Alleviate Accounting Systems & Staff Training Chokepoints to Power Nonprofit Missions: Part 1

Article Highlights:

• Innovation is Iterative
• Addressing Obstacles Systematically
• Manual Labor to Digital Systems
• Training Ourselves and Others

Innovation is Iterative

In 2019, I came to Lost Valley Education and Event Center (LVEC), first as a student for the Holistic Sustainability Semester (HSS), one of LVEC’s programs, and then began employment as LVEC’s bookkeeper, with no prior training in the craft other than management of my own finances and experience with office and managerial work from my stint as an Air Force Intelligence Officer.

As I moved from student to employee-in-training to taking on the full scope of bookkeeping as outlined in my staff agreement, it became evident that several financial chokepoints were restricting LVEC’s ability to achieve its mission to provide both low-income housing as well as sustainability education in ecological, social, and personal spheres. These chokepoints included but were not limited to the following:

• Outdated accounting systems requiring excessive manual labor and expenditure of resources
• Minimal accountability or tracking for income or expenses
• Thousands of dollars’ worth of overdue accounts on the books
• My own lack of training in the bookkeeping role
• Distrust from staff and residents of those in administrative roles
• Frustration, burnout, and insufficient training leading to excessive turnover in multiple staff roles
• Lack of staff education around how to handle organizational income or expenses
• Lack of resident education around how resident behavior impacted administration stress and accounting errors

That’s a lot to take deal with—let’s get started.

Addressing Obstacles Systematically

As I began to learn more about bookkeeping generally and LVEC’s systems specifically, I uncovered problems under rock after rock that hadn’t been looked at in years. The prospect of developing systems, sorting through a stack of unsorted paperwork, and working with the Byzantine and outdated bureaucracy seemed insurmountable at times, but I tackled each obstacle in a systematic fashion. As my skills and knowledge grew, my ability to tackle projects of increasing complexity improved as well. Here are the approaches I took.

Manual Labor to Digital Systems

Focus on modernizing, seek software solutions

One of the first issues I addressed was our outdated system of paying bills, reimbursements, and payroll.

Our process when I first began my job was to receive paper bills in the mail: We scanned those statements into the computer and emailed them to our professional accounting firm in Eugene, EARTH Bookkeeping & Payroll, who would print out paper checks for us. We drove 30 minutes to town to pick up the checks (on LVEC’s dime for staff time and mileage reimbursement), bring them back to the office, track down an account holder to sign them, rip off the bottom third, staple it to a copy of the vendor’s bill, hand address and stamp an envelope, stuff it with the original statement and the check, mail that to the vendor, and then file the copy along with the bottom third of the check stub. I had to keep track of checks we issued this way and verify that they had been deposited, then follow up with the vendor if they hadn’t received payment. A similar process existed for every outgoing payment we made, from payroll to staff reimbursements. Was it exhausting to read that paragraph? Imagine completing that whole process multiple times a month.

As a millennial, I have never paid my personal bills any other way than over the internet, so this process struck me as both bizarre as well as wasteful of staff time and organizational and planetary resources immediately. Within 30 days, all of our major bills were paid online, through a combination of signing up for digital accounts on vendor websites and having our bank cut checks and mail them each month. Minimal waste.

Innovation is an iterative process; take feedback, don’t settle

Our primary accounting software is Quickbooks, which recently began to offer the ability to cut checks and make ACH transfers directly. I’ve learned a lot about this software in the last ten months, and noticed and implemented this new capability within days of first realizing it was an option. We are now making ACH transfers for some staff and resident reimbursements, as well as payments to 1099 contractors. This software solution solves another problem that even having our bank cut and mail checks didn’t: The mail to and from Dexter, Oregon is increasingly unreliable.

Apply the same solution across domains

After I had fully implemented online bill pay methods, I transitioned almost the entire staff to direct deposit and implemented a digital method of keeping track of hours by recreating our ancient hard-copy timesheet system in Google Sheets. Moving staff to direct deposit minimized our need to drive to town to pick up paper checks, and reduced problems where staff would lose or damage their checks before depositing, requiring additional work from admin staff.

While we’re now looking at a timesheet app that integrates with Quickbooks to further streamline payroll, our use of Google Sheets and Google’s “Share document” capability this last year to track employee hours solved a number of problems we faced with hard-copy timesheets, such as employees not putting their names on them, writing illegibly, adding up their hours improperly, supervisors not signing them, or employees failing to turn them in on time or at all.

Accountability on Your Accounts

Your baseline credibility and your ability to fulfill your mission depend upon your organization’s ability to pay vendors and staff on time and in full.

Prior to implementing these digital systems, LVEC paid bills late 1-2 times every quarter. Some bills had stacked up late fees that hadn’t been paid as the previous bookkeeper was paying only the currently due amount, without awareness of the growing penalties. Some vendors did not allow LVEC to make purchases on account because we had been so delinquent in our payments, forcing us to outlay money for large purchases such as event food costs before the corresponding income had been received. Paying staff late contributed to resentment, burnout, and turnover, which ultimately harmed the nonprofit’s ability to offer sustainability programs to students, to attract new residents, or to maintain our housing.

Part of my modernizing efforts have been to increase accountability around the income we take in. Improving not just staff, but resident trust in our treatment and tracking of their money allowed us to raise and deliver $1200 for our local fire department in five days during the peak of the West Coast fire season.

Implementing software solutions and making appropriate use of already-available technology boosted LVEC’s financial credibility on a number of fronts, improved the organization’s ability to accomplish its mission, and cut down on our substantial waste of staff time and nonrenewable energy resources.

Training Ourselves and Others

By the time I was hired, it had already been clear to LVEC for two years that organizational accounting practices and record keeping needed major overhaul, with challenges requiring much more than the simple technological solutions described above. Previous administrative staff made the decision to seek professional support from our accounting firm, after discovering that LVEC was delinquent on $10k in bills. At the same time, they also hired an in-town CPA after LVEC was assessed a $2k tax penalty for failing to file. It was time to fill the gaps by training ourselves and others.

Identify organizational knowledge gaps, seek outside support to fill them

While LVEC has an admirable culture of wanting to hire residents for staff roles in order to keep income circulating in the community and provide work for residents, the decision to seek professional support for bookkeeping, payroll, and tax preparation has relieved some of the liability and financial burden on the Business Administrator and the Board of Directors. Many people have filled my role in previous years, and most of them have not had the proper training or desire to do a thorough and correct job with tracking and coding income and expenses, account reconciliation, or record keeping. It’s important for all organizations to recognize when they are in over their head and require outside assistance, especially on matters that involve a potential existential threat to the entire organization—such as an audit from the IRS.

Identify personal knowledge gaps, seek organizational support to fill them

Even with professional support, LVEC had a need for an onsite bookkeeper to translate our strange accounting practices into language and documentation that financial professionals could understand. As such, while my title was “Bookkeeper” my staff agreement contained many tasks more in line with an administrative assistant, or perhaps horse wrangler. I emailed bills, filled out transaction logs for EARTH’s later categorization, consolidated timesheets into a master payroll spreadsheet, filed paperwork, and hounded staff for their receipts. While I had access to Quickbooks, I was scared of making any changes independent of EARTH for fear that I would mess something up.

I ran into issues or questions that I didn’t know the answer to often. So much of my time was spent going back and forth with EARTH asking them to do very basic tasks in Quickbooks, such as adding a new customer account or generating an invoice. This back and forth communication meant it took days to resolve what I came to understand were very straightforward accounting issues, such as duplicate payments or improperly coded invoices.

Just as LVEC admin staff once recognized the organization required professional support in order to accomplish its mission, I came to understand that I needed more training in order to be effective in my employment. I proposed that the organization pay for me to take a basic Quickbooks class offered through an online platform, provide me a bonus upon completion, and then furnish me a raise as I began to implement the skills I had learned. My supervisor and our finance circle enthusiastically embraced this idea, recognizing, as I did, both the usefulness and the limitations of our contract with EARTH.

Our own personal/professional development is the foundation of creating change and innovation in an organization’s staff.

Read Part 2 of this article: Alleviate Accounting Systems and Staff Training Chokepoints to Power Nonprofit Missions: Part 2.

You might also like:

• A Nonprofit Partnership: How One Board Member Connected Two Organizations and Boosted Both
• Innovative Leadership — Culture Doesn’t Have to Eat Strategy: Tending to Human Factors During Strategic Planning
• Treasurers of All-Volunteer Organizations: Eight Key Responsibilities
• Insider Newsletters: An Easy Way to Keep Your Board in the Loop and Engaged
• An Easy-to-Use Accounting Procedures Manual Template

 

You made it to the end! Please share this article!

Let’s help other nonprofit leaders succeed! Consider sharing this article with your friends and colleagues via email or social media.