Financial automation in not for profit organisations

Woman checking on the laptop with workflow graphs, charts and icons concept

If you are still actioning a lot of financial tasks manually, then it’s time to consider implementing elements of financial automation within your not for profit.

Automation can help save you time and money, and for most NFP organisations that would be highly beneficial. Rather than having your finance team spend valuable time completing transactional accounting tasks, you want them to be able to focus on strategic or proactive work that will help you grow and achieve your organisational mission.

CEO Kirsten Forrester discusses financial automation… and highlights how helpful it could be during the current recruitment climate.

What is financial automation

Essentially, financial automation is utilising software technology solutions to complete specific tasks. Kirsten explains:

“You use digital tools that harness the power of artificial intelligence and machine learning to undertake parts of the finance function. Instead of your team member processing all the data entry manually, the machines do it for you.

A simple example is Dext, which we use with all our clients. It is a really proficient tool that reads the documents you send to it. Whether it’s a PDF or even a handwritten invoice, it does a great job of reading the details and extracting the invoice information for data entry to the accounting software.

Young Businesswoman Taking Photograph Of Invoice Document Secretly In Office

You can take a photo of a shop receipt, you can forward an invoice that you receive from a supplier – or your supplier can send it directly to the system, meaning you don’t have to handle it at all – the information is extracted from the file with excellent accuracy.

The other thing I find valuable about Dext is that it provides a platform to gather the transactional documents and an opportunity to engage your broader team in the process of reviewing and coding – the expense-incurrers should take responsibility for their purchases, not expect finance to deal with it for them.”

Data entry is just one area where automation can be helpful. You can also find tools to support you with accounts receivable, inventory management, forecasting and cash flow tracking and a wide range of payroll applications. There are many efficient options available when you understand what your organisation needs.

young woman writing on white board during a presentation in conference room

Assess what your organisation needs

But how do you determine what you need? This is where you need to take a step back and look at your internal processes with fresh eyes. You need to identify each element of a process in order to pinpoint where you could implement automation.

“This is where I would recommend going a bit analogue… grab a white board marker or put pen to paper to map out your processes.

Start with what you do: How does income come into your organisation? Are grants deposited into your bank account? Are donations made via credit card from your website?

What about receipts from sales? Think about the types of transactions and then consider the flow of activity that follows. What happens when things come in… how do you have to handle them to get them recorded correctly?

‘Process mapping’ doesn’t have to be overengineered and described in perfectly laid-out flow charts – just take care to note down each step or component. That will help you identify things that go in circles and also spot straight lines, where only one person is doing all the tasks. If there is a straight line, this is an area where there could be some risk as there is no segregation of duties. While this can be hard to achieve if you only have a small finance team, it’s still important to recognise.

From here you can discern areas where automation tools could save you time by reducing manual data entry tasks. And also help you improve your financial governance through better segregation of duties.”

accountant working on laptop computer with business document,

Recruitment challenges

Automation can also be extremely beneficial if you are struggling with recruitment. The current labour market is challenging and if you think you need to increase your team, you might be able to find a digital solution instead. We aren’t saying that software systems will totally replace a human resource, but it might help reduce the pressure if your team is feeling under the pump. Kirsten continues:

“Half-a-million people have left Australia since the beginning of COVID – I feel like plenty of them were accountants! And I hear many late-career accountants have retired earlier than usual. All those factors put pressure on the labour market – you reduce your risk of a vacancy when some of the work is done via automation.”

A group of four people, seated around a table doing a meeting

Financial automation examples

Here at True Accounting we have been able to support not for profit organisations as they successfully implement financial automation processes. We don’t have a large and complex tech stack, but we do work closely with a range of solutions that produce great results. Some of our success stories include:

“A drug and alcohol crisis accommodation service has an on-demand need for brokerage payments that we couldn’t support as part of our regular service. But they’ve found the perfect solution through automating these low-value but time-critical accounts payable transactions. Case workers send bills directly to the digital system and the payment is made instantly, as needed.

A relatively new mental health organisation has a fairly young management and governance team. They were unable to get a credit card issued but they were able to use a virtual card system. Similarly, a Neighbourhood Centre was keen to get rid of petty cash, and the virtual card was an ideal option.

And a First Nations Organisation received a grant that doubled their scope quickly… the virtual cards enable their teams on the ground across the country.”

NFP Accounting experts

We have 25 years of experience in not for profit accounting. Our comprehensive knowledge of how NFPs operate enables us to provide high level CFO services to basic bookkeeping and everything in between.

We have the accounting skills, systems expertise and financial intelligence to empower your organisation. If you’d like to find out more about our services, please contact our team today.

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