Session 4: Operational Excellence - FMA

1 1 Session 4: Operational ExcellenceFinancial Management Training ProgramHilda Polanco, CPA, CCSA , CGMA, Founder and CEOG retchen Upholt, MPA, ConsultantDecember 8, 2016 Reflections on Session 322As a result of participation, organizations can expect: Enhanced ability to communicate your organization s financial story to staff, board, funders, and other key stakeholders Increased ability to use historical financial information to inform the organization s future plans and forecasts in an inclusive, team-based process More effective communication and financial decision-making among members of the leadership team 3members of the leadership team A foundation for building an organization-wide culture of Operational Excellence Identification of areas with opportunities for improvement and action stepson how to move forward43 What are some elements of success in fii l ti?

2 financial operations?5 Welcome & Overview (9:00am)Introduction to Operational ExcellencePeople Accounting SoftwareEfficiencies & WorkflowLunch (12:00pm)6 Internal ControlsMaking it StickAdjourn (3:00pm)4 OPERATIONALEXCELLENCEEXCELLENCEO perational Excellence is an organizational culture that values learning problem solving and a strong that values learning, problem solving, and a strong commitment to continuous improvementEssential organizational capabilities that comprise Operational Excellence fall into three categories:8 StrategyResourcesPractices5 StrategyResourcesPracticesTalent and teams Talent and teams Organization-wide Organization-wide Mission alignmentMission alignmentAdaptable strategy and plansAdaptable strategy and plansRb t & Rb t & performing at full potentialperforming at full potentialFund development capacityFund development capacityEffi it d Effi it d gperformance measurementgperformance measurementSound decision-making practicesSound decision-making practices9 Robust governance & risk managementRobust governance & risk managementEfficient and integrated

3 WorkflowsEfficient and integrated workflowsEffective internal and external communicationsEffective internal and external communicationsPEOPLEPEOPLET alent and Teams Performing at Full Potential6 Survey Results: Do you believe your organization has adequate staffing in the fiscal office?gYes, 33% (2 orgs)Not Sure, 50% (3 orgs)Yes 46%Not sure, 0%11No, 17% (1 org)(g)Yes, 46%No, 54%LevelFunctionStrategicLead and support organizational financial planning and monitoringManagerialEnsure that the finance office is effectively carrying out its Operational responsibilities12 TransactionalPerform day-to-day accounting functions, data entry, andadministrative from Jeanne Bell Peters and Elizabeth Schaffer, financial Leadership for Nonprofit Executives: Guiding Your Organization to Long-term Success 20057 What Factors Drive Your Fiscal Staffing Configuration?

4 Business model Complexity of revenue streams Number of government grants & contracts Budget size Total number of employees13pyPayrollAccountingPayrollBil lingReportingFinancial AnalysisBudgeting14 Grants ManagementPurchasingAnalysis8 FinanceOperationsHuman ResourcesInformation Technology15 FacilitiesOffice Manage-mentSmall Organizationor could be 16or, could be outsourced9 ExecutiveDirectorMedium Sized OrganizationSeniorAttInformationDirector ofFinance &Operations17 AccountantTechnologyA/P & PayrollSpecialistStaffAccountantLarge Organization1810 How is a finance leader successful in their role?Thil SkillBi SkillTechnical Skills financial Accounting & Reporting Business Planning Management Reporting & AnalysisBusiness Skills Strategy Process Management Market & Regulatory EnvironmentCompetency Framework19 Adapted from the CGMA Competency Framework: Skills Team Building Coaching & Mentoring Motivating & InspiringPeople Skills Influence Negotiation & Decision-making Collaboration & Partnering201121 Questions 1 & 22212 ACCOUNTING SOFTWAREACCOUNTING SOFTWAREE fficient and integrated workflowsWhich Accounting Software Do You Use?

5 Abila (MIP), 4 SoftwareNumber of OrgsQuickBooks7 Abila (MIP)3 Accufund224 QuickBooks, 613 Commonly Used Accounting Software in the Nonprofit Sector 25 Basic FunctionalityAdvanced Functionality Flexible Chart of Accounts Modules for Accounts Payable Accounts Receivable Reporting against budgets Customizable reports Fund accounting Automated allocations Dashboards View-only access for end-users Paperless document management26 Ability to import/export datamanagement Electronic workflow routing Cloud capability / Web-hosting Purchase requisitions14 Fundraising DatabaseAccounting and Reporting SoftwareClient Tracking/ BillingPlanning Software27 Automated Bill PayPayroll and HR SystemsTravel & Expense ReportingWhat makes sense for the data flow between systems?

6 Manual entry of all data points into each systemManually entering batched totalsDownloading & ldi dt Building a digital bridge to transfer data seamlessly28uploading data between systemsHighly manualHighly automated15 MonthlyDepartment ManagersMonthlyMonthlyDepartment ManagersExecutive LeadershipMonthlyMonthlyQuarterlyDepartm ent ManagersExecutive LeadershipBoard of Directors Budget-to-Actual Revenue & Expenses for the program(s) and grants/contracts they oversee Performance Dashboard Budget-to-Actual Revenue & Expenses for the program(s) and grants/contracts they oversee Performance Dashboard Performance Dashboard Budget-to-Actual Revenue & Expenses for (a) each program (b) organization-wide Statement of Activities Balance Sheet and Budget-to-Actual Revenue & Expenses for the program(s) and grants/contracts they oversee Performance Dashboard Performance Dashboard Budget-to-Actual Revenue & Expenses for (a) each program (b) organization-wide Statement of Activities Balance Sheet and Management Narrative Performance Dashboard Budget-to-Actual Revenue & Expenses for (a) each program (b)

7 Organization-wide Statement of Activities29 Balance Sheet and supporting schedules Cash Flow Projection Year-end Forecast Balance Sheet and supporting schedules Cash Flow Projection Year-end Forecast Statement of Activities Balance Sheet and supporting schedules Cash Flow Projection Year-end ForecastQuestions 3 53016 EFFICIENCIES: CASH DISBURSEMENTSDISBURSEMENTSE fficient and integrated workflowsBanking Technology Positive pay Ensures checks are only paid to verified vendors ACH block and filters Prevent unauthorized outsiders from accessing or removing funds from an accountElectronic transfers32 Electronic transfers Reduced need for check issuance Purchase cards Eliminates needs for handling cash17 Technology: Automated Travel and Expense Reporting Systems Web-based, mobile accessScan or take a picture of receipts/documentationElectronic approval routing33 Direct connections to.

8 Credit Cards, Payroll, Accounting SystemElectronic audit trailCostsCommonly Used SystemsCosts Initial set up and configuration Per user or per expense report feeCommonly Used Systems Expensify Nexonia Tallie Concur34 Chrome River TriNet18 Automated Check Writing Services (such as ) provide Automated invoice approval workflow that be accessed via any computer or mobile device Integration with accounting software Elimination of the manual process of cutting and mailing checks Simplified deposit process35pppEFFICIENCIES: PAYROLLEFFICIENCIES: PAYROLLE fficient and integrated workflows19HR Management DatabaseAccounting DatabasePayroll SystemTime & Travel & 37 Time & Attendance SystemIntegrated PlatformTravel & Expense SystemEFFICIENCIES: CASH RECEIPTSEFFICIENCIES: CASH RECEIPTSE fficient and integrated workflows20 Cash Receipts: Technology Banking technology Remote deposit (check scanning) New technologies that facilitate fundraising: Donations via text message39 Mobile bidding at auctions Mobile payment solutions (for example: Square)How do these systems connect?

9 Online Giving Platform(s)Accounting SoftwareDonorDatabase40 Merchant AccountBank Account21 WORKFLOWWORKFLOWE fficient and integrated workflowsWhy Focus on Process Improvement?Technology is not always the solutionResources are scarce42 Adding more people to bottlenecks may not help22 Goal of Process ImprovementProcess Improvements: Reduced cycle time Elimination of redundant d Result in: Increased quality Cost reduction43steps and errors Reduction in variability Additional capacity for higher level workQuestions 6-94423 INTERNAL CONTROLSINTERNAL CONTROLSE fficient and integrated workflowsActivity: Internal Controls4624 Why do we need internal controls?Protect Resourcesfrom waste, loss, theft, or misuse Ensure Resources are Used Appropriatelyin accordance with stakeholder expectations, monitoring agencies, and your budget and plan47and your budget and planProduce Reliable financial Statementsthat are based on accurate and verifiable dataControl activities are achieved through:Resolutions adopted by the BoardPolicies Pd 48 Specific tasks & measuresProcedures 25 Segregation of DutiesNo one person all functions within an accounting the ability to cover up an intentional or unintentional accounting error49 Controls should be in place in each of these accounting cycles.

10 Purchasing Cash Disbursements Payroll50 Independent Contractors Cash Receipts26 Does your organization have an up-to-date written fiscal policies and procedures manual?No, 23%51 Yes, 77%5227 Questions 10 1453 Session 4 RESOURCESSESSION 4 RESOURCES28 Resources New Skills, Existing Talents: The new mandate for finance professionals in supporting long-term business success. July 2012 Report of the Chartered Institute of Management Accountants. Factors that set apart top-performing finance teams. CGMA Magazine July 2015. aspx? Achieving Operational Efficiency: A Means to Bridge the Gap Between Mission and Aspirations. Accenture/NYU Wagner School Roundtable White Paper, 2012. NTEN: organization of nonprofit professionals who put technology to use for their causes.