First, it can help your organization significantly reduce operating costs. You eliminate the expense of payroll taxes, insurance, vacation and sick time, and other employee benefits. You may also save money on office space, computer equipment, and recruiting and training costs.
Second, outsourcing your bookkeeping can be the key to better internal controls and continuity in maintaining your financial records. You need the most accurate and thorough information possible to make your critical financial management decisions.
Third, it can free up time and resources to focus on program goals and operating strategies. For some nonprofits, it doesn’t make sense to develop bookkeeping as a core competency. Outsourcing can help focus your mission, improve your staff structure, and strengthen your operational model.
Fourth, it allows you to tap into the resources and expertise of seasoned bookkeepers who specialize in nonprofit accounting. Our bookkeepers have extensive experience with all sizes and types of nonprofits. We work with you to determine your needs and find the most effective arrangement for delivering and discussing financial information.
When do nonprofits outsource their bookkeeping?
Smaller organizations frequently need more bookkeeping skills than their administrative assistant can provide, yet don’t need a full-time bookkeeper. Organizations of any size may have trouble finding the right fit for a full-time bookkeeper, or may not be able to cover the costs of an additional full-time employee. Sometimes nonprofits initiate the outsourcing relationship when there’s an extended vacancy, a staff restructure, or a bookkeeper goes on sick or maternity leave.
The Alliance began offering bookkeeping services to help the many members who told us how hard it is to find someone with the right skills to prepare invoices, generate financial statements, and analyze financial data, especially at an affordable rate. Others knew it didn’t make sense for their organizations to develop or maintain bookkeeping as an organizational competency. Still other nonprofits were outsourcing their bookkeeping but not getting the detail, the communication, or the timeliness they expected.
Outsourcing your bookkeeping is an important responsibility. But keep in mind that you’re only farming out limited, specific tasks. You maintain all treasury and management functions under your control. If you decide to outsource bookkeeping, the CFO or other financial manager receives all the information she needs to thoroughly review and analyze financial information, including monthly reconciliations and financial statements.
Regardless of whom you contract with, you should never accept incomplete, inaccurate, or late information. Thinking of finding a new external bookkeeper? Talk to us. And if you already have a relationship with a contracted bookkeeper, review the relationship at least once a year to determine whether you should change bookkeepers or move the bookkeeping function in-house. Take all your resources into account, including the value of your time, and evaluate the information and communication you receive. Remember that consistent, accurate, timely financial reports are essential for strategic decisionmaking and knowing the financial health of your organization.