How one CEO benefitted from taking on some of his organization's accounting functions.
When I first arrived at the International Workers' Compensation Foundation, Inc., in December 2006, not only did I become its executive director, but I also took on the role of bookkeeper.
Taking on the role was not completely out of the blue. I am an attorney by training and have many years of experience as an association executive, so I was well acquainted with the laws and rules regarding financial reporting. I had also taken an accounting class and was familiar with a lot of the concepts involved with accrual accounting, but I had never done any bookkeeping.
By way of background, IWCF is a 501(c)(3) foundation with a staff of two that is not affiliated with a particular industry or other organization. We do not have members like a typical association does, but I do face the same management issues as association executives or foundations affiliated with associations. Each year, we work with state workers' compensation agencies to cosponsor educational conferences that keep attorneys, insurance providers, third-party administrators, and so forth up to date with different states' requirements.
As soon as an invoice comes in, I can take care of it.
As executive director, I wear many hats and have a number of responsibilities that are common to other small-staff organizations: signing contracts, working with the board, negotiating hotel agreements, supervising staff, handling insurance. I am also responsible for doing workers' compensation-related research. Then you have my duties as bookkeeper, which include handling payroll, preparing deposits, writing checks, reconciling bank statements, entering the data in our books, and preparing quarterly IRS reports and the annual W-2s, to name a few. Yes, it's a lot, but somehow it has become part of my daily routine that I seem to manage to spread out between everything else that I do.
To make it a bit easier on all of us, we do have some systems and processes in place to make sure that everything is going smoothly. For example, I consult regularly with our CPA to make sure that everything is clean and in the order that is required by law and to run the foundation as efficiently as possible. We also undergo a full audit annually. Internally, we decided to no longer accept credit cards or use merchant accounts. We did for a while, but it was so laborious to enter the data and reconcile credit-card receipts that it did not make sense for us. Yes, reconciling checks is a far more efficient process.
At a previous organization, we handled our accounting functions both in house and out of house. And, as with everything, there were positives and negatives to doing so. Outsourcing our bookkeeping improved the accuracy of our financial records and gave me an outside expert to consult with on financial questions, but it didn't save much staff time and made it difficult to catch and correct errors. For example, copies of our records were not housed in our office, so if I needed an original document or to do some research, I was dependent on someone else to make it happen. Another problem we had was keeping a schedule to submit check requests that matched our bookkeeper's availability.
I'm the first to admit that I'm not perfect and that mistakes happen on occasion, but here are some of the benefits I found to handling the bookkeeping function myself:
I can cut checks immediately. As soon as an invoice comes in, I can take care of it. I don't have to wait for someone else to make it happen. Also, our vendors love that we do this.
|Name: International Workers' Compensation Foundation, Inc.
Location: Ormond Beach, Florida
Staff size: 2 full-time employees
I can find and fix errors quickly. Since I have access to the books basically 24/7, I am able to fix something right away when I notice something seems incorrect, which makes our books very clean. (Our CPA is always very happy with them.) Also, since I am involved in our work day in and day out, I am likely to notice a misclassification more quickly.
I have everything at my fingertips. Invoices, payroll statements, vouchers, expense reports: They're all right there when I need to prepare reports.
Of course, this is only my experience, and I can only speak for what works for IWCF. Other organizations, especially those larger or charged with membership duties, may find that outsourcing is right for them. But if you're thinking about bringing your bookkeeping in house, start by asking yourself two questions: Who on staff has the capability to do it accurately, and who has the time to make sure it is done efficiently so that vendors get paid and the books are clean? Once you've got those answered, the answer to whether or not you should insource or outsource your accounting functions will likely come next.
Eric Oxfeld is the executive director of the International Workers' Compensation Foundation, Inc. Email: firstname.lastname@example.org