Accounting for Nonprofits: Close the Book on It!

Preparing Your Books for the End of Year Close

‘Tis the season – the season when nonprofits everywhere start thinking about year-end close. This year, vow that you’ll do all you can to smoothly and efficiently close the books with minimal stress to your accountant. Accountants everywhere thank you.

In all seriousness, there are many reasons why doing a good job preparing your books for the end of year close is important. Without closing your books for the year, you’ll have no idea if your nonprofit was profitable or not. Closing the books and reconciling them means that you’ve tallied up everything for the end of the year, put a period or end point on it, and start with a fresh slate in the new year.

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Closing the accounts for the year reset the revenue and expense lines to zero. These ‘temporary’ accounts are now ready for the new year, a clean slate, and a new eye to profitability. Without closing your books, you’ll have a muddle of data to assess, and you won’t get a clear picture on how well your organization achieves its financial goals during the year.

Accounting for Nonprofits: Tips for Success

There are certain steps you can take to successfully close your books for the end of the year. This includes:

  • Keep your accounts updated: Schedule time monthly to reconcile expenses and income. If you let it all pile up to the end of the year, it will feel overwhelming. There’s also more of a chance to make mistakes and forget items.
  • Create a checklist: A detailed and thorough checklist that details every step for your year-end close is a helpful resource. Such a process can guide you through the close out each year and save time.
  • Ask questions during the year: Hopefully, you have a great certified nonprofit accountants to work with, someone who knows your nonprofit and is open to questions. Don’t let questions delay your routine accounting practices. Ask questions throughout the year so that you don’t let mistakes proliferate.
  • Schedule plenty of time for your audit: Dovetail your end of year close with audit prep, but leave plenty of time for your audit. By doing both at the same time – audit prep and end of year close – you’ll be well-prepared for the new year.

Pay Bills, Lower Receivables

Another useful end of year task to tackle before reconciling and closing your books is to pay off any outstanding invoices so that you carry fewer into the new year. You should also review your accounts receivable file, and attempt to collect any past due invoices. You can certainly carry these over, but it is always a good idea to avoid open receivables. The fewer receivables you have, the more income your nonprofit has at the ready.

While closing out your books may not be top of mind as you celebrate the holidays, tackle the tasks early enough in the month so that you can get them done while people remain in the office. Note when your accounting team may be taking time off to travel or celebrate the holidays, and work around their schedules. You can complete your end of year close with plenty of time to enjoy the festivities of the season.

Beck & Company

Beck & Company provides nonprofit accounting and audit services in Washington, D.C and Virginia. Founded in 1987, we specialize in the world of nonprofit institutions, helping them to navigate the complex world of finance and accounting. Our services are always personalized, and cost-effective for your institution. We welcome your inquiry or call.  Contact us today or call 703-834-0776 x 8001.

Considering the Cloud?

Here’s What Nonprofit Accountants Need to Know about Cloud Computing

Many nonprofit accountants continue to be reluctant about switching their files and systems to the cloud. Cloud computing uses shared servers and hardware, rather than servers and hardware located in your physical office space, to store files and run programs. Cloud programs are accessed through secure web-based portals, making it appealing for companies with a mobile workforce or who work from client sites frequently.

Concerns about switching to the cloud range from security concerns to cost concerns. Advances and changes in computing often come with some anxiety. Accountants who, in times past, purchased new hardware and upgraded their programs annually, suddenly find themselves considering site licenses, monthly or annual fees, and new business considerations related to cloud computing. It’s definitely a shift in how organizations think about their technology needs and roll out tech changes.

Dispelling the myths surrounding cloud computing can help you feel more confident as you consider the options. Cloud computing is now ubiquitous in many industries, and nonprofit accountants are catching on to its many benefits.

Cloud Computing Concerns

First, let’s address typical concerns shared by nonprofit accountants regarding moving to the cloud.

  • Security: Many fear that because public clouds, or the typical cloud solution embraced by the average organization, aren’t as secure as paper-based files or networks housed within their physical office. Consider your current security situation for your files. Are valuable files backed up on your server? If so, where are the backups housed? Do you lock your file cabinets, and are they located in rooms with locking doors? Many offices use convenient central files that, while they take up less space and make it easier for workers to access, are by no means as secure as the company assumes. Cloud security, on the other hand, is usually top-notch. Because the companies providing the cloud invest heavily in security, they can afford the best and are constantly updating and upgrading their technology. They may still be breached or hacked, but they are probably more secure than what you are currently using.
  • Costs: Cloud costs may be confusing at first, but they tend to be less than what you would spend on upgrading your hardware. Many cloud solutions provide a monthly fee with an annual subscription that offers significant savings. If you amortize the cost of hardware and software investments in the past, cloud computing tends to come out ahead in terms of cost savings.
  • Mobility: Many nonprofit accountants take work home, especially during busy times of year such as end of quarter and the spring run-up to tax season. Cloud computing is mobile, and can be accessed anywhere you have a web connection. This makes it easy to log on from home, complete your work, and access it again from the office the following day. If you travel frequently, or work onsite at a client’s location, you can also access all of your files no matter where you are.

Choosing a Cloud Vendor

As you can see, the cloud offers many advantages for nonprofit accountants. If you are considering a cloud vendor, review several to find the best match for your requirements.

  • Check references and delve into the vendor’s reputation.
  • Request data on downtimes. How does the vendor handle outages and problems?
  • Do they have someone available 24/7 to help you by phone, email or chat, or do they limit communications?
  • Who owns the data?
  • Do they own their own server or rent space from another company?
  • What support and backup do they offer? How frequently is data backed up, and what are their recovery plans if data is lost?
  • What security do they have in place?
  • What is the cost and contract terms?

Cloud computing offers exciting opportunities for flexibility, cost-savings and security. Moving to the cloud is usually a smart choice for nonprofit accountants.

Beck & Company

Established in 1987, Beck & Company is a group of Washington DC and Virginia Certified Nonprofit Accountants. Our services are personalized to your organization’s needs. We provide independent auditing, accounting, tax services, and consulting to help keep your organization’s finances running smoothly. Contact us today or call 703-834-0776 x 8001.