Linda J. Kramer, CPA, MBA
Accounting & Auditing Director

Outsourcing of accounting and bookkeeping support services is an increasing trend in many nonprofit organizations. Driven by several factors, outsourcing is a confluence of trends impacting nonprofits.   

Technology and integration

Increasing demand for cloud services has fueled growth in digital accounting options such as QuickBooks Online, FreshBooks, Xero, Zoom and other solutions.

Integration of accounting and bookkeeping functions with these platforms has helped further increase demand for cloud-based accounting services such as bank account linkage, automatic payments and merchant services, as well as integrated apps such as Bill.com, Expensify, Square, Tsheets and PayPal.

Increasing complexity

Nonprofits are looking for solutions that are highly specific to their needs, which drives the creation of more apps and integration.

But with expanding capabilities and more complex integrated applications, many nonprofit leaders and finance professionals have found they are not familiar with all the platforms and don’t have the time to investigate or train, making outsourcing more attractive. Working with professionals who are well-versed in the technology enables them to find the right solutions.

Efficiency and cost savings

Outsourcing may allow an organization to realize efficiency and cost savings. If your organization’s accounting and bookkeeping can be managed in 20 hours per week, why pay a finance professional – if you can find one to recruit in today’s tight labor market – for a 40-hour week?

Moreover, there are numerous outsourced accounting providers that specialize in serving nonprofit organizations, so their capabilities and fees are oriented to the needs of nonprofits.

Things to consider when outsourcing

If you’re considering outsourcing some or all your organization’s finance functions, here are a few best practices:

• Find a provider who is experienced with nonprofits and any specialized accounting relating to your organization, such as endowments, allocation of restricted investment income, and tracking use of restricted funds.
• Determine the scope of services. Consider which finance functions you want to outsource first. Many organizations start by outsourcing accounts payable and accounts receivable, then move on to more functions.
• Make inquiries concerning quality of services. How do they train employees and address continuing education? How do they keep up with technology? Is there oversight within the outsourced accounting firm for the work performed? How do they address staff turnover? Will there be continuity of staff performing services for your organization?
• Discuss the cost involved. What are their billing practices, and how will they handle additional billings that may arise from unexpected problems?
• Communication is key. Determine if there is proactive communication before hiring an outsourced provider. Talk with at least two or three about how they work with clients like your organization.
  • • How will they work with your internal finance staff or with you directly?
    • How often will they be in communication?
    • What are their procedures for dealing with problems that may arise?
    • What will their monthly reports look like?
• Determine the timeline for work product and make sure these can be met.
• Fraud and data protection should be considered. What controls do they have and how do they address data security issues?

If you are considering outsourcing your organization’s accounting and bookkeeping functions, contact your G.T. Reilly advisor for a discussion.