Wednesday, 29 May 2019
Whether it is a small non-profit initiative organised by a few friends or a nation-wide entity, bookkeeping plays a significant part in determining its success. Financial management and reporting for non-profits in Australia are governed by new accounting standards AASB 15 Revenue from Contracts with Customers and AASB 1058 Income of Not-for-profit (NFP) Entities.
Any errors in the reports can affect the position and credibility of the NFPs, and it usually occurs due to the hiring of untrained volunteers as bookkeepers. The accurate reports are highly relevant for non-profits as they help them to secure funding and grants from the existing donors as well as potential financiers.
Thus it becomes imperative to employ professional bookkeepers for non-profit organisations in Melbourne for experienced financial assistance and improvement of the bottom-line. If you are not supported by an expert, then your organisation may have to face many bookkeeping challenges. Let us elaborate on the most common threats that can affect NFPs in Melbourne.
One of the biggest bookkeeping challenges for NFPs is not being aware of the tax liabilities and government rules which can lead to losses. Many tax concessions are applicable to non-profits operating in the country and they depend on the legal structure of the organisation. You need to be watchful of tax reforms and updates occurring in the state regulations to avail the concessions.
Your NFP can save a lot of money by leveraging these concessions that can make an impact on your capital flow. The concessions are applicable on income tax, goods and services tax, capital gains tax, fringe benefits tax, etc. You must review the entitlements available to your organisation in Melbourne to take advantage of these privileges.
Poor cash flow is a nagging issue with many non-profit organisations in Melbourne and can disrupt the functioning of the entity. A bookkeeper can help in this regard through cash flow forecasts and management of the debts in a smart way. They take the pains to make arrangements for activities which can be used for generation of funds.
They ensure that the focus is on employees who are helpful in enhancing cash flow and replacing the non-productive activities with the productive ones. They can aid in creating more liquid assets through the selling of redundant assets to maintain positive cash flow. The bookkeepers are adept in drafting reports which can be presented to the board of directors when required.
Expenditure is inevitable in every non-profit as a lot of people have to be paid for their services such as employees, suppliers, event managers, etc. It can become a pressing issue if the management is not able to curb the overspending.
A bookkeeper can salvage the situation by examining each transaction and cutting down on the underperforming activities. They can review the resources and check for wastage in time to take corrective actions. Simple changes in daily operations can save costs such as judicious use of energy, stationery, paper, etc.
Every non-profit in Melbourne receives grants from a variety of sources which allows it to make profits that are used for achieving the purpose of the organisation. This cash is utilised to start new projects, improve the infrastructure, and keep some in reserve for future use.
However, tracking the collection of money from multiple sources can become tedious for a volunteer who doesn’t have access to technology. A professional bookkeeping company for non-profits in Melbourne has the knowledge and tools (accounting software) to manage the flow of grants to avoid losing out on any essential funds.
Although non-profits are considered reliable organisations, they are not free from frauds which can take place at many levels. Since the fund providers have a lot of confidence in non-profits, the grants can get mismanaged by volunteers. Too much dependence on the goodwill of the employees can prove bad for the financial health of the organisation.
The charities need to follow the governance standard for accountability to members which keep everything in check. Thus the stakeholders should not put blind faith in the volunteers and employ a bookkeeper to keep track of the incomings and outgoings on a regular basis.
When a non-profit in Melbourne recruits a staff, they are obligated to pay wages to them. The charities and not-for-profits either manage the payroll themselves or hire a third party to do the same. However, professional bookkeepers can take care of this task along with finance management with the help of payroll management software. So one person can manage all the money related processes without making any errors.
Acquiring funds is a big challenge for non-profits in Melbourne which can come from myriad sources such as government grants, donations, debt, etc. The bookkeeper can help by providing all the required financial information and projections to potential donors and banks for seeking finance.
They will advise you if a loan is possible and how much should you borrow. They can provide inputs for preparing an application for government grants and inform you about the weak links in your application if it gets rejected by the government agency.
Risks are involved with the functioning of all types of entities and can shake the foundations of a non-profit. The risks can range from dependence on a small group of donors and not organising enough fundraising activities to offering credit in trading activities.
Risk management can reduce the probability of losses due to unethical practices, fraud, etc. For this, the non-profit in Melbourne needs to put down a code of conduct and inform it to the employees while training them. During recruitment, the management must screen the volunteers thoroughly and hire only those who share the same values and ideas.
The obstacles in the path of a non-profit are no less than those suffered by the for-profit organisations in Melbourne. Thus it makes sense to hire the right people for the bookkeeping tasks and save the organisation from becoming a victim of these issues.
We are a family run bookkeeping business that has grown to include offices around Australia in Melbourne, Adelaide, Brisbane, Sydney and Canberra. We have been helping our clients grow since 2001. Being one of the leading Bookkeepers in Melbourne, we are offering free consultation to every new client.
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