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Busy invoice format for non-profit organizations

[Music] welcome back to the nonprofit show we are thrilled that you're here this is day four of power week and this entire episode is dedicated to Back to Basics Beth you have been a fantastic guest not many individuals can do a Power week every single day so Beth Farley CPA and partner at I Bailey thrilled to have you back to talk to us about Back to Basics and documenting those best practices so again if you are joining us for the first time go back and listen to Mondays and Tuesdays and Wednesdays episodes so much good information here nonprofit power week is not something that we do often about five times a year so Julia Patrick want to say thank you to you CEO of the American nonprofit Academy for allowing this platform for content and I've always had so much fun joining as co-host I'm Jarrett Ransom also known as nonprofit nerd and CEO of the Raven group together we have produced over 900 episodes and again really excited when we do have these unique opportunities for a nonprofit power week so glad to have IID Bailey with us today also glad to have the continued support from our partners which include fundraising Academy at National University Bloomerang your part-time controller nonprofit thought leader American nonprofit Academy Staffing Boutique nonprofit nerd as well as nonprofit Tech talk these are the companies most of them have been with us since day one and allowed us these opportunities that Beth you even said to us they are different than you know a lecture or really listening in to a webinar so I appreciate you noticing that and any of you can go back and watch these previous episodes that we've recorded and even this one now will be up on these Platforms in just a few hours so you can scan the QR code and download the app you can still find us on streaming broadcast and podcast platforms I'm a podcast listener Beth what about you where where do you typically consume I do like to listen to the podcast I um kind of change it up just depending on which ones they're popping up you know but YouTube probably the most yeah yeah same you know when I'm driving or exercising that's I'm I'm usually listening to podcasts so all right well Beth again welcome back I feel like you know we don't need an introduction but for many of our viewers and listeners they're probably joining us for the first time so Beth is a partner at ID Bailey you've shared with us over the last several days a little bit of the intricacies with ID Bailey but tell us a little bit about where you're based and if you would the uh customers clients the sector that you particularly get to work with yeah so I'm based out of the Reno Nevada office however I work with clients all over so that's kind of the unique thing as you've said you know when you started this everybody was a little different and then coid happened and we've all realized how much we can work remotely with a clients all over the place so we work with nonprofits as a firm across the entire United States and some internationally as well we have locations in about 15 states um we're sort of Nebraska West all the way but we do still service clients on the East Coast as well um my my I really have loved a lot of different nonprofits and worked with a variety of different ones I think one that I really find interesting is community foundations those are so unique in and how they service the the communities that they're in so that's always a fun one um to work with but really I mean any kind of nonprofit I just really eny enjoy working with because I love to see what they're doing for our community and how they're the backbone of our communities absolutely cannot shout that louder so thank you for sharing that uh the nonprofit Community plays a critical role you know throughout our globe so so grateful to have IID Bailey you know in this space dedicated working with these amazing leaders so again Beth you have just wowed us Julia and I both um you know continue to educate us so this entire week you've really taken us Back to Basics and a big piece of Back to Basics has been that documentation so let's dive even deeper right day four of nonprofit power week share with us about documentation here's an acronym T and responsible Champions first of all what does Toc stand for your table of contents in this instance that's what it's going to stand for so your table of contents you want to have your or your documentation process you know organized in a way that it's easy easily accessible for everybody that may mean it's all in one um document one PDF one word um because you're going to start with word but you're going to probably print to a PDF so people using it they're not making changes without the firm you know the organization as a whole kind of agreeing to those changes but maybe you don't have it all in one PDF because that would just be timec consuming to do that but you do want to have a main page that shows where everything is so you're going to you know have on there okay your accounts payable you're going to have your accounts receivable you're going to have your payroll and maybe those are three separate documents that are being worked with but you're going to have one main area that says okay here's where they are and then this is everything that we have because what if you're new to the organization you're like okay travel policy how how do we do travel reimbursement and you don't want to go searching you know through six different documents to try to find that and then it'd be really great to have that table of contents that's going to show what one of the documents includes travel policy so making it very clear where everything is I appreciate that so much one of my roles that I've served in Beth is an interim executive leader and if there's no documentation for me to to see or put my you know hands in I'm asking so many questions and if there's a document that I can contrl f as one of my favorite shortcuts right oh yes can find it in a document I think that would really help um with the learning curve for you know for new individuals you talked about yesterday you know when we're really looking at perhaps onboarding a new team member it's not simply because someone's left it could be because of a promotion so having these documents available um and that to that table of content you know I learned Sally from you same as last year now table of content contents um I'm more curious to how do we make it accessible right like what do we need to do to make this documentation accessible I don't know if it was yesterday the day before yesterday you and I both shared right like when we started yes these were in three ring binders and they were handed to us you know we would flip the pages what does accessibility to this documentation look like now yeah so one thing I'm going to mention too is just your document retention and destruction policy which should be part of these policies you're dealing with um and you know we get a lot of questions about how long we should we keep documents how long you know this type of document versus this and there's some there's some policies out there you can you can get for that the key important part about that policy or any of your other documentation or policies that you have is that it shouldn't matter if you're keeping that in a paper form in real life or you're keeping that in the cloud they should be easily found and accept accessible the same way so and and what it really drives down to is the IRS had said this too you know they don't care if you only keep things as a PDF form as long as you they say you know we're going to go look at this we need you to go pull it up same thing as Auditors if we say hey we're going to audit something and we want to look at this we don't want you to have to go digging through and it takes you three months to finally find it because there was no organization to that so you kind of have to consider the same way that you think about it as like folders or binders on your desktop um on your actual physical desk you're going to do the same thing in the cloud you're going to have folders and binders however that looks that might be multiple different ways depending if you're using software just you know in the Explorer on your pro on your on your computer um but it's got to be the same thing so methodology is the same regardless like in our advanced technology world and it's only going to advance further that hard copies are really becoming obsolete right like for me it's just easier to have a live document if you will that if there is a process that changed because you talked about having a policy is different than the process right so there that that differs so I wonder you know is that hard copy still relevant is that something we should still have or or is the the digital form like the way to go I think the digital form is probably the way to go um because it's accessible by everybody in your organization as it grows regardless if you're sitting in the same office or not or if somebody's working from home so if you have a physical document only and somebody has to come into the office and see it there then that can delay possibly moving on to the next step or something like that um so I would recommend looking at your organization and determining if you can do that what you want to make sure as you're going through these that you don't lose any of that so you know of course like we talked about is three room Bang but let's talk about like an invoice being paid you used to stamp it and somebody would sign it that it was paid you put the check number and it's all kind of right there to show how it was approved and and paid now if you just scan it and it's sitting in a folder there's no documentation of that review so you've got to have some sort of process for that so everything you were doing in real life you have to be able to duplicate in the cloud and so that's the important part you don't want to lose any of your internal control segregation of Duties because you're moving it to the cloud Beth you remember the enter office envelope that would would go around and we would have to initial right like yes here scratched off a name put the next name down because they had the hundreds of lines yes yes and I feel like you're right so how do we mimic that into the cloud one of my questions I would love to ask you uh I know that I Bailey is also doing some fractional work some operations um you know accounting things like that what is it like to document these processes when we're also working with a fractional entity or you know even as you mentioned perhaps a bookkeeper you know that's not on staff per se what does that look like by way of documentation so you know one of my favorite ways is using a software that can do that for you so if your accounting program does that for you if not there's lots of different softwares um out there and I don't want to highlight one versus the other but you know there's a software that you can utilize that you scan the invoice in um then the person who puts that into there puts what account number it's going to be posted to and you know classification or whatever else that detail is then you can have it assigned to somebody that it's going to be Advanced to they can approve it once it's been approved then it Advan to your signer and then the signer can actually push it forward to get paid and those systems I mean it's kind of like paying your bills through your bank like most people are familiar with that it's similar to that but the software allows the approval to be documented as well and so those are really great systems because you're not having to send an email that says I approved this and somebody has to print that email to a PDF that can work and that can be one of the things to do that but then you have to remember every single time to print the PDF and make sure it got approved whereas if you have a system that's doing it for you then it won't let you pay it until that approval has happened which really puts a good internal control process in there now this might be a curveball question but where does automation find its place if you will into documentation because as you mention you know this might be a sample process I'm sure some of this is also automated so what role does automation play in this so there's there's one of the systems that we have used with a lot of our clients um that you can email the invoice can be directly emailed into the system it is there and then as you're doing that it exports directly into QuickBooks online so you're not having to then enter it multiple times because it's sort of doing that for you and you've got that history of the approval within the software but then you've got the detail also in QuickBooks Online as well so so some of those programs can do that um some are more sophisticated than other but you really want to evaluate that and determine where that automation because honestly the automation too in that is that you're not having to print a check and go find signers go track them down for physical signatures and get that in the mail the software is doing that for you which does save a significant amount of time and we saw that a lot of clients adopt that during coid because they couldn't go physically get the signers anymore and they've just kept it because now they don't have to pay for those checks that's why everybody's like well there's a cost to it well yeah but you don't have to pay for the check or the stamp so you've saved some money there balances out and there's a lot of distributed Workforce now so you know even past the the height of the pandemic looking at distributed Workforce having the documentation having it accessible all of that is really you know so so very important so let's talk about you know what about reviewing documentation strategies how does that show up and and what are the things that we need to do to really uh review the strategies of documentation yeah so you want to make sure that it's being reviewed we say as a minimum annually because things can change within that year the other way times that you're going to have a minimum change needed is that if you add a position or remove a position that's part of those key internal control processes that you have um and this is I know we mentioned briefly the word Champion earlier you know there should be a position within your organization that is in has the full responsibility to make sure that this is being updated on an annual basis they're not going to go through and re write all the words for each one of them but they're going to be the person who says okay AP department have you looked at yours this year okay payroll department have you looked at yours this year right so and there may not be changes if you've not had any changes maybe it's just okay yep we're still doing all these things and we're following it or shoot we kind of stopped doing that six months in we didn't realize that we were supposed to be doing that or it didn't work because this changed let's change what our process says so it really helps to kind of keep everybody on their toes of what their responsibilities are but you got to have that one person who says I will make sure this gets done every year yeah that champion where does the board again I love have loved every time Beth that you've brought up the board responsibilities the fiduciary agent the governing body where does the board fall into this when it comes to you know that that strategy and and the champion piece it can be very different depending on the size of the organization or the board but let's talk about one that maybe has an executive committee or a finance committee it can be named different things depending okay so that's probably the first place it's going to start at the board level is you know not the full board you're going to have a committee and maybe that committee is is part of their decision their annual budgeting process they talk to the executive director or the CEO about that and says okay what have you done to make sure where are we at on that and and that could be part of it too because you know the exec the CEO is probably doing reviews for multiple individuals annual reviews within the organization but that CEO position needs to be reviewed and the you know new salary evaluated by the board and they're have they met their goals and so maybe that's part of their process during that time period that says that's one of the checklist things have you guys reviewed your policies you know is there any concern over policies and board members they're doing this in their businesses I mean most board members aren't you know only volunteer and that's the only thing they do so they're seeing this at different levels so they should bring forward hey we just did this in our organization you know are we doing this as well so that you know using their business sense that's why you have board members because they have a lot of expertise yeah you know we talked about earlier in the week really the maturity of different organizations because documentation and processes right they evolve as organizations evolve and I imagine as well when the skill sets of the board members come in and they they differ as well how much of this documentation strategy changes um you know throughout the maturity and the evolution of a nonprofit because as you know Beth like there's 1.8 million nonprofits registered in the US currently um but there's more coming to the table and as as a new one comes they're setting up talk about Back to Basics they are setting these processes up so yeah th this isn't a one-size fitall is it no not at all because if you have a new nonprofit starting up you've got an individual who probably came up with an idea that they saw a need in the community so they created this nonprofit they've got several of their people that they know to join the board so maybe you've got a six person board to start out with you know kind of on the smaller side that one person is doing the bank wrecks and paying bills and you know whatever it is they're not getting paid at the time so there's no payroll but they can't do that alone because if they're doing everything on their own and nobody's looking at anything that is very high risk for that organization that there's just going to be mistakes or you know something terrible happens so the big F word the fraud word right so the board members have to be very involved in that probably all six of them have some sort of Duty that comes along with maybe daily activities they probably have a fundraiser they have somebody who's you know double-checking that the reconciliations are done there's somebody helping out with the 990 you know they've got a lot of different things with those board members they've got a ton of responsibility and when you look at that 990 and it shows how many hours those board members are spending per week the smaller the organization the more those hours are um and then you hire an outside accountant to do the bookkeeping a couple hours a week because you've gotten big enough now the now the person the main president maybe is overseeing the bookkeepers but they're still talking about it with the rest of the board but they're maybe not doing as much and then you hire your first employee and now they're kind of overseeing you know whatever the day-to-day operations and the board's still checking in with them and and probably signing the checks because if you're paying the bills you shouldn't be signing your own checks you know so it can grow and evolve and that's why you can't just adopt a process right and hold on to it forever because too many things change as you grow yeah way too many things change right I mean there's there's a lot of elements into that change we're coming up on our final time but I want you to really talk about this key topic as well which is the naming conventions as well as consistency what what are we talking about here so I'm going to have you visualize a a binder with different you know let's go back to your Trapper Keeper right and you've got got all the different classes right yes so you have the different folders within that we're going to kind of create that within our computer system as well so you've got a folder that has you know 2023 and then you're going to have months underneath those potentially and those months I would personally I really want you guys to think about how easy is it to find and when you go January um you know February March April that's not alphabetical our months are not alphabetical so when you put it when you put them name on it it can be harder to find that in the right order so if you do you know January is 01 or maybe July is your first month two 01 you know you do one two and then you put 01 January 2023 very clear that this folder is now for January of 2023 it's easy to find and you want to spell it out the same way you don't want to do this one as a j and then January J and then January fully spelled out you want that consistency that says how you're going to name these that makes so much I love I appreciate the Trapper Keeper having a feeling you and I are same generation here absolutely love that you know I have had my hands and I'm sure you have as well in a lot of organizations uh systems right and how they have gosh just as you mentioned filed these documents they are all over board right there's often inconsistencies there's often a very structured manner of doing this and I love that you're bringing up these opportunities to be consistent but how how do we start I mean can we can you give us a tip on it does seem very overwhelming and I think it's really hard when you go into an organization and there's never been an organization and so then you're like okay what do I save and how do I put it together I would start with it and is it worth saving like is this the document that we save is this the process right right well what I have done sometimes is I've gone in and I've put everything that I'm not sure in into a an un I'll just say unsure if we're keeping folder you know I'll name it that and I'll just start putting things as you start to organize it so that if you're missing something you can go search that folder but you know that maybe going forward you're not going to need that um but I would start minimum you've got to have everything by a fiscal year you know you've got to have your organizing documents by fiscal year those are everything you've deposited everything you've paid everything you've done payroll for but then you also need to make sure that you're keeping those long-term documents so these are your permanent documents Articles of Incorporation bylaws those should not be in the year that you started or in a specific year because you cannot get rid of those those are some things that you always have to keep so you need a permanent file so at a minimum you're doing year permanent file that's like the basic but it's a good place to start um then you can add to it as you grow yeah you I really see this as strengthening a muscle right like once we do it we're going to keep doing it keep doing it and then it becomes habit it just becomes part of our standard operating procedure which is really something we're looking to do beth again you have brought so much Insight you know I I don't want to uh make light that this is a Back to Basics so for some of you it might seem remedial but truly I find often Beth that we jump we nonprofit leaders we jump to that next phase and we don't always take the time that we need because we're too busy right there's there's too much on our plate there's too many things that we need to do so this entire week has been fantastic we're not done yet we have you back tomorrow and I'm excited for that but please do go back and watch the previous episodes of this week I have my notes here where we've talked about you know critical information to document you brought great Insight on that uh documenting your way to success so there was even more information there how do you get the staff you know to participate in this where do you start and then yesterday was all about avoiding risk and you're right we talked a little bit about the fword fraud and what that looks like so thank you for bringing this to our attention it's always fantastic uh to have you with us and ID Bailey please check out ID Bailey's website there is phenomenal information on their website uh tons of resources you can find that at ID bailey.com for those of you listening that's e d b a i l l y.com and Beth Farley has joined us day in and day out this week so extremely grateful to have you and your skill set uh Beth Farley is CPA and also partner at IID Bailey thrilled to have you for this nonprofit power week also want to say thank you to our amazing sponsors that allow us this platform to have a very unique opportunity which is a nonprofit power week if you joined us earlier you learned we don't do this often maybe about five possibly six times you know throughout that calendar year but thank you to our sponsors which include Bloomerang fundraising Academy at National University your part-time controller Staffing Boutique nonprofit nerd American nonprofit Academy as well as nonprofit Tech talk these are the companies that allow us these very casual in style conversations so Beth you have been wonderful thrilled to have you with us today thrilled to have you back tomorrow yeah thank you it's been an honor thank you for all of you that have joined us we really appreciate it we hope you'll come back again tomorrow to hear what Beth has to say there's still more believe it or not I she's given us so much already and there's still more so Beth as we sign off every day we use the same words but they always sound a little different and we invite all of you our viewers our listeners and including our ask to please stay well so you can do well thank you Beth have a fantastic [Music] day