Episode Overview
Nonprofit leaders often struggle with outdated financial systems that hinder informed decision-making and mission delivery. In this episode, Cherry and Omar Visram explore practical strategies for modernizing financial operations through technology and streamlined processes. Omar shares expert insights on achieving financial clarity and operational efficiency, helping nonprofits become more resilient and capable of fulfilling their mission.
Al is revolutionizing nonprofit operations by automating tasks and enhancing decisionmaking.
Effective financial management is key to nonprofit success, requiring both technology and process optimization.
- Leverage modern tools like QuickBooks Online and Dext to reduce manual data entry and improve accuracy. Omar highlighted how these tools streamline financial operations and compliance.
- Focus on process clarity by mapping out workflows and automating reminders to ensure timely data submission. This approach helps nonprofits concentrate on their mission.
- Consider fractional CFO services to provide strategic financial insight without the cost of a full-time hire. Omar explained how this can lead to more informed decision-making.
- Engage and educate your team on the importance of financial processes. By understanding their role, staff can contribute to financial transparency and accountability.
- Build a budgeting and forecasting framework that aligns with your organization’s goals. Omar stressed the importance of this for effective financial planning and reporting.
Episode Highlights
1. The Evolution of Nonprofit Financial Systems
In their discussion, Cherry and Omar Visram explored the journey many nonprofits undergo as they modernize their financial operations. Omar shared that many nonprofit organizations are often using outdated software like Desktop Sage or QuickBooks Desktop. The first step is transitioning to QuickBooks Online, which can involve complex data migration due to unique nonprofit requirements like grant tracking.
Omar emphasized the importance of optimizing QuickBooks for nonprofit use, such as automating GST processes specific to Canadian nonprofits. He explained that getting on the right tech stack is crucial, but it’s only part of the solution. The real transformation happens when workflows are clearly defined and processes are tailored to the organization’s needs.
Cherry resonated with this, highlighting how Claribase helps nonprofits gain clarity on their data, enabling them to focus more on their mission rather than getting bogged down by financial admin tasks. Together, they painted a picture of a growth trajectory where nonprofits evolve from basic software to a modern, efficient financial system.
2. Building Your Financial Team
Omar introduced the concept of fractional finance, a strategic approach that allows nonprofits to access financial expertise without the overhead of a full in-house team. He explained that many nonprofits benefit from a mix of bookkeeping, payroll support, and fractional CFO services, which can be cost-effective and provide high-level financial insight.
Cherry and Omar discussed how this model helps nonprofits be more nimble and focused on their outcomes. Omar noted that while some larger organizations might eventually need full-time in-house finance staff, many can thrive with fractional support for a long time. This approach not only saves money but also enhances financial control and transparency.
Cherry shared examples from her experience where nonprofits with fractional finance support were able to streamline their operations, emphasizing the importance of clear communication and role clarity within financial teams.
3. Avoiding Common Financial Pitfalls
A significant part of the conversation revolved around common financial challenges nonprofits face, such as the risk of fraud and the need for robust reporting mechanisms. Omar shared stories of nonprofits struggling due to a lack of unrestricted funding and inadequate financial clarity, which can lead to dire consequences like mergers or closures.
He advised that nonprofits should avoid having a single person control both the bank account and accounting functions, as this can lead to fraud. Instead, a separation of duties should be enforced to ensure financial security.
Cherry added that many nonprofits realize the need for change when they face pressure from board members or funders who demand accurate and timely financial information. This often becomes the catalyst for nonprofits to seek improved systems and processes.
FAQ
How do I modernize nonprofit financial systems effectively?
To modernize nonprofit financial systems, start by migrating to QuickBooks Online. Omar explained that many nonprofits initially use outdated software like Desktop Sage. Transitioning involves data migration and optimizing QuickBooks’ features, such as automating GST. Tools like Dext for expense automation and Pluto for payment approvals streamline processes. These changes help nonprofits focus on their mission rather than financial admin tasks.
Is it worth outsourcing financial operations for nonprofits?
Outsourcing financial operations can be highly efficient for nonprofits. Omar discussed that fractional finance teams provide bookkeeping, payroll, and CFO support tailored to your needs. This approach offers significant cost savings and flexibility compared to hiring full-time staff. Most nonprofits benefit from outsourced support until they reach a size requiring real-time in-house data.
What’s the difference between a nonprofit’s financial tools and workflows?
Financial tools and workflows are both crucial, but they serve different roles. Tools like QuickBooks and Dext automate and simplify tasks. However, workflows ensure that processes like receipt submissions are timely and consistent. Omar emphasized that a combination of optimized tools and clear workflows leads to better financial outcomes and allows nonprofits to focus on their core missions.
Tools and Resources
- QuickBooks Online: A cloud-based accounting software that nonprofits are encouraged to use for better financial management.
- Dext: A tool for expense automation that uses AI capabilities to streamline data entry.
- Pluto: A payment management tool favored for its approval workflows, critical for nonprofit financial control.
- Payworks: A payroll tool that integrates well with QuickBooks for effective salary management in nonprofits
How to Apply This
For nonprofit leaders looking to implement these insights, start by evaluating your current financial systems. Identify if you’re using outdated software and consider transitioning to a modern platform like QuickBooks Online. This change might involve a data migration process, especially if you’re tracking multiple funding streams.
Once on the right software, map out your financial workflows. Clarify each step of your financial processes, from expense reporting to payroll management. This clarity will help reduce errors and improve efficiency.
Consider the benefits of fractional finance services. If your organization is not ready for a full-time finance team, explore fractional support options. This can provide the expertise you need without the full financial commitment, helping you stay nimble and focused on your mission.
About About Omar Visram
Omar Visram is the co-founder and CEO of Enkel, a firm dedicated to improving financial operations for nonprofits. With a background in accounting from KPMG, Omar saw firsthand the struggles small organizations face in managing their finances effectively.
He founded Enkel to offer tech-enabled, service-focused financial solutions. Omar and his team now support numerous nonprofits across Canada, helping them optimize their financial systems and focus on their mission. Readers can learn more about Enkel’s services by joining their newsletter.
Next Steps
If this conversation sparked ideas for your organization, Cherry and Omar would love to hear how you’re thinking about applying these strategies. Watching the full episode could provide even more insights into optimizing your nonprofit’s financial operations.
Consider sharing this episode with your team to inspire discussions about improving your financial systems. And if you need clarity beyond finances, like whether your current tools are actually supporting your mission, grab our free Nonprofit Data Health Check below.
