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Why Xero Is A Smart Investment For Not-For-Profit And Membership Organisations

By August 2019November 18th, 2020No Comments
Beyond Accounting advice Why Xero Is A Smart Investment For Not-For-Profit And Membership Organisations

For all the fantastic work nonprofit and membership organisations do, they are forever battling with the challenge of limited resources, whether it’s a shortage in budget, time, people, or expertise. They depend on the generosity of volunteers who give their free time and, if one of them happens to have accounting expertise, then it seems to make sense for them to be the organisation’s treasurer.

Although this appears to be a logical proposition at first, what too often ends up happening is that the treasurer, who may already have a full-time job, spends their Saturdays counting up money, banking it, paying bills, making bank transfers, running salaries, and ultimately working as a free employee for the organisation. It is a quandary we see happening in these types of organisation time and again. Ideally, volunteers should only be used for the roles they are volunteering for and other areas, such as accounting, should be done internally at the cost of the organisation.

But with limited resources, how should tasks like these be managed? Our recent work with The Irish Design Institute (IDI) is a perfect example…

Case study: Beyond helps the Irish Design Institute get set up with Xero

IDI’s fundamental issue with their traditional accounting setup was that they were always looking at figures which were very out of date! This was because all their accounts were done by external accountants and the first time they got to see reports was at the very end of the year. This made budgeting and strategic decision making difficult for the institution’s president, currently Kirk McCormack.

As with many presidents before him, Kirk also has a full-time job as an architect. Essentially, in his spare time he has been asked to be president of IDI for two years, and, in that short time, he must come to grips with what is going on in IDI, make sure the money is being managed properly, and put some strategic direction in place. It is no small ask, and it makes tasks such as reconciling bank transactions, pulling together accounts, and having long discussions with accountants a bad use of his time.

Another challenge was that IDI members pay subscriptions every year and these need to be kept track of with regard to who has paid, who hasn’t, and if a reminder has been sent out or not. It is not hugely complex, but it can still become chaotic very quickly if you depend on spreadsheets to record the subscriptions of several thousand members. Information such as this is critical to an organisation like IDI because it determines what the income for the year was, what was paid, and what is still outstanding. Essentially, it is the lifeblood of the organisation. It was clear to us that a more modern accounting system, such as Xero, would be the perfect solution.

Xero cloud accounting software

Now, with Xero, the staff at IDI can log into the platform and get instant access to the financial information they need. Xero organises information for easy accessibility, pulling together reports for users and ordering information in a much more manageable format. It streamlines processes by automating tedious tasks such as invoicing member subscriptions and sending them reminders. There is also a live bank feed of income and expenditure coming into the platform, allowing IDI staff to see everything that is happening in real time.

Xero organises information for easy accessibility, pulling together reports for users and ordering information in a much more manageable format.

This includes the president, who can now remotely see what is going on. We have configured the necessary reports to show the information that matters most to him, such as the cost of the awards night and their annual conference, salaries, and how the budget is doing in comparison to actual expenditure. Having all that information on a modern accounting platform like Xero, where it is easily accessible and intuitively organised, is completely transformational for him. It also means that when Kirk comes to the end of his term he can easily pass on the necessary information to the next president.

IDI currently has a staff member who does basic tasks such as reconciling transactions and paying supplier bills as a part of their remit and because Xero is designed to be used by non-accountants this job is very straightforward. Now, all volunteer directors have to do is approve things rather than continually deep dive into accounts. The best news of all is that a typical Xero subscription is under €30/month, making it very cost-effective when compared to hiring a full-time in-house accountant.

Compliance and transparency with Xero

Xero makes keeping track of your organisation’s finances painless in more ways than one. Not-for-profits are under a lot more scrutiny these days. The media has gone a long way in helping to highlight issues of fraud and in 2014 the Charities Regulator was established to ensure compliance with the Charities Acts. In response, many organisations now choose to be recognised as a Company Limited By Guarantee (CLG) rather than the looser terminology of “Trust” or “Non-Corporate Body” so that they are seen to come under company law, with filings to CRO. There are also compliance laws specific to charities which must be adhered to; for example, if a charity is bringing in donations of over €100,000 a year then an audit in a prescribed format is required.

This kind of compliance can only be correctly conducted by an accountant, not volunteers, and modern accounting systems such as Xero make achieving a high degree of transparency and compliance uncomplicated. This emphasis on transparency regarding how these types of organisations guard people’s money is simplified by the systematic organisation of information that occurs in the platform, the easy access to compliance reports, and how it allows all the directors to see what is going on in the accounts in real time. Ultimately, Xero helps make sure you are covered, which gives volunteers and the wider community trust in your organisation.

Interested in finding out more about what Xero can do for your nonprofit or membership organisation? Get in contact today! As Ireland’s leading Xero Platinum Partner, we are sure we can answer all your questions.