
- Using shared electronic folders for collecting scanned credit card receipts for manual reconciliation via spreadsheet at month’s end.
What all these examples have in common is that they replace the physical paper moving through a workflow with an electronic file. But these changes do not actually introduce any real workflow changes or innovative technology designed and customized to support that workflow. In fact, workflows like this can be less efficient and less effective, especially in a high-volume environment.
Real Innovation
There are a wide variety of truly innovative technology solutions that enhance efficiency and effectiveness for the finance team. For example, the following simple solutions can help address the situations above:
- Utilize one of the many electronic accounts payable (AP) tools that enable electronic invoice routing based on an organization’s defined approval workflow, facilitate electronic coding that syncs to the general ledger and have a mobile app option. These tools also will facilitate electronic vendor payments without time-consuming manual data entry.
- Implement electronic time sheets that work with your organization’s payroll processing technology, eliminating the potential for mathematical errors, facilitating tracking paid time off and syncing for payroll processing without manual entry.
- Consider an expense management system with mobile app capability. Similar to the AP solutions, these tools allow credit card holders to take pictures of receipts and other supporting documentation, code and approve within the app, and facilitate month-end reconciliation. Expense management systems are also designed to automate employee expense reimbursements in a similar way.
Beyond electronic accounts payable, time sheets, and credit card management, other common areas for innovation include:
- Automated financial reporting — including budget versus actual, dashboards and forecasting — that reduces the need to download data to a spreadsheet for manual report creation.
- System integrations, so that information—including development revenue, inventory balances or deposit details — is automatically updated in the general ledger and not manually entered.
- Expense allocations that are automatically calculated based on set parameters to avoid time-consuming calculations.
- Document routing and storage systems that are designed to circulate important items — including grant agreements, information for grant reports and vendor contracts — for internal approval and to house final versions in a central location.
When beginning to assess which tools may improve efficiency, it is helpful to focus first on the most time-consuming areas for the finance team, also keeping in mind how the team would spend time if capacity were increased. These are just a few of the most common areas for innovation, and there is certainly no shortage of technology solutions available today. BDO can help organizations assess finance team infrastructure needs, including opportunities for technology innovations, and help with related implementation and internal training.
Source: BDO United States