Stop Time-Consuming Reporting in Human Service Organizations

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As a valued team member of a nonprofit or human service organization, you know reporting is essential to maintain finances and compliance. Still, it can often become tedious and time-consuming, and when it comes to reporting and accounting services, too much manual work can extend the bookkeeping process and even lead to fraud.

Research shows that nearly 70% of organizational leaders have made critical decisions based on inaccurate financial data. Of these respondents, more than 40% attributed this issue to manual data inputting, while over 55% cited a lack of automated controls and checks as part of the problem.

No matter the size of your organization, even the most minor accounting mistake can throw your reporting off track and lead to costly, labor-intensive damage. To reduce human error, mitigate risks, and streamline operations, it’s vital to implement accounting software.

Types of Accounting Errors

If your team handles your human services income reporting processes without any automation, your organization likely has a higher risk of running into errors, mistakes, and fraud. Many IT departments rely on technology to minimize human error by creating consistency at scale, speeding up response times, reducing the manual burden on the team, and minimizing operational risks. While your accounting team may run a bit differently, you can still benefit in the same way.

Here are the different types of human error to watch out for in your accounting and reporting department:

  • Errors of omission: Employees can unintentionally fail to record an item, such as noting a receipt but forgetting to record it on the accounting system. This issue often happens if someone misplaces receipts, invoices, or other documentation.
  • Error of commission: By mishandling an item or putting it in the wrong location, employees can commit an error of commission. Though they may enter the correct amount, they may place it in the wrong account or note a receipt against the wrong customer. While your total payment will be correct, there’s still an error.
  • Error of principle: This type of error occurs when a staff member doesn’t comply with certain principles, such as recording a personal expense as a business expense. This error tends to have consequences because it goes against the Generally Accepted Accounting Principles (GAAP).
  • Compensating error: A compensating error happens when someone makes two mistakes simultaneously, causing one to offset the other. For instance, an employee might overstate income by $500 but accidentally overstate an expense by a similar amount, so it ends up evening out, even though both entries are wrong.
  • Error of transposition: Overstating or understating an item is often the cause of transposition, which means an employee has recorded the incorrect amount by accidentally reversing numbers. For example, instead of entering an expense as $234, one might put it as $324.

Several other types of human error can occur with data entry. These can all end up delaying your accounting and budgeting process and interrupt your cash flow, which can harm your organization in many ways.

How Human Error Impacts Accounting and Cash Flow

How much does human error really impact your organization’s accounting processes? While you might think it’s not an issue, any accounting error can result in a reporting mistake that causes other discrepancies down the line.

Human error, such as forgetfulness or misentry, can lead to the falsification of data, which can have great damage potential. Human error is a constant threat in reporting, particularly if your organization has no verification steps or ways of checking for common issues.

Whether an accounting error is minor or substantial, it can still have serious consequences on your organization:

  • Employee fraud: Failing to notice or find the source of accounting issues and incorrect reporting can prevent your organization from detecting employee fraud, such as embezzlement.
  • Incorrect expense reporting: Misclassifying or failing to include organizational expenses may result in failure to report a deductible expense, which can cause you to overpay in taxes.
  • Increased labor costs: Correcting too many classifications or omission mistakes is time-consuming for employees and can take time away from their other reporting tasks, leading to increased labor costs.
  • Late payment fees: Misclassification errors are often found later in the accounting process, which means your invoices could be past due and result in late fees and interest.
  • Incorrect cash flow data: If all items aren’t reported correctly, it can be difficult to know the amount of cash you have on hand to pay bills due to overstating.
  • Incorrect income reporting: Errors in expense reporting can distort your profit margins or lead to the over-reporting of income.

Why You Should Automate Your Human Services Reporting 

automate your human services

If you’re repeating something, you should automate it. This popular organizational rule can help you save time and drastically minimize the chance of human error. Not to mention, it can free up time for your employees to focus on more high-value tasks and projects. The more elements of data collection and standardization you can automate, the fewer mistakes you’ll likely have.

There are plenty of opportunities for automation in your organization, but let’s focus on what it can actually do for you:

  • Speed up data entry: Manually entering data can take up too much time. Automation speeds up this process and enables employees to enter information, check calculations and run reports much faster, giving them more free time to devote to other priorities.
  • Reduce invoice traffic jams: At the end of the month, your staff may have piles of invoices and data entries to complete. This time-sensitive activity can lead to backlogs and pause incoming work, which reduces productivity. Automation helps improve this process by enabling on-time payments and minimizing invoicing errors.
  • Improve compliance: Your organization likely follows strict procedures that involve many stakeholders. Automation can streamline this process by mitigating fraud and inaccurate data due to human error.
  • Enhance data accuracy: By removing the human from the equation, there’s less chance of a human error occurring within your data. Accounting automation helps improve the timeliness and accuracy of your accounting operations and prevents time-consuming and costly repairs.
  • Improved productivity: Manual, repetitive tasks can cause employees to lose focus. Automation can help your teams save time and become more engaged with their work, boosting productivity and morale.

What Other Capabilities Does Accounting Software Offer?

Accounting software platforms can improve the quality of your data and allow you to be more confident when making organizational decisions. Instead of putting your trust in potentially inaccurate data, you can rely on a solution that anticipates your reporting and accountability requirements. If you’re looking to reduce human error and streamline your requisition, purchasing, inventory, budgeting, and timesheet processes, you need a purpose-built and secure accounting system.

With a trusted solution, your organization gains access to a true chart of accounts and dynamic report templates to help you quickly find what you need and complete your task. Your staff members can create reports in minutes instead of hours and spend more time analyzing data that fuels your financial decisions.

With scalable and configurable accounting software, your team can utilize built-in dashboards, reports, and unlimited budget forecasting so you can give stakeholders and donors the insights and transparency they need. Your organization can also manage critical data with accounting software, such as payroll, employee records, benefits, and tax documents.

Finally, you can make compliant reporting a breeze with modules and tools that make it easy for nonprofit and government organizations like yours to complete these essential processes.

Request a Demo With MIP Fund Accounting® Today 

At MIP Fund Accounting®, we know how frustrating it can be when one small mistake disrupts your entire accounting cycle and leads to more downtime. With the MIP Fund Accounting® software solution, you can effectively manage complex accounting with more comprehensive financial tracking tools that help you engage donors and make better-informed decisions.

At MIP, we aim to provide nonprofit organizations and government entities with a robust solution that eliminates the need for manually inputting data that leads to errors. If you want to eliminate time-consuming reporting in your organization and empower your team to focus on more high-value tasks, request a free demo today to see how we can help.

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