Every association has a need for accounting and other financial services, but are they best handled in-house or through outsourcing to an association management company, or AMC? To determine if outsourcing will improve your situation, ask the following questions:
Do you have a treasurer who is not a bookkeeper or accountant by trade?
If your treasurer is a qualified accounting professional, do they run a business or organization of their own full time?
Is all your financial work handled by a single volunteer or staff member other than the treasurer?
Have any of your necessary reports, filings, or budget work been late or submitted just in the nick of time?
Have you dealt with the cost or inconvenience of a financial error or late filing?
If the answer to any of these questions is yes, you can derive immediate benefit from outsourcing by ensuring tighter controls, full compliance with Generally Accepted Accounting Practices (GAAP), and secure succession/reduced turnover costs.
Let’s review some of outsourcing’s benefits:
Reduced cost—Because an AMC provides services to a number of clients, they can maintain an in-house staff and only charge you for a portion of that expense. In many cases, this costs half as much as maintaining an in-house accounting staff.
Reduced workload and increased focus for staff—If your association is large enough to have in-house staff (but not a dedicated accounting staff), it’s likely they have to act as jacks-of-all-trades and juggle multiple responsibilities. Bookkeeping and financial filing tasks are among the most important, but also among the most time-consuming.
By outsourcing these tasks, you relieve them of this burden and make room for them to focus on items more closely tied to your organizational mission.
Better compliance—GAAP compliance and good general financial practices are crucial in any organization; in nonprofits they can be a make-or-break proposition. Tight budgets compound financial errors and may mean there are fewer resources to deal with the aftermath. Nonprofit tax filings can be dauntingly complex, and errors on them can put your nonprofit status in jeopardy.
In volunteer-led organizations, those handling the finances may not have true mastery of non-profit accounting; in other cases they may be fully qualified, but also have pressing demands on their time that can cause quality and deadline compliance to slip. With outsourcing, you’ll know an expert staff trusted by other nonprofits will have ample time to handle your financial compliance.
Investment expertise included—Your financial needs may include investing funds for the future, and it’s uncommon that expertise in accounting, tax compliance, and investment will all be on your staff or volunteer roster. An AMC that serves multiple associations will either have that expertise on staff or have a retainer agreement with a firm that can give you the service that you need for growth and security.
Reduced impact from turnover—The cost of replacing a staff member is around 30% of their annual salary, plus you’re left with the hassle of others ensuring financial compliance while you conduct the search. When an AMC experiences turnover, there is no additional cost to you, and you will see no change in service.
As we’ll see below, there’s a turnover cost even when you rely on unpaid volunteers for your financial compliance.
Secure succession—If tragedy strikes and an employee or volunteer dies or suffers a major illness (or even just leaves suddenly) it can be difficult to pick up the pieces and ensure that someone else can use the systems and procedures they were using. With an AMC, there is an institutional structure dedicated to ensuring their clients comply with GAAP, meaning your services will continue without interruption.
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At V2, we’ve provided full service and outsourced services for national associations for many years, and can provide the financial expertise you need. Get in touch with us today, and let’s see how we can improve your financial procedures together.