Outsourced Controller Services for Nonprofits: Are you missing out?
More and more nonprofit organizations are opting to outsource certain aspects of their daily operations, including their financial management duties. When comparing the pros and cons of hiring an in-house controller or CFO and using outsourced controller services, like the ones we provide at Financially Tone, many of our clients are shocked to learn that their organization will benefit more from outsourced services than a full-time controller on staff. Let’s look a little deeper at why that is and whether an in-house controller or outsourced services is better for your nonprofit.
Why do nonprofit organizations need a controller?
A controller oversees and sometimes carries out all the accounting and financial management functions in a company. Both not-for-profit entities and for-profit businesses use controllers, although the job duties of a controller vary depending on the size, organizational structure, and goals of the organization. The controller often holds the most authority and responsibility within the accounting and finance departments of a company but may report to or work hand-in-hand with a chief financial officer (CFO). It is not unusual for nonprofits and small businesses to combine the roles into one executive position that is responsible for leading and managing accounting functions and works with other members of the leadership team to effectively make decisions and guide the organization’s future.
The controller duties at any organization can be filled by one in-house, full-time staff member or they can be outsourced to an individual contractor or a third-party accounting firm. Both methods can provide your organization with the financial direction it needs to thrive, so choosing the right path depends on your goals, operating budget, and personal preferences.
Why choose an outsourced controller?
Controllers are responsible for supervising the accounting department, overseeing payroll, and ensuring that financial records are accurate. They also make sure that the organization stays compliant with federal and state regulations, and compile financial statements for donors, grants, and Board Members. Some controllers also oversee the accounts payable, accounts receivable, and cash forecasting processes, all of which can be done in-house or as outsourced services.
Continue reading to learn why we recommend outsourced controller services to our nonprofit clients.
Save money
Nonprofits operate with a slimmer budget than their for-profit counterparts because the purpose of a nonprofit organization is to use revenues to fund the mission. For that reason, it is important to save money wherever possible. Management salaries are typically lower for nonprofits than for other businesses, but the average annual salary for nonprofit controllers is still above $90,000. Choosing to work with an outsourced controller provides the nonprofit with a higher level of experience for less money.
Increase efficiency
Some nonprofits, especially new or small organizations, do not have enough work to keep a controller busy forty hours a week. In those companies, it is not efficient to pay a full-time salary to a controller that is only using their skill set half of the time. It is more efficient for nonprofits to outsource the specific accounting tasks they need than to have a high-level financial manager working on remedial daily tasks just to pass the time.
Reduce risk
People often think of preventing fraud when we talk about risk, but there are many more areas nonprofits can be vulnerable. Partnering with an outsourced controller gives your organization a whole team of nonprofit financial experts looking out for your entity. Outsourced controllers also reduce risk by:
help prevent fraud through segregating duties and proper financial report reviews
reduce the risks of noncompliance, which protects your nonprofit from losing its tax-exempt and nonprofit statuses.
produce accurate, up-to-date financial records which promotes transparency with current and potential donors and decreases the risk of compromising grant funding.
The Bottom Line
Outsourced controllers give your organization access to the best financial experts in the industry for less time and money than it takes to hire an accounting manager or in-house controller or CFO. Using outsourced accounting services not only saves money but protects your organization from fraud and non-compliance while increasing efficiency in other departments. To learn more about partnering with Financially Tone for accounting functions, schedule a chat today.
