How efficient is your not-for-profit? Even tightly run organizations can use some improvement — particularly in the accounting area. Adopting the following six tips can help improve timeliness and accuracy.

  1. Set cutoff policies. Create policies for the monthly cutoff of invoicing and recording expenses — and adhere to them. For example, require all invoices to be submitted to the accounting department by the end of each month. Too many adjustments — or waiting for different employees or departments to turn in invoices and expense reports — waste time and can delay the production of financial statements.
  2. Reconcile accounts monthly. You may be able to save considerable time at the end of the year by reconciling your bank accounts shortly after the end of each month. It’s easier to correct errors when you catch them early. Also reconcile accounts payable and accounts receivable data to your statements of financial position.
  3. Batch items to process. Don’t enter only one invoice or cut only one check at a time. Set aside a block of time to do the job when you have multiple items to process. Some organizations process payments only once or twice a month. If you make your schedule available to everyone, fewer “emergency” checks and deposits will surface.
  4. Insist on oversight. Make sure that the individual or group that’s responsible for financial oversight (for example, your CFO, treasurer or finance committee) reviews monthly bank statements, financial statements and accounting entries for obvious errors or unexpected amounts. The value of such reviews increases when they’re performed right after each monthly reporting period ends.
  5. Exploit your software’s potential. Many organizations underuse the accounting software package they’ve purchased because they haven’t learned its full functionality. If needed, hire a trainer to review the software’s basic functions with staff and teach time-saving shortcuts.
  6. Review your processes. Accounting systems can become inefficient over time if they aren’t monitored. Look for labor-intensive steps that could be automated or steps that don’t add value and could be eliminated. Often, for example, steps are duplicated by two different employees or the process is slowed down by “handing off” part of a project.

Jen:  This is the PKF Texas Entrepreneur’s Playbook.  I’m Jen Lemanski, this week’s guest host, and I’m here with Martin Euson, one of our tax directors on our Transaction Advisory Services team. Welcome to the Playbook Martin.

Martin:  Thank you, Jen.

Jen:  So Transaction Advisory Services, I know you’ve told me before that we advise people when they’re looking to purchase a business, what are some of the top tax issues that you want them to consider when looking into something like that?

Martin:  There are three key areas that I advise clients on who are looking to buy a business. First and foremost I advise them that they should really understand the form, the substance and the structure of the transaction they’re proposing to undertake from both a legal perspective and a tax perspective because as you may imagine those two can differ. Secondly, I advise them they should really be able to manage their risk and limit their exposure to the historical tax liabilities of the business that they’re proposing to buy.  And thirdly I advise them that they should really understand the tax attribute profile of the business that they’re proposing to acquire.  In other words are there any loss carryovers or credit carryovers that may be available to then in the future?

Jen:  So it sounds like there are a lot of moving parts when you’re potentially thinking about buying a business.  What sort of timing should all of this take?

Martin:  Jen the most important issue here with respect to timing is that all of this stuff be accomplished prior to the transaction.  If you’re looking at this stuff after the transaction’s already happened it’s really of limited value.

Jen:  So it’s really too late?

Martin:  Yes.

Jen:  Perfect. So they need to call you and get you on the phone now if they’re even thinking about buying a company?

Martin:  Absolutely.

Jen:  Perfect. Well, we’ll get you back to talk some more because I think this is a little bit more in depth than we can go into right now.

Martin:  Thanks, Jen, I look forward to it.

Jen:  To learn more about how we can assist you with your potential transactions visit PKFTexas.com/transactionadvisoryservices/.  This has been anther Thought Leader production brought to you by PKF Texas The Entrepreneur’s Playbook.