Lean Accounting: Why It’s Important for Nonprofit Success
The most dangerous phrase in the language is: We’ve always done it this way.
Read the above quote and let it settle in your mind for a moment. Ponder how it relates to your organization and the many tasks that keep it running. Are you doing things in certain ways simply because that’s how it’s always been done? Or is it because those functions are truly the best ways to get things accomplished? Change can be a scary thing, but progress isn’t possible without it. It’s especially true when it comes to accounting — more specifically, lean accounting. It’s the name of the game in today’s innovative world. But what is lean accounting? And why should you care? What’s more, how do you implement it? Let’s break it down…
What is lean accounting?
Lean accounting is all about efficiency. It’s taking stock of your current accounting processes and identifying those that are time-consuming, error-prone, and archaic. The “lean” part involves removing the waste from those tasks. In true nonprofit fashion, you’re determining how to do more with less. Granted, the endeavor isn’t a “once and done” kind of thing. It’s one that requires continuous improvement — but it gets easier over time, especially if you have helpful accounting tools in place.
Why should I care about lean accounting?
Reducing wasteful accounting processes increases the department’s quality, efficiency, and productivity. It helps your nonprofit do more of what your stakeholders value and less of the things they dislike. You’re essentially revolutionizing your nonprofit’s accounting to save time, money, and stress for anyone involved with that part of the organization.
How do I make my nonprofit’s accounting function lean?
Here are seven steps to getting started with lean accounting at your nonprofit:
1. Determine your “why” – Figure the reason (or reasons) why you want to move to a lean accounting model. Ask yourself things like, how will it help you with your mission? Will it put you in a better position to help people? If so, which ones? Think about your donors. Will it give you the ability to obtain additional funding? Make your “why” compelling so that all stakeholders can readily support the effort.
2. Prepare your people – Go back to your “why” and see which people will be affected by your lean accounting methods. Keep in mind that they could be internal (employees, board members, etc.) or external (donors, volunteers, etc.) Give them a heads-up as to changes that may affect them.
3. Evaluate resources – Once you determine who will be affected by your lean accounting practices, ensure they are aware and prepared. Invite their input, especially before changes take place. Most importantly, determine if your resources have the bandwidth to take on any new initiatives and plan accordingly. Some work may need to be shifted to others.
4. Pinpoint tasks – Remember, this is a marathon, not a sprint. Take a look at what you’re trying to accomplish from a 20,000-foot standpoint. Create a list of long-term goals, short-term goals, and the tasks required to achieve those goals. Take baby steps. A series of small wins yield significant results over time.
5. Delegate – Look at your task list and delegate appropriately. Give your team autonomy but check-in and obtain feedback regularly. Use your resources wisely and kindly.
6. Review – What doesn’t get measured doesn’t get managed, so don’t forget to monitor and rate your progress over time. Are you achieving your goals? Do you see the results? If things aren’t going as planned, be prepared to pivot and change course to gain a better outcome.
7. Share – Communication is a key to success. Share much and share often with your team. Let them know results — what’s working and what’s not. Sometimes things don’t go according to plan, and that’s ok. Be honest and let your team know what’s going on. They’ll respect you more for it.
If you’re ready to ditch wasteful bookkeeping and accounting practices, let’s talk. Our team of nonprofit accounting experts and cloud-based technologies will have your accounting running lean in no time. Let us know your “why,” and we’ll share some ideas on how to achieve your lean accounting goals this year and beyond. Schedule your free consultation call today.
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Qbix's goal is to provide the latest cloud-based accounting technology while delivering real-time visibility into your nonprofit's financials 24/7. Numbers are our passion, but providing your nonprofit with the financial expertise needed to facilitate growth and profitability is our top priority. And because no two organizations are the same, Qbix offers the flexibility you need to accomplish your nonprofit's goals.
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