How Nonprofits Achieve Hyper Efficiency with Financial Automation
Automation is all about doing more with less, so Accounts Payable (AP) automation is a great way for nonprofits to cut the manual hours your staff spends looking after billing—giving them more time to focus on the important work they were hired to do. Read more to find out how automating AP can help your team:
- Reduce time spent making outbound payments
- Limit the number of manual payment-related errors
- Eliminate the effort required to enter the supplier’s payment information
- Stay tax compliant, effortlessly
Why AP automation for Nonprofits?
Regardless of your industry, automating manual tasks can save you time and, by extension, money. That is not to say that nonprofits can automate all tasks across the board. The industry has specific and rigorous standards that must be followed, so automation should be done with care. You need to maintain accountability and transparency, both from a legal standpoint and because donors expect it of you. That’s why the AP function is a great candidate for automation.
Benefits of Streamlining AP
By employing automation in your AP operation, the impact can be measured in a number of ways. We already mentioned that automation can cut staff hours that would normally be dedicated to processing, reading, filing, and following up on invoices, not to mention the time spent chasing approvers for signatures on paper checks. Automation reduces the need for your accounting team to burn the midnight oil just to get everything done. Closing out your month/quarter/year becomes a matter of course instead of an ordeal.
On top of that, there is the hard cost of physical materials that fly off your shelves at year-end—paper, envelopes, ink, stamps, and all the related supplies. That cost is greatly reduced by focusing on digital-first AP management. While not a hard cost, it is worth noting that this shift also helps you move your nonprofit towards a more sustainable and eco-conscious model.
With digital approvals of automated AP transactions, there is no longer a need to physically chase approvers for signatures and approvals. They will get notifications on the go and approve as transactions come in. Approval workflows can be configured to something that works for your organization, not only cutting out the manual intervention that is often needed in analog processes but also putting in place measures that can help mitigate the risks of fraud or malingering by outside bad actors. Conditional routing means that invoices from a particular supplier or of a certain amount can be sent to the correct person, as defined by you in the system. For example, all invoices over $20,000, or from a Tier 1 supplier, must be approved by the CFO.
Nonprofits often face a lot of scrutiny for the money they spend. Due to rigorous reporting requirements, members of the public can pour through expenditures with a fine-toothed comb. Tagging and automated payment syncing features help identify what money went where. It makes completing your annual return easy – saving you from the hours of work involved in manually categorizing payments and preparing reports.
Why Should You Invest in Technology?
It’s important for nonprofits to have visibility into all of their incoming and outgoing cash. Real-time visibility and advanced tagging make understanding your day-to-day financial position simple, which can help make audits a breeze. An ERP designed for nonprofits helps you manage all of the components, with multi-entity reporting, advanced tags, and revenue recognition right out of the box. If you work with conditional grants, an ERP makes it easy to track insights on where that money is going and where your status of the conditions is at any time.
Best-in-Class Nonprofits Automate AP
In Canada, nonprofits and charities do not pay taxes. They do, however, need to submit an information return each year. If they purchase certain supplies that have sales tax applied to them, they may be eligible for a rebate on that tax paid. Keeping track of all invoices, including the amount of sales tax paid, is essential to receive this rebate. Manual compilation of this information is tedious and laborious. Using an ERP integrated with AP automation means that when an invoice comes in, the sales tax can be recognized by OCR (Optical Character Recognition), which then syncs with your core financials. Using an ERP’s powerful report writer with standard & custom fields, you can export the information you need to file your returns in a fraction of the time it would normally take you to do so manually. This type of reporting helps donors and funders evaluate organizations and also helps the fund development team find the best stewards of their contributions.
With global-ready set-ups, an ERP integrated with AP automation can help you maintain compliance in multiple countries while ensuring your obligations are met, all while leaving you with more capital to carry out your mission. Automation future-proofs your global AP operations by providing end-to-end AP capabilities for multi-entity companies in a single platform, helping finance departments manage growth and scale compliantly.
The Power of the Right Integration
AP automation makes onboarding new suppliers easy, giving them a self-service portal. They can add supplier details that are automatically validated on the spot, ensuring you always have all the info you need when you need it. Suppliers can use the portal to submit invoices directly, review past payment history, and manage their information online. Intelligent AP automation can identify opportunities where payable amounts can be paid early in return for a discount, saving your organization money.
The right integration also makes credit card reconciliation much easier, allowing you to match credit card payments with invoice details seamlessly, at the touch of a button. An ERP automatically keeps your sub-ledgers and your general ledger synchronized in real-time, so you always have instant access to summaries and balances as well as transaction details.
This means that workflows become very low-touch. For example, let’s say a PDF invoice is sent to your designated address. That invoice is automatically opened and read. All of the details are pulled from the PDF and entered into your ERP ledger as outgoing. The system checks the details and routes the invoice to the correct person for approval. The approval is the first human touch here. Once approved, your AP automation software may suggest early payment for a discount. Credit card payments in your outgoings can be matched with invoice details, reducing errors and staff time on reconciliations. Tax details are collected and become indexable items that can easily be pulled when it comes time for your yearly report. As with everything in your ERP, this makes audits par for the course. All of your grants and funds from outside stakeholders are accounted for and identified through all of your activities. AP technology supports ERP standard and custom fields, making pulling real-time, insightful visual reports on your AP activities something that takes seconds, not days.
All of this automation not only makes the lives of those in your accounts department a little easier but also allows you to rapidly scale your organization without needing to increase your employee headcount, giving you back more time to achieve your mission and take care of your community.
Automate Accounts Payable for Your Nonprofit Today
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