THE SMART “COMMERCIAL”
MOVE EVERY NONPROFIT
SHOULD MAKE THIS YEAR
By Peter Bepler, President and co-founder of Anybill
If you were the CEO of a struggling small to midsized business, you’d look at making significant
strategic changes, right? You and your executive
team would look at thriving organizations to
uncover practices you could steal/adopt to increase
your own performance, flexibility and efficiency.
It’s not so straightforward for a nonprofit executive, is it?
Your mission-focus, culture and public image complicate the adoption of commercial
practices. But, this isn’t a good time for maintaining operational status quo – it’s
time to figure out what works best and run with it.
Nonprofit executives, like the struggling CEO, will survive these troubled times by
adopting best practices from prosperous enterprises.
For example, let’s look at a universal concern facing nonprofits in 2012: shrinking
support from donors.
Donors are scrutinizing their philanthropic options more closely. To gain and retain
donor/funder support, a nonprofit can’t be managed like a mom-and-pop shop. The
most successful fund-raising organizations, those most likely to fulfill their mission
in 2012, demonstrate efficiency and financial accountability to donors.
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THE SMART “COMMERCIAL” MOVE EVERY
NONPROFIT SHOULD MAKE THIS YEAR
So, how is financial accountability managed enhanced in
the commercial world? Increasingly through technology.
Today’s corporate accounting is made more efficient and effective through platforms
that simplify and speed payroll and Accounts Payable (AP). The majority of business
payroll is now handled through a third party direct deposit, and Accounts Payable
automation is quickly becoming the method of choice for invoice management.
While most nonprofits are closing the technology gap with payroll functions, they
lag in AP. Here’s the window of opportunity. Accounts payable automation usually has
an outside vendor providing secure, internet-based management of invoices, payment
processes, and financial data analysis and reporting.
Why is AP automation the ‘best practice’ your nonprofit
should adopt in 2012? These are four good reasons:
Maximizing Efficiency. Recent surveys of accounts payable professionals show
organizations pay, on average, more than $10 to process an invoice manually.
Electronic processing, on the other hand, costs typically $2 or less.
The inefficiencies of paper-based processing also undercut a nonprofit’s mission
through fines and penalties owing to late (misplaced or misfiled) invoices. Manual
processing also means more labor hours, longer turnaround time, more errors,
higher printing costs and greater security risks.
Appealing to Donors with Credible Metrics. Again, demonstrating reliable
donor stewardship will become increasingly important in the coming year. Donors
and prospective donors seek more information about your cost of providing services
and expect a commitment to internal financial control. AP automation provides the
nonprofit with a credible tool for achieving a higher level of transparency.
Legislation. Nonprofits can expect increased legislative and regulatory demand
for financial accountability. Currently, regulations like IRS Form 990, Sarbanes-Oxley,
and Bill 198 in Canada require nonprofits to monitor and report on accounting
procedures, including AP. It’s reasonable to expect governments will continue
their demands on nonprofits to behave more like businesses with regard to
finance and accounting. Many NPOs already have adopted business technologies
(e.g., AP automation) to manage these demands.
Fraud Deterrence and Mitigation. ”According to the Association of Fraud
Examiners 2010 Report to the Nations on Occupational Fraud and Abuse
(http://www.acfe.com/rttn-highlights.aspx)...“small organizations are disproportionately victimized by occupational fraud. These organizations are typically lacking
in anti-fraud controls compared to their larger counterparts…. AP automation
helps to control financial fraud through increased transparency in the payment
process, giving your executive team a meaningful ‘payments dashboard.’
2
1801 Pennsylvania Ave., NW, Suite 700
anybill.com [email protected]
Washington D.C. 20006
P
202 789 2626
F
301 542 0167
THE SMART “COMMERCIAL” MOVE EVERY
NONPROFIT SHOULD MAKE THIS YEAR
As mentioned above, much of corporate America has found these reasons motivation
enough to transition to AP automation. When your nonprofit is prepared to follow,
speak to a peer in the for-profit world to learn more about his/her incentives and
results. It’s likely they’ll cite the acquisition of spending benchmarks, gaining an
analysis tool for cash forecasting, and the ability to support dynamic discounting
with suppliers.
EdOps, a Washington, D.C.-based company providing business management services
to charter schools, provides a great example of how commercial firms seize
strategic advantage through automation. The nonprofit charter schools EdOps
serves require not only the financial transparency to demonstrate sound stewardship,
but also a high level of flexibility and cost efficiency.
Dan Theisen, EdOps Co-Founder, notes the AP function holds a unique and
underleveraged capacity to cut costs, reduce vulnerability and facilitate greater
staff productivity.
“The ease of use, central online archive and transparency of the
on-demand AP platform speeds approval processes, provides
information instantly, supports audit activities and aids grant
tracking and compliance. In addition, EdOps clients appreciate
the online system’s elimination of nearly all AP related paper,
helping them to achieve their green goals,” added Theisen.
Since it adopted automated AP in October 2010, EdOps has deepened the capability
of its online management suite, receiving overwhelmingly positive feedback
from clients. Theisen says the adoption of AP automation has made a significant
contribution in enabling EdOps’s to greatly increase the number of clients it serves.
For EdOps, automating AP transformed it from a cost center to a revenue generating
operation. Any nonprofit organization, yours included, can do the same.
As with the adoption of any new technology or process, your first step is to undertake
a needs analysis, addressing both mission and financial needs. Your IT department
should be included in these discussions because electronic infrastructure plays a
role. With a vendor selected, it should take from a few days to a few weeks to set-up
the solution, complete imlementation and train your team. Then a competent vendor
will adopt your AP processes and begin tasks like invoice sorting, document imaging/
archival and payment processing.
It’s understood that the poor economy and inherent human aversion to change
make such transitions difficult. Your accounting department’s recent leap from
ledger books to Excel spreadsheets might have inspired similar trepidation. It
must be remembered, though, that a nonprofit’s mission and Accounts Payable
are inseparably linked. Every NPO wishing to fulfill its commitment to constituents
in 2012 should make technological empowerment of AP a foremost priority.
3
1801 Pennsylvania Ave., NW, Suite 700
anybill.com [email protected]
Washington D.C. 20006
P
202 789 2626
F
301 542 0167
THE SMART “COMMERCIAL” MOVE EVERY
NONPROFIT SHOULD MAKE THIS YEAR
About the author:
Peter Bepler directs Anybill business strategy, focusing on the company’s marketing,
sales channels and communications. His efforts have helped the company experience
a 10-fold growth in clients, 1000% percent increase in revenues and a quadruple
rise in sales per client since its founding.
Before co-founding Anybill, Peter was Associate Director of Business Development
for UniverseONE, Inc., a pioneer of online marketing. There he developed and
implemented web marketing strategies for clients and spearheaded the development
of online marketing best practices. He also helped develop the Internet strategies
for Charles Schwab and Quick & Reilly. Peter holds a Bachelor of Arts degree in
Economics from Kenyon College.
About Anybill
Since 2001, Anybill has automated accounts payable for small- to medium-enterprises (SME) as well as some of the world’s largest corporations
and institutions. Because accounts payable—in all its iterations, including tax payments—is all we do, we’re able to provide innovative and
effective software that’s wed to superior customer service. We are headquartered in Washington, D.C., are SSAE 16 compliant, and maintain
strategic relationships with regional and national CPA firms such as RAFFA, BDO Seidman, KPMG and Ernst & Young.
4
1801 Pennsylvania Ave., NW, Suite 700
anybill.com [email protected]
Washington D.C. 20006
P
202 789 2626
F
301 542 0167