The decision-making process moves much faster than the financial-reporting process at nonprofits. And that’s a problem. Learn how reporting inhibits sound financial management – and what to do about it.
Financial reports supply not for profit accountants and executives with the numbers they need to base decisions off facts instead of assumptions. Reports are vital for informed, objective decision making. But there’s also a problem with financial reporting: the amount of time and input involved.
When it takes days or weeks to prepare reports, the average nonprofit accounting team only has the resources to undertake the process occasionally: monthly, quarterly, bi-annually. As a result, decision makers may be referencing reports that contain outdated, inaccurate, or irrelevant information – leading to unexpected and unwanted outcomes for any decision based on that data.
The opposite can also happen. If decision makers request updated or customized numbers, they will have to wait for however long it takes to prepare a report. For time-sensitive decisions, this wait time isn’t acceptable. But neither is plowing ahead with bad information. Financial reporting may be a great source of information. For dynamic decision-making, though, it’s not a great vehicle for delivering that information.
Fortunately, there’s another option that doesn’t just speed up financial reporting; it transforms expectations around nonprofit decision making.
Financial Dashboards: Bringing Reporting to Life
If the problem with financial reporting is the lengthy process required to create reports, the solution is simple: eliminate the process. That’s where Sage Intacct’s financial dashboards come in. They integrate critical and complementary metrics related to financial and operational performance, just like most reports. Unlike most reports, however, the numbers update automatically as soon as new data enters the nonprofit accounting system providing complete visibility and transparency. This visibility and transparency is critical for securing and keeping donors sponsors on board.
Nonprofit dashboards - focused on topics like compliance, fundraising, outcomes and more – aid with decision making in two fundamental ways. First, they supply decision makers with the most complete, accurate, and updated information available. Dashboards reveal conditions as they exist in the present, not the past, and keep expired information from distorting how a nonprofit understands its own performance. The very best data informs decision making. Not surprisingly, that leads to optimal outcomes with stronger internal controls and tighter cash management.
The second way dashboards transform decision making is by eliminating the reporting process as we know it. When key metrics update automatically in real-time, decision makers save hours or days of time they used to spend finding and organizing information. Nonprofit leaders can then use the ample amounts of extra time and energy they have to study, plan, and strategize instead of spending it building spreadsheets.
Nonprofit dashboards don’t guarantee the right decision every time. But by making great information as accessible as possible, they make the decision-making process faster, smarter, and more confident, which is an asset for anynonprofit. Who wouldn’t want to make the best choice more consistently, especially if it required less work than before?
Does your nonprofit accounting software offer data-driven dashboards? Does the data in those dashboards update in real-time and come complemented with insightful visualizations? Can you quickly customize the data in the dashboards based on the role or goal of the user? If you answered no to any of these questions, your not-for-profit accounting software isn’t doing the decision-making process any favors. Explore an upgrade driven by dashboards with the nonprofit accounting experts at Equation Technologies.