They work to accomplish a single purpose and that is complete their charitable mission to the needs of their benefactors. Whether it is local charity support or international aid funding, the end desired result is impact. Yet what lies behind a successful charity, there is a tangled web of financial string pulling. For most organisations, however, keeping track of that income becomes another onerous task that depletes resources.
Charities cannot choose whether or not to be financially transparent and accurate; they are required to by law. However, doing so is not viable for many small and medium-sized organizations due to its high cost. This is where the guidance of a professional can be priceless. Outsourced Bookkeeping for Charities is a convenient answer for those companies that want to minimize the cost and bring attention back to their cause.
The Importance of Professional Bookkeeping
The capital market of the third sector is not same as other capitalist financial systems. Charities need to consider both restricted and unrestricted funds, maintain grant reporting standards and remain Charity Commission compliant. When records are incorrect, it can cause legal flashpoints and faith in public institutions to erode.
Maintaining these records requires precision. An outside service provider ensures that the processing of financial data is carried out by professionals who are familiar with and sensitive to the unique regulatory requirements associated with the non-profit industry. By outsourcing this planning, trustees and managers can be reassured knowing that their financial reporting is accurate, current, and compliant.
The Benefits of Outsourced Bookkeeping for Charities
Outsourcing the financial management provides an immediate operational advantages. These are improved administrative capabilities and increased staff / volunteer free time.
Simplifying Financial Administration
The day-to-day grind of financial tasks can easily drown a small team. It takes time to record who has contributed what, to organise volunteers payments and to claim back gift aid (adding extra money) and cross-referencing bank statements.
Charities’ outsourced bookkeeping can assist in simplifying this. BOOKKEEPING Professional bookkeepers harness the power of modern-day technology to automate transaction recording and tracking expenditure. This means every £ is captured without input from a charity member of staff. As a result, the risk of human error is minimized and financial reports are generated faster.
Reallocating Time to the Mission
The value of a charity’s time is just immense. His organization couldn’t afford senior staff to spend hours working with spreadsheets or payroll — they weren’t out fundraising, delivering services or meeting stakeholders.
By contracting out these tasks, companies are in effect purchasing their time back. Case studies repeatedly demonstrate that when bureaucratic obligations are lifted, charity bosses go on to invest more energy into developing long-term projects and delivering services. This paradigm change often correlates with higher fundraising results and a broader community impact.
The Cost-Effectiveness of Outsourcing
A common myth is that contracting out an outside company adds costs. In fact, for many companies, it is a cost-cutting exercise. When one looks at the expense of a service fee versus employee total cost, it quickly becomes a financial no brainer that a company should outsource.
Reducing Overhead Costs
Hiring an in-house bookkeeper is more than just a salary. An employer also has to account for National Insurance, pensions contributions, sick pay and holiday pay. Plus, there’s the not so transparent expense of recruitment and training as well as office space and gear.
Outsourced firms charge by the job or the hour. This leaves out the vagaries of labour overhead. You pay for only the service you need, when you need it. There are no worries about staff turnover or cover while on holiday. The service is both regular and dependable.
Accessing Expertise for Less
Small charities often can’t afford to bring in a senior-level accountant with experience working in the sector. They might depend on very low-level staff or well-meaning volunteers who simply don’t have the technical understanding. “Outsourcing affords us the opportunity to draw on a skilled group of individuals for much less than what it would cost us in salary alone. Hence the charity gets top end financial advice and efficiency without the price tag.
Improving Budget Setting for Charities
Safe and sound financial planning is all about forecasting the future. Charity budgeting is an essential tool for making sure your charity can continue to operate in times of austerity, and also enables appropriate investment during any periods of growth.
Creating Realistic Financial Plans
An outside bookkeeper offers a fresh perspective on the charity’s financial soundness. They can look at historical data and recognize patterns in donation cycles and spending. It is these data-based approaches that can enable realistic and attainable budgets to be created. The charity does not need to take pot luck, but can base its activities on hard financial facts.
Aligning Funding with Operations
Experienced bookkeeping guarantees not only that budgets correspond to operational demands as well as funding constraints. If you want to be able to monitor expenditure against individual budget lines while you’re in the process of awarding grants, it’s important that your processes allow you to do so. Correct budgeting for charities provides a way to track this, enabling money to be spent as intended and for reporting back to donors to be accurate. This trust leads to securing continued financial support, as donors believe in providing resources to groups that show good stewardship of their money.
Addressing Common Concerns
Trustees generally have legitimate worries about moving to an external provider. Direct dealing with these challenges is a major part towards achieving successful partnership.
Data Security: Security is paramount. HONEST bookkeeping companies utilize the cloud and adhere to cyber security protocols helping reduce risk of hacked data. They often have stronger security systems than a small charity could keep in its own office.
Loss of Control: Some fear that outsourcing equals no oversight. A common practice is quite the opposite. The real-time financial dashboards that cloud accounting provides means 24/7 access for trustees. That data is provided by the outside bookkeeper, but complete control and visibility are maintained over everything inside the charity.
Transition Toughness: Transition from in house to outsourced is a controlled process. Companies that do this professionally know how to migrate data and install new systems with as little hassle as possible.
Proven Advice on Selecting A Provider
Picking the perfect partner is key to long term success.
Check Charity Experience: Make sure the provider is experienced with charities. They need to get to grips with Fund Accounting, Gift Aid and SORP (Statement of Recommended Practice) guidelines.
Check Technology Compatibility: Find suppliers that operate on well-used cloud-based systems such as Xero or QuickBooks. Such software tools provide the ease of working with multiple users looking at and modifying documents together, plus other features particularly useful for budget setting for charities.
Check out Certifications: Ensure that they are licensed by a professional body, for example the ICB (Institute of Certified Bookkeepers) or AAT (Association of Accounting Technicians).
Summary and Next Steps
The administration burden on charities is getting worse. Organisations need to find quicker, more efficient ways to manage resources if they are to stay on an even keel and focus on their primary purpose. Outsourced Charity Bookkeeping provides a route to professional, compliant and efficient financial management.
By slashing overheads, ensuring accuracy and helping with endeavours such as budget setting for charities, the process of outsourcing helps organisations work in a more sustainable way. It makes the finance function something other than a drag.
For charities seeking to protect themselves for the future and ensure that they mirror their good work with good financial processes, it is a common sense measure. Think about reaching out to a service that can assist you in your mission.
