Signs your nonprofit should invest in expense management software
Running a nonprofit is often a balancing act.
Most nonprofit leaders and staff tend to focus on the mission solely, but they also have to accomplish basic business tasks to keep the organization going. For example, they have to:
- Pay employee salaries and volunteer expenses
- Be prepared for unexpected costs and expenses
- Manage budgets based on multiple projects
Many nonprofit leaders hesitate to spend money on administrative expenses. But investing in technology is not the same as spending on technology. For instance, investing in an automated program, such as expense management software, can help you save time, yield better results, and increase efficiency.
This post discusses the signs a nonprofit should consider expense management software. We also talk about the various benefits such programs offer.
Signs it’s time to start looking at expense management software
Manual, paper-based processes can work if only one or two people are managing a limited number of routine expenses. The more people and accounts you add to the mix, however, the more likely it is you’ll need a more sophisticated solution. You know it’s time to consider expense management software when your old methods:
- Start taking too much time and resources
Employees and volunteers need a way to submit expenses. Managers need to approve them. You may need to designate certain expenses to a specific account, such as one related to a grant your organization has received. You need to document your internal controls that separate the receipt of income from the payment of expenses. Eventually, these processes will require more human labor and additional operational costs. In remote settings, working with outdated methods can also increase stress and workload for the staff.
- Lack transparency
The conventional expense management process can make it difficult to track expenses through the system and ensure they are handled properly. Volunteers and staff can find expense tracking confusing, leading them to submit inappropriate bills, which can hurt you during audits. Additionally, the inability to monitor multiple expenses incurred from various sources can make it difficult for project managers to keep up with real-time insights into project spending and trends.
- Make it hard to enforce expense policies
You need to ensure expenses are appropriate, documented correctly, approved by the correct people, and charged to the right accounts. Traditional expense management processes can make it hard to determine who’s spending what and why, which limits your ability to ensure expenses are consistent with your organization’s policies.
- Lead to accounting errors
Confusing expense management practices can cause accounting errors. Delay in expense submission can also force accounting closing books late and missing out on auditing errors. Such inefficiency can affect relationships with donors and potentially put your organization at risk.
Benefits of switching to an automated expense management system
An automated expense management program allows you to:
- Establish a smooth expense submission process
- Automate credit card reconciliation
- Enable project-based allocation and policy compliance
- Centralize your organization’s spending data
Establish a smooth expense management process
Nobody likes a broken process. If you have a broken expense reporting and tracking process in place, chances are your staff and volunteers avoid it as long as possible.
Last-minute reporting also means your accountants or bookkeepers receive expense data right before deadlines. The lack of time to audit each expense claim can lead to account discrepancies.
Organizations can encourage on-time reporting by ensuring the expense submission process is straightforward and hassle-free. For example, with an expense management app, your volunteers and staff do not have to manually keep track of receipts and mileage logs. They can easily record and store them within the app. This means no missing receipts or inappropriate expense claims. And instead of worrying about receipt storing and tracking, your staff can concentrate on carrying out your mission.
Automate credit card reconciliation
Business credit cards offer visibility into organizational expenses. Automated expense management software makes credit card reconciliation easier. It can help you track every expense made using the card and eliminate the manual work of matching every expense against the card statements. You can also integrate live feeds with the software to get a detailed view of the card usage.
Project-based allocation and policy
Projects can vary geographically, and each project can have its own set of requirements, challenges, and associated expenses. Policies for a specific project may also vary from other projects or organization-wide policies.
Expense management software mitigates confusion and makes expense tracking easy by:
- Enabling staff and volunteers to allocate expenses based on project, location, and cost center.
- Allowing volunteers and staff to split and report their expenses based on projects they’re working on.
- Making it possible to define a project’s budget and limit expenses by category to ensure expenses are within the allocated budget.
Centralize your organization’s spending data
Donors often want to understand how and where their money has been spent. Organizations should also keep expense records from the past to analyze spending and make informed decisions.
With an automated expense management tool, all your expense data related to receipts, card payments, approvals, and budgets are readily available to the accounting and finance teams. Additionally, these reports can be easily exported and shown to the donors.
Organizations can also configure their expense management software to sync with their preferred accounting software in just a few clicks, eliminating the need for manual work to coordinate them.
Traditional expense management processes have hidden operational costs and can eat away at precious hours and revenues.
By adopting modern technology such as expense software, organizations can save time on mundane tasks and increase visibility into their work. Additionally, by opting for a smarter solution, your staff can be more productive and efficient at the end of the day.