3 Ways Nonprofits Can Increase Their Impact Through Technology
It began with Little House on the Prairie and a photocopier.
Short on funds for his Bronx high school class, Charles Best copied his sole book so that all his students could read the literary classic. Suddenly, he was hit with inspiration. What if there was a way to connect teachers with individuals who would help fund classroom projects?
In 2000, Best launched DonorsChoose.org. The nonprofit organization posts teachers’ requests for support, collects donated money and uses the funds to send the needed supplies. Now, the charity supports schools and teachers coast-to-coast and has fulfilled more than 1.3 million classroom projects.
That’s the beauty of nonprofits. They provide innovative programs and solutions to help those in need. Whether it's cleaning oceans, aiding in disaster recovery or teaching kids to code, each nonprofit powers on with the help of passionate employees and volunteers and the goodwill of donors.
One thing nonprofits aren’t known for: big budgets. They’re often working with little money and a small number of employees to meet their mission as an organization; It’s a constant struggle.
Fortunately, technology empowers nonprofits with opportunities to maximize time and resources – especially for the back office. After all, each process run more efficiently means that employees have more time to invest back into the cause.
Nonprofits and the traditional back office
In a bid to control costs, many nonprofits rely on what they perceive as inexpensive ways to handle everyday back office tasks. One example of this philosophy is using paper checks for AP. According to a recent report, each invoice paid by paper check costs up to $22 to process. That includes reviewing bills, routing them and then printing, signing, mailing, and reconciling paper check payments.
While $22 may seem a small expense by itself, its cumulative impact can be substantial for a nonprofit. If an organization pays 100 bills a year with paper checks, that’s more than $26,000 spent on processing those payments. Further, costs around paper check payments can increase beyond that, thanks to supplies and bank or late fees. And that doesn’t include the hours spent by employees who are handling the highly manual process.
What’s the solution?
The same study asserts that business payment solutions can reduce AP costs by up to 75%. By moving payments from on paper to online, nonprofits crack open a valuable opportunity to control costs, conserve time, and ensure proper approval workflows for AP and AR.
Nonprofits and the modern back office
Nonprofits that explore cloud-based digital business payment solutions can significantly reduce the time and costs associated with AP and AR.First, there’s automation. Digital business payment solutions allow the cloud to shepherd bills through the appropriate approval workflows and ensure the proper separation of duties. Everything moves online and every activity – from review to comments to payment – is tracked and audit-ready. For example, a bill arrives for two replacement laptops. The vendor emailed it to your nonprofit’s digital payment solution address. It appears on your nonprofit’s dashboard electronically. After a quick review, it automatically enters the appropriate review cycle based on the organization’s guidelines. Each person involved is invited to review the bill, comment on it, and/or approve the expense. The process continues through to payment, made by digital means such as ACH transfers, EFTs, or international payments as needed.
Suddenly, there’s no longer a need to review a paper bill, search in cabinets for associated contracts and payment history, and hand the bill off to another person to review. No one has to ask where a bill is in the approval process. And not one person needs to sign, stuff, and mail paper checks. Automation handles the entire process, and integrations with accounting solutions like Sage Intacct ensure that all records are updated in real time.Next, there’s the mobilization of payments. Executives and board members at nonprofits are often on the go, traveling to visit donors, or working to fulfill the organization’s mission. These same leaders are often involved in signing paper checks – meaning payments must wait until they’re back and the chances for late payment can increase. By giving them mobile access to accomplish this, they can easily use a smartphone app to access outstanding bills, research vendors and payment history, and approve payments. This eliminates the risk of late payments (and late payment fees) and unnecessary time spent on tracking down approvers. And again, every payment-related activity is tracked within the digital business payments solution, which comes in handy for the next item on the list.
Finally, comes audits. Audits are a necessary task for nonprofits, who must undergo them for the government to remain as a 501(c)(3) or similar designation. With paper as the primary information source, audits become time-consuming, ambiguous endeavors. Typically, an auditor lands in a conference room crowded with paper files and printed bank statements (among other forms of data). The auditing process can take multiple days (or more) as the auditor culls through it all.
By moving payments online and in one digital business payments platform, nonprofits have already done the heavy lifting for audits. The entire workflow for payments is audit-ready, from inception to payment to canceled check image. A nonprofit can grant audit-level access to an auditor, and that auditor can perform his or her duties from anywhere, at any time.
As one accountant describes it: "Auditors tell us that their time in testing, AP and AR cycles have been reduced by approximately 35% when using Bill.com because they can access check images, vendor invoices, EFT confirmations, and date/time stamps of vendor invoice approvals on the AP side. On the AR side, auditors can access billing invoices and EFT notifications of payments that have been received."
Is your nonprofit ready to take advantage of digital business payments?
Bill.com is a leading digital business payments company with a network of 3 million members, managing more than $60 billion in payments annually. Making it simple to connect and do business, the Bill.com cloud-based Payment Management Platform automates, streamlines, and controls the payments process, saving more than 50 percent of the time typically spent. Bill.com partners with the largest U.S. financial institutions, more than 70 of the top 100 accounting firms, major accounting software providers, and is the preferred provider of digital payments solutions for CPA.com, the technology arm of the American Institute of CPAs (AICPA). Winner of more than 70 awards, Bill.com is recognized as one of San Francisco Business Times’ and Silicon Valley Business Journal’s “2018 Best Places to Work.”