6 project accounting issues that keep NFP stakeholders awake at night - and why finance should care
Time to read: This is a five minute read
Managing and understanding how well a project is progressing can be a nightmare for the budget holder, project manager, board or trustees. And it should be a huge concern for finance teams too. Accurate and timely project costing directly impacts how efficiently the not-for-profit organisation’s funds are utilised – and the prospect of future funding. Here are six key issues you need to look out for to help address inefficiency and bottlenecks:
1. Information delivery to external donors, funders and regulators: the information either arrives late, is incomplete or internal managers spend way more hours than necessary to collate the data together. One thing’s for sure, this means that funds are spent inefficiently and the organisation loses out on that all-important tender.
2. Timely reporting to project managers, budget holders and trustees: managers outside of finance don’t care what happened 10 days after month-end. They must know how a project is doing today. Unfortunately, in many organisations budget holders are maintaining their own reporting systems because they don't trust or can’t wait for accounting system reports.
3. Demonstrating delivered values: if an organisation can’t show how time was spent on a project or provide factual evidence, the bottom line is this – future funds will be cut. Finance has a major part to play in ensuring this doesn’t happen by providing the right tools to capture, track and report on this information.
4. Understanding the true costs: if a project is likely to fail, you can be sure that not having a clear view of costs was a major factor. From costing and budgeting for volunteers to being able to evidence why an event didn’t raise enough funds, the finance department has the experience required to help overcome this obstacle.
5. Pulling data from multiple sources for reporting: manual data collation, multiple spreadsheets and systems that are difficult to extract information from: managers can spend as much time producing reports as they do on their projects. Being able to map multiple data sources into meaningful financial and non-financial reports is at the heart of any good finance function.
6. VAT compliance: without a clear picture, it’s once again impossible to see the true cost of projects, with partial VAT an issue in particular. Managers, the board and trustees will be looking to finance for guidance here on for how to best manage this problem.
By helping your stakeholders to address these issues, you’re enabling them to be more responsible caretakers of funds. This supports you as the ultimate financial custodian, not only to make sure that monies are used for the purposes they were intended, but also to attract more grants, improve fundraising efforts and the value that this brings to the NFP’s cause.
