Many nonprofits think it’s best to outsource bookkeeping. To leave this work to a pro. And let the nonprofit focus on its core work. So what is the role of a bookkeeper in a nonprofit?
What does a bookkeeper do?
Each organisation probably uses their bookkeeper a bit differently. But in general a bookkeeper deals with most day-to-day finance tasks. They receive invoices from your suppliers and experts and make sure these are added in your accounting system. And then they prepare payments for these invoices. They may prepare payments of salaries. They manage petty cash if you have that. And they may communicate with team members and vendors to make sure they get the information and adjustments needed.
What does it mean?
Your bookkeeper is the first one to do a check on your financial documentation. They’ll check that the invoices received are clear and complete. They don’t decide whether the invoice is justified. But they may flag that a date is wrong, the service charged isn’t in line with the contract, or that there is an error in the calculation. They will not pay out cash if there’s no documentation. And they’ll not receive cash for your petty cash box without documenting the source and reason. So anything that enters your books is at least technically correctly documented.
Yes, that is a big deal. Anyone who’s ever experienced an audit will confirm that. Having complete and correct documentation is an important foundation of any report you may create. Whether that’s for a project donor or a sponsor or even ‘just’ the board. Certainty that the paperwork is technically in order, with all required signatures and such, is golden!
A bookkeeper typically also enters received invoices in your accounting software, whether that’s Excel or a programme like Quickbooks, Sage or similar. That way, your bookkeeper creates data you can use to create a report. A project report or an organisation report. An outstanding receivables report. And so on.
So, what is the role of a bookkeeper in your nonprofit
In short, a bookkeeper is a gatekeeper of the quality of your documentation, underlying your reports. Bookkeepers don’t take decisions on who to contract for what price. And they don’t decide if the vendor delivered what was agreed. They don’t decide that an expense belongs to the budget line abc of project xyz. But they make it possible for others to take such kinds of decisions and more by ensuring the organisation has quality data in its systems.
What about outsourcing?
In principle, it’s certainly possible to outsource bookkeeping tasks but I don’t see it happening a lot. Often, in smaller nonprofits the finance manager also carries out bookkeeping tasks. For instance, if there aren’t many transactions for a bookkeeper to handle. Bigger organisations tend to create a finance department with a finance manager and a bookkeeper for instance.
The advantage of an in-house bookkeeper is that they’re more part of the team and will therefore more easily understand the different projects and the admin challenges you face. External bookkeepers may not as easily ‘get’ that. Also, it’s sometimes hard to find someone with nonprofit bookkeeping experience. So sometimes it pays off to employ someone and train them on the job in this.
How I can help
Get simple steps to set up and organise your finance & admin foundations guidance by me with my bundle of six simple and short workshops: https://www.changingtides.eu/financeandadminbundle
These workshops are part of the bundle. You can also buy them individually and build your system step by step.
- Set up your financial processes: https://www.changingtides.eu/financialprocesses
- Understand important basics of bookkeeping for nonprofits: https://www.changingtides.eu/bookkeepingfoundations
- Be sure you are keeping all the documents you need for project donors, auditors, or officials: https://www.changingtides.eu/documentationfornonprofits
- Plan your cash flow for a year: https://www.changingtides.eu/cashflowfornonprofits
- Get a feel for how time sheets can be helpful to everyone in your nonprofit and set them up straightaway: https://www.changingtides.eu/timesheetsfornonprofits
- Learn how to calculate the price of time spent of your team members, including allocations for general costs that are used in different projects: https://www.changingtides.eu/feesfornonprofits
Want to know more and ask questions?
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