Technology can be scary for most nonprofits. The idea of changing tried-and-true processes to achieve possible efficiencies can feel like a daunting task. Compounding that with an organization’s willingness to make a monetary and resource investment can be an insurmountable mountain for most organizations.
However, nonprofits risk falling behind in the current digital landscape if they don’t properly make investments in their technology. New and emerging technologies can help nonprofits increase efficiencies through automation tools and, ultimately, reduce costs in various ways. Below are a few examples of such efficiencies and financial benefits.
Time Savings
New technology can allow for more efficient processes that reduce time spent on entry and increase time spent analyzing. Some of those ways include:
- Streamlined Processing: Data entry automation speeds up the process and eliminates bottlenecks associated with manual sorting, filing, and data transcription.
- Automated Workflow: Automation tools implement predefined rules that route items for approval, matching them against support data. Automated reminders can prompt approvers and streamline necessary approvals if items match and tie.
- Centralized Document Management: By maintaining related documents in a centralized digital repository, automation solutions provide easy and efficient access to financial data.
- Increased Staff Productivity: By automating routine tasks, staff can redirect their efforts from manual data entry and tracking to higher-value activities.
Improved Accuracy & Reduced Errors
Automation tools allow for a more detailed review with a higher level of accuracy. For example, tools can automatically tie out bank reconciliation entries and give staff more time to analyze cash flow. This can save days or even weeks for the month-end close process. Other ways that automation can assist include:
- Automated Data Capture: Automation systems minimize the risks associated with manual data entry. For example, these systems ensure that the foundational data entering the financial system is correct by accurately capturing invoice details such as vendor names, amounts, and dates. This reduces the potential for errors at the source.
- Predefined Processing Rules: Automation allows for establishing predefined rules that standardize the handling of the procure-to-pay process from invoicing to payment, including automatically performing a three-way match of invoices to purchase orders and delivery receipts, ensuring that payments are made only when verification criteria are met.
- Reconciliation Processes: Automation facilitates timely and accurate subledger reconciliation with general ledger entries. This allows more time for analysis and review of the activities, rather than spending time on data entry.
Cost Reduction
Investments in new technology can help ensure a nonprofit remains relevant while also saving resources that eventually lead to reduced costs. Some of the areas where organizations can reduce costs include:
- Labor Costs: Manual processing of any workflow is labor-intensive. New technology can reduce the need for significant staff time for data entry, invoice matching, and payment processing.
- Processing Costs: Automated systems streamline processes digitally, eliminating tangible costs by reducing the physical footprint needed for storing financial documents.
- Opportunity Costs: Beyond direct financial savings, the efficiency gained through automation frees up organizational resources that can be redirected toward mission-driven initiatives.
These are just a few of the ways that technology and automation tools can save an organization time and money. While implementing any system requires an upfront investment in time and resources, it can be a real game changer over time for organizations that take the leap. If you have any questions or need assistance, please reach out to one of our professionals.