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These Issues are Common Nonprofit Problems Featured

These Issues are Common Nonprofit Problems Sebastian Herrmann

Like many other businesses, accounting presents unique challenges to nonprofits. However, this is not a big issue. The biggest problem is how to manage the nonprofit's financial status. This begins with identifying the financial red tapes then maintaining the nonprofit’s status. Unfortunately, this is not always easy. When it comes to tracking various financial processes, most of the charities get it wrong. Compounded with the regulatory changes and the shifts in the nonprofit landscape, you are likely to encounter countless challenges on the way. Here are the common nonprofit problems that you may face in accounting.

  1. Management reporting

Real-time financial data is critical in the management of accounting. Sadly, most nonprofits lack such data, hence face challenges when it comes to management reporting. The financial data that is needed to achieve this include periodic data and management reports. One of the problems encountered is inaccurate management reports often caused by outdated data.

To determine reporting and nonprofit’s fundraising goals, you need accurate and current reports. These kinds of reports give you detailed expense reports and allow you to develop straightforward mission-based budgets. It also allows you to improve daily function and gives you clarity that enables you to look for better funding sources. You should never overlook management reporting.

  1. Real-time financials

Real-time transaction visibility is a common challenge that most nonprofits face. The monthly financial statements make things more complex than they already are because they cause processes to fall behind, leading to bulk entries once or twice per month. This slows down decision-making and affects general cash flows and budgets, making proactivity difficult. Failure to get the right software and expertise might affect decision-making and transparency in a nonprofit.

  1. Paper-based processes

Many industries are going digital, and so should the nonprofit industry. Sadly, most nonprofits have not fully embraced technology. This means that some activities still rely heavily on paper-based processes. They cannot efficiently track and record their financial data. While paper offers valuable copy that is useful in certain areas, it is not efficient in accounting processes. Therefore, nonprofits must find electronic-based record management such as accounting software. Additionally, a bookkeeping professional will make things easier as far as the improvement of workflow is concerned. The software will help in managing reports and offering real-time financial information for better decision-making.

  1. Grant tracking

Getting grants is one thing, and tracking them is a totally different thing. The process of applying for grants involves many steps. While the process of applying may sound simple to some, tracking them and going through the concurrent processes is usually a challenging undertaking. Owing to the importance of these grants to the operations of a nonprofit, you will not want to lose track. Although there are better ways to track grants, such as using software or hiring a specialist, some nonprofits have not embraced this.

  1. Payroll management issues

Your nonprofit needs proper management of payroll for financial prosperity. If there is none, it will always suffer from accounting challenges. Some nonprofits do not have a proper system to manage their payroll or have paper-based payroll management systems, which are inconsistent. Failure to track the income of your employees makes tax reporting difficult and leads to financial discrepancies. This makes it hard to cater to all the needs of nonprofits while also ensuring there is transparency. For proper payroll management, you will need a payroll management system. Payroll bookkeepers might also serve well in managing payroll. These two ensure that you have the proper process of paying your employees and tax reporting is done correctly.

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Scott Koegler

Scott Koegler is Executive Editor for PMG360. He is a technology writer and editor with 20+ years experience delivering high value content to readers and publishers. 

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