By Neil Taurins, General Manager of MIP Fund Accounting
With the new year in full steam, your organization may already be chipping away at its goals for the year. With common challenges like economic uncertainty, staffing, tech stack considerations, and others facing your organization, we’ve identified these top trends, challenges and recommendations for accounting and finance teams in 2023:
1. Improving Efficiency by Examining Your Tech Stack
Inefficient or siloed technology that handles singular purposes can cost your organization efficiency and physical capital by requiring multiple licenses. When you employ multiple pieces of technology, instead of one multipurposed system, inefficiency may be an unintended byproduct.
In this 2022 Nonprofit Research Study, half of the nonprofit and educational organizations surveyed said they used six or more tools that led to at least two hours a day navigating inefficient systems. The hours spent navigating between inefficient systems piles up to 520 hours a year or 25% of a respondent’s work week.
Combatting inefficient systems is one of the biggest takeaways from our upcoming 2023 Nonprofit Research Study as well. Sixty-one percent of nonprofit respondents reported that aspects of their current tech stack are time-consuming.
To alleviate this pitfall, examine your tech stack today and consider if cloud-based technolology is right for you. Some common often-ignored areas are accounting, donor management, payroll, HRMS, and other similar administrative systems.
For example, cloud-based accounting software helps your organization:
- Easily measure the performance of a program or activity
- Create reports for multiple fiscal years
- Track and report on encumbered funds
- Employ robust internal controls and a comprehensive audit trail
- Tailor reports for each funding source
- Create, manage, and report on multiple budget versions
Relying on siloed or inefficient technology can split the above tasks over multiple pieces of software, creating opportunities for human error and adding to administrative hurdles. Adopting cloud-based software meets your employees wherever they’re at, cuts technology spending by eliminating tech infrastructure requirements, and automates the backup and update processes. Cloud technology integrates with other programs, like Salesforce and bill.com, to help manage financial operations more efficiently and effectively. And when it comes to data security, the cloud has several options to keep your organization secure like multi-factor authentication and reputable and secure server hosting.
Our upcoming 2023 Nonprofit Research Study will share how many organizations already plan to adopt cloud technologies. About 52% of nonprofits, 58% of education organizations, and 57% of government organizations (including public agencies and municipalities) plan to invest in cloud-based accounting software this year.
These organizations are moving to the cloud to improve administrative efficiency and to take back the 520 annual hours spent navigating between inefficient systems. Examine your tech stack today and see if streamlining your technology can improve team efficiency.
2. Preparing for Economic Uncertainty Through Varied Funding Sources, Managing Costs and Budgets, Improving Processes
Organizations ended 2022 with sharp economic uncertainty, and financial experts expect the trend to continue. With consumer spending decreasing, inflation rising, and general economic uncertainty hanging in the air, most nonprofits who solicit donations will feel the effects of an upcoming recession.
While donated amounts increased in the first three quarters of 2022, donor numbers continued to decrease, and are expected to decline in 2023, according to The Nonprofit Times.
Prepare for the uneasiness by managing costs and better managing budgets, improving process efficiencies, and working to safeguard your organization against this potential economic uncertainty.
Proactively approaching your finances and creating several “What-if” budget versions will be proactive in 2023 to ensure financial stability in the coming year. Keeping and updating a plan B and C budget will be essential if the country falls into a recession.
3. Solidify Staffing Through Retention and Training
Despite the uneasy economic qualities, many nonprofits found relief in staffing shortages and added more willing applicants to end the year.
While the accounting and nonprofit industries are in a worker shortage, organizations combat the deficit by improving and solidifying employee retention policies. From investing in employees to holding in-person training events, organizations are working to keep current accounting staff content and engaged, especially in advance of busy periods such as tax and audit season.
Holding in-person training sessions is a great way to increase staff engagement and help develop new skills. . Find ways to reduce repetitive tasks and focus employees on strategic work. Help them find efficiencies in reporting and workflows, especially for significant assignments.
Preparing staff on how to support each other during audits, in applying for grants, and during tax and budgeting season also factors into retention and employee happiness.
When organizations invest in their employees, it’s a win-win. Employees are happier, and organizations can benefit from having engaged, skilled employees.
While preparing for all the challenges 2023 will have is impossible, being proactive and taking steps to prepare for whatever the year throws at your organization is an excellent way to improve organizational efficiency and create a more optimized workplace. Prepare today, benefit tomorrow.
At MIP Fund Accounting, we’re working on helping your organization combat 2023 challenges. These collected resources are available and developed for nonprofits.
- Budgets for Nonprofits: Get ready for 2023
- Smart, Forward-Thinking Nonprofit Budget Planning
- How to Tell Your Nonprofit’s Financial Story
- Best Practices when Accounting for Grants
- Essential Nonprofit Grants Checklist
- Everything You Need to Know About Grants