Implementing technology into your nonprofit accounting process can help solve a variety of issues—from tracking receipts to properly recording donations. In most cases, technology helps improve the efficiency and accuracy of nonprofit accounting.
You’ll need to use the right technology systems to get these benefits. Known as a tech stack, building a comprehensive system from multiple tools is essential to successful technology use. Keep reading to learn more about building a tech stack for your organization and some of the programs we recommend for it.
Accounting Can Be a Challenge for Nonprofit Organizations
One of the biggest challenges for nonprofits to overcome is accounting. Nonprofits are subject to a lot of legal and financial scrutiny. Your nonprofit accounting setup needs to be able to meet tax and legal regulation and reporting requirements so you stay in compliance and retain the public’s trust.
Some of the most common accounting challenges for nonprofits include:
- Accurate everyday bookkeeping, from recording donations to paying invoices
- Preparing accurate and consistent financial reports
- Filing tax returns
- Managing payroll
- Organizing accounting and financial information into usable data
Nonprofits can leverage technology to help solve these problems. A good technology solution addresses each of your nonprofit accounting concerns. With the right tech in place, your organization can more accurately record and report your financial information and save your team a lot of time over paper accounting systems.
Integrate Accounting Tech to Build the Perfect Stack
As we mentioned before, a tech stack is a multi-solution technology system that works as a whole to solve your technology needs. Generally, tech stacks use several software programs or tech tools to meet technology needs that one platform can’t.
The key to a good stack is that your individual solutions work together seamlessly. In a well-organization stack, your programs work together to record and organize data across platforms.
Does it seem daunting to set that up?
The good news is most modern tech programs are designed to work with other common solutions through integrations. For example, your revenue recording software might integrate with your donation collection software so that when someone makes a donation it’s automatically recorded in your system.
Elements of a Strong Nonprofit Accounting Tech Stack
How do you build a strong nonprofit accounting tech stack? The key is knowing what programs offer your organization the most benefit and work well together.
At The Charity CFO, we’ve found four tech tools that have worked for several of our clients to improve their accounting systems. An example of a strong nonprofit accounting tech stack includes:
- QuickBooks Online
- Dext
- Bill
- Fathom
It’s important to remember that this exact setup—while great for many nonprofits—may not be the best fit for your organization. Be sure to work with a trusted nonprofit accounting and technology team to help you find the right tech stack solution for your organization’s needs.
QuickBooks Online
In our experience, most small- to mid-sized nonprofits benefit from using QuickBooks Online. QuickBooks provides an easy-to-use bookkeeping solution that puts all of your financial data in one place. Even better, the program is scalable to meet the needs of a growing or evolving organization.
We often recommend QuickBooks Online over nonprofit-specific accounting software for three reasons, it’s:
- Cloud-based
- Well-known
- Features almost endless integrations
As a cloud-based solution, QuickBooks Online doesn’t require you to hire an expansive IT team or physically house expensive hardware. All of your financial data lives securely in the cloud, which also means you can access it from anywhere with a secure connection.
QuickBooks is also one of the most well-known accounting platforms and might even be the most widely used. You’d be hard-pressed to find an accountant or bookkeeper who doesn’t have experience with the platform. Working with a well-known system makes it easier for your accounting team to do their job without learning a complicated new system.
Most important to a tech stack, however, is QuickBooks Online’s ability to integrate with nearly any software or tech system you might need. By building your stack around this platform, you almost guarantee that any other system you use will seamlessly feed data to your bookkeeping database.
Dext
One of the most difficult aspects of nonprofit accounting is accurately recording transactions. Dext is a software that helps solve this problem. The program essentially creates an online storage bin to organize your receipts, bills, and deposits where your accountant can easily access them.
A great feature of Dext is the ability to use a mobile app to capture receipt and document data. Employees simply open the Dext app and snap a picture of a physical receipt or document. The app then prompts you to code the receipt so it can accurately record it in the system.
Dext integrates fully with QuickBooks Online, so when a receipt is uploaded to the Dext system, it’s also recorded in your bookkeeping software.
Bill
Bill (formerly Bill.com) is a tech solution for the accounts payable and accounts receivable cycle. The Bill platform works by uploading digital copies of vendor or contractor bills and sending them to the appropriate parties for approval.
You can even set up specific rules in the system that enforce your organization’s approval policies. For example, your nonprofit requires all bills over $500 to go to a specific individual for approval. If a bill comes through the system over that amount, the individual in charge of approval is notified and the bill won’t be approved until they give the all-clear.
This system of only paying approved bills is huge in helping reduce common mistakes caught in nonprofit audits.Â
Fathom
Our final recommendation for many nonprofit tech stacks is Fathom, a reporting system that enhances the limited reports of QuickBooks Online. Although QuickBooks Online does a lot of things really well, its reporting options aren’t the best solution for many organizations that need more customization in their reports. Fathom eliminates these limitations.
Fathom pulls data from QuickBooks and generates monthly financial reports and dashboards. Organizations can use Fathom to customize their reports for various stakeholders in the organization.
The Charity CFO is Your Partner in Building a Strong Tech Stack
Adding technology to the accounting system can help free up your time and improve your accuracy, but you must do it correctly. Your tech tools need to work with one another through integrations or you run the risk of a disorganized tech stack. Using platforms that work well together, such as QuickBooks Online and Bill, reduces the risk of inaccuracies across platforms.
The Charity CFO team specializes in helping nonprofit organizations improve their accounting systems. As nonprofit accountants, we know the struggles nonprofits often face in their accounting setup. We can help you streamline your accounting systems for accuracy and efficiency.
Contact us today to see how we can build a tech stack that gives you more time to focus on your mission.
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