When safe-at-home orders hit this past March and the “COVID-19 era” began, it quickly became apparent which nonprofit organizations had leveraged cloud accounting and which ones were behind the times.

Was it a seamless transition for your nonprofit or did your bookkeeper have to sneak into the office early on Saturday mornings to scan documents and do Quickbooks work on a desktop?

If your organization remains in the second category, perhaps it’s because you never expected something like COVID-19 to happen. Who did? Or maybe you don’t trust the “new-fangled” technologies or are held back on automating due to budgetary constraints.

We are lucky that this pandemic didn’t strike in 1997. Technology has come such a long way that it is now both feasible and affordable to have a fully remote/virtual accounting department and to maintain internal controls while you do it.

But how does a nonprofit maintain these internal controls in the COVID-19 era? And how can we automate key accounting processes to make them simpler and more secure using cloud accounting?

Here are some approaches employed by the most tech-savvy nonprofits.

Make your general ledger software accessible in the cloud

This is the single most important change that your nonprofit can make with your accounting in the COVID-19 era.

Your general ledger is the primary tool that your bookkeeper or accountant uses to maintain your organization’s finances. Making it available only in the office severely limits their ability to do their job, which in turn impacts your ability to make well-informed management decisions.

While there are various ways to accomplish the transition to cloud accounting, probably the most popular for small nonprofits is to convert from Quickbooks Desktop to Quickbooks Online. Xero is another popular, browser-based, cloud accounting package.

Automating nonprofit accounting processes: Virtualize AP

It can be particularly challenging to pay your bills in a traditional manner during a pandemic, especially if you have effectively segregated duties.

Let’s reconsider the bookkeeper who sneaks into the office, sorts through vendor invoices, enters them in the accounting software and prints checks.

The executive director then comes in on Sunday to sign those checks. The board president visits the office on Tuesday night to sign the checks which are above the dual-signature threshold.

What a hassle, right?

These days, there are a variety of mechanisms to automate your AP. One is by using your bank’s online bill payment service.

If you take this route, make sure that the system is set up so that a check signer has to log in to approve disbursements. Under no circumstances should only one individual be in control of setting up and executing payments.

Alternatively, you may want to consider bill payment software that is linked to your general ledger package.

Bill.com has been the darling of tech-savvy accountants and bookkeepers for several years.  Auditors also like it because it allows for separation of duties so that no one person has too much control over a process.

With bill.com, you can assign roles to each person involved in the process. Your bookkeeper could enter the bill, your finance director approves it, and the executive director electronically executes the payment, all from different locations.

This can be set up to synchronize with your general ledger accounting system in order to avoid duplicate data entry.

It also serves as a “virtual filing cabinet”, so that users not only have easy online access to vendor payment history (while they are at home in their pajamas) but they can also see the invoice backup and the proof of payment (EFT or check image).

Intuit has given bill.com a run for their money in recent years. Earlier this year, a new version of their own bill payment platform was rolled out, which is embedded within Quickbooks Online.

Nonprofit internal controls in the COVID-19 era

Security and internal controls are a major consideration and concern for organizations that make the transition to cloud accounting during the COVID-19 era.

Whenever clients ask me about internal controls in an electronic environment, I advise them that the same principles apply as when you were doing things the old way. You should think about it from a risk assessment perspective. What could go wrong with the way you have things set up? And how are you going to address that risk?

While I cannot give you an exhaustive list of do’s and don’ts, I can offer general thoughts from a best-practices perspective.

For any system that is hosted on site, backup and data security considerations are key. For web-based/hosted products, many large-scale providers have frequent backups, bank level encryption, multi-factor authentication, etc. But you should not assume that this is the case with your provider – check and make sure.

At the client level, access is a huge consideration. It is important to make sure that people only have the level of access that they need to do their job.

Lastly, the guidelines included here are meant for informational purposes only. Any nonprofit making changes to its internal controls in the COVID-19 era should involve its finance committee and IT professionals to ensure that due diligence is exercised and safeguards are established.