Easy Office Blog

Watch this 45 webinar regarding nonprofit financial statements.  We cover how to read and interpret financial statements.  We show examples of reports.  We discuss the unique differences between for-profit and non-profit accounting terms.  It is a useful primer for any Executive Director or non-profit board member.

 

There are a lot of accounting software options out there for non-profits.  When picking an accounting solution, there is always a trade-off between cost and quality. 

Cost can be thought of relatively straight-forward : what does it cost to buy this thing, configure this thing, and run this thing.  Most smaller packages such as Quickbooks require very little configuration.  It is what it is.  Larger software packages such as NetSuite, MIP Fund by Sage, Financial Edge by Blackbaud can require extensive time and energy (and $$) for consultants to turn on and off the hundreds of features to fit your exact needs. It costs more, but it'll fit perfectly.  We often say that QuickBooks does 95% of what needs to be done for 90% of small and mid-sized non-profits (<$2M annual budget).

Quality can be broken out into the application itself, and ecosystem that exists to support it.  Certain larger software has better audit trails, management is able to place tighter controls on who sees what data, etc.  But on another quality dimension, such as Ease of Use, QuickBooks has very high quality.  But that same ease of use can give you too much flexiblity at times - enough freedom to hurt yourself.  The big difference in quality is the ecosystem that QuickBooks has to support it.  Thousands of bookkeepers across the country - of varying quality! - know and use Quickbooks.  And if you want to convert to / from Quickbooks, almost every accounting software that exists makes it very easy to do so.  Quickbooks dominates in terms of market share and this creates a vast ecosystem of trainers, users, and technology support that helps everyone.

In summary, picking an accounting solution can be complex for larger organizations.  We have helped many groups walk through that process.  And Easy Office currently helps a variety of groups using a variety of accounting software packages.  But for most small non-profits (<$2M annual budget), we generally recommend Quickbooks because of the cost and flexiblity.  That said, we know that there are a lot of horror stories out there about Quickbooks falling apart, but we've found in almost every case it could have been avoided by improving the set-up of QuickBooks and proper training on the procedures to use within QuickBooks.

Lastly, for another opinion on the topic, here is a nice article written a few years back by the good people at Tech Soup.
http://www.techsoup.org/learningcenter/software/page5144.cfm?cg=fundraising&sg=wk3

We find ourselves often talking with clients about the benefits of outsourcing and using a solution like Easy Office.  One thing that we frequently talk about is the idea that you are getting a team, not just an individual.  An accounting department requires a variety of skills - someone who knows the ins and outs of the system - be it Quickbooks or otherwise, someone who can perform financial analysis, someone who can read and interpret financial statements, someone who knows the intricate IRS rules on grant allocations, etc. 

Often non-profits can struggle to find all of that in a single person.  If you get someone overly qualified, they get bored doing the day to day bookkeeping.  If you get somoene who is great at data entry and bookkeeping, you may sacrifice quality in the higher level, more complex tasks.  Outsourcing to a team-based service provider, instead of outsourcing to an individual freelancer or consultant, can be a really good cost-effective way to get access to a whole variety of skills.

Cash is king.  Make sure to take the time to monitor your cash flow.  In these times it is especially important to stay on top of your finances monthly, if not weekly.  Don’t let cash shortages sneak up on you.

Closing the books.  It can be a really helpful discipline to “close the books” once they are reconciled for a period, for example at the end of the month.  After a period is closed, most accounting software, including Quickbooks, can be set up to require a password or provide users with an alert before editing ‘closed’ transactions.  This may help prevent inadvertent changes to your past which can throw off reconciliations, financial statements and more.  Just the simple act of closing your books regularly can help keep them nice and clean.