Tuesday December 10, 2019
Any accounting, business or tax advice in this podcast is not intended as a thorough in depth analysis of specific issues nor substitutes for a formal opinion, nor is it sufficient to avoid tax related penalties. If you need any help with that, please reach out. Hey there, it's Chyla Graham of CNRG Accounting Advisory. This is another episode of the Nonprofit Nuggets Podcast and today for you the overwhelmed nonprofit leader, whose a little bit anxious about talking about money and you know you want to make a bigger impact. I want to head you over to one thought or a few thoughts. You are special, your organization is special, your organization is different and even though there are organizations that are like you or similar to you, they are not you. So stop trying to fit their mold.
The place that this comes up the most and I see super often when thinking about money is when we're thinking about the chart of accounts. So for those of you who may not realize what the chart of accounts is, in most accounting software and it's just a list of numbers and names of like buckets where money can be put into when you get it or spent out of when you're, you know, spending it. And most accounting systems will give you a default chart of accounts and people stick with that, which is super silly in my opinion because that chart of accounts is just, they're like, "Hey, we think most organizations have this expense." And if that isn't true for you, you don't want that expense. Like if you're like, we never pay for groceries, why do you have a grocery line in here? Or if you're like, "Oh, we never do that type of mileage reimbursements", why is that in your chart of accounts?
Stop leaving things there just because that's how you got it. You didn't start this organization because you were seeing what everyone else was doing. So don't let your chart of accounts try to dictate that and don't feel like, Oh my gosh, it's there. I can never delete it. You can, most software will let you at least deactivate an account if you're not using it. And that way it reduces options or things you have to run through when you're like, "Oh, how do I code this?" Don't have 50 million things. If you know, you consistently use five banks don't include things that you're like, I would never make a decision based off of this. So that's in terms of like how you have things, categories, also if you are thinking about what should they be named, think about what would resonate for you. What would be the thing that you're like, "Oh yeah, this is for our program materials for the afterschool program versus supplies." Supplies is too like generic to be of use for most people. So think about what would trigger you like man this is why we do this work. So name every thing, again, most accounting software will also have an option to put the description. So if you're like, Oh crap, like I don't really know. That means put a description in terms of, I mean this when I say that, this'll help you when you are putting together your budget to think about, okay, why are we using this? What are we calling that? And in short, what's important to you when you're ever like, man, we need to cut the budget. When you go back to those names, it's a lot easier to say, Oh no, I need program supplies as opposed to I need any program materials versus I need supplies.
Do you need supplies? Maybe, maybe not. But you definitely need some program materials. So those are my tips for today. Go back to your chart of accounts and review them. Look at what needs to be renamed so it makes more sense for your organization. What are you not using? So you need to deactivate it. Do that once a year, preferably when it's time to do the budget. If you're like, Oh, we never use that account, Hey, great time to cross it off your list and great time to think about, do we need to rename some things? Could some things be grouped together? You want to be able to make a decision over these things that don't take too long. No one is reading your financial statements. It is seven pages long, so make sure to try to make the account shorter so that your reports are shorter and more manageable. Hope this helps. Hope you feel a little less overwhelmed and excited to see your next report that's going to be shorter because we're not using 50 11 accounts.