5 Accounting Workflows Your Nonprofit Can Begin Automating Today

You work hard to keep your nonprofit finance office running smoothly. But some days, you feel like you’re swimming through an endless sea of paper invoices, manually printed checks, and expense reports in interoffice envelopes.

As your fund accounting software has evolved, so have the opportunities to incorporate automation into your processes—and get rid of some of that paper and manual decision-making. Although it can feel daunting to figure out which processes you can automate and how to get started, nonprofit accounting automation can save your team significant time and headaches.

Keep reading to learn the key benefits of accounting automation and five ways to automate your finance processes today.

The Value of Nonprofit Accounting Automation in Your Finance Office

Whether you work at a nonprofit, foundation, or educational institution, accounting automation can help you work smarter and get insights faster, so you can get back to the strategic work that helps your organization drive impact.

These are just some of the benefits you can expect when you implement automation at your finance office.

Save time by replacing manual, repetitive tasks

According to the AFP’s 2022 Payments Cost Benefit Survey, finance professionals spend at least one hour a week reconciling and processing payments. In fact, some organizations are spending up to six hours a week on each of those tasks.

Think about it: What could you accomplish with more time back in your day? You fantasize about getting to the bottom of our to-do lists each day, but with nonprofit accounting automation, you just might make that a reality. And actually be able to take a real lunch break.

The San Diego Humane Society, a Blackbaud customer, saved more than 200 hours of staff time over three years by automating their sustained giving program and eliminating the manual work of charging donors every month.

Reduce the Risk of Fraud

Did you know 680,000 cases of check fraud were reported in 2022 alone? Paper checks sitting in mailboxes or on desks increases the chances for check washing and other payment fraud.

When you automate AP using fund accounting software and reduce the number of touches needed to complete payments, you also significantly reduce the risk of fraudsters getting their hands on checks or other valuable information.

Lower costs and boost efficiency

More than 85% of companies are manually inputting and mailing out paper checks. The AFP Payments Cost survey found that the median transaction cost for issuing a paper check ranges from $2.01 to $4 per check, not including any late fees that might be incurred if payments aren’t received on time.

By implementing nonprofit accounting automation in your office, you can significantly limit the amount of late fees your organization pays because invoices are less likely to be lost in the shuffle of paper, and approval processes move faster. And when payments are processed quicker, the efficiency of your entire finance office improves, too.

Improved internal controls

Internal controls help build trust with donors—and make for easier audits. Solid internal controls help your organization stay compliant, safeguard important data, and provide transparent and reliable financial reporting.

Implementing automated accounting processes adds a layer of separation into your internal controls thanks to less human input, which prevents errors and fraud. It also helps provide a clear audit trail, so all stakeholders have confidence in the accuracy of your finance office.

Automation systematizes your internal controls, making it easy to follow your policies for approvals, expense attachments, and reconciliation. With automation, your team is less likely to make mistakes that can inadvertently lead to missed payments, overpayments, or incorrectly entered journal entries.

Avoid burnout with more time to focus on meaningful work

According to the 2024 Accounts Payable Career Satisfaction report by the Institute of Finance Management (IOFM), 78% of Accounts Payable professionals believe that automation will have a positive long-term impact on their role.

It’s understandable—tasks like stuffing envelopes and manually entering invoices aren’t exactly inspiring. When your workdays are filled with repetitive processes, it’s natural for your team to feel disconnected from the mission that originally motivated them.

By introducing nonprofit accounting automation, you can eliminate these time-consuming tasks and free up valuable energy—and brain space—for more meaningful work. This shift allows you and your team to focus on strategic efforts that drive impact. In doing so, you’ll help everyone rediscover the purpose behind your organization’s goals.

The Difference Between AI and Automation

Automation and artificial intelligence (AI) are two separate functions. You can automate processes without AI, and you can use AI without automating any processes. But when you put them together, you can see significant gains in your productivity and efficiency.

Process automation involves humans setting up processes and defining strict rules to be followed. For example, when you implement nonprofit accounting automation for AP, receiving an invoice can trigger an automated approval process that you previously created. Automation is a great tool for repetitive, tedious, or time-consuming tasks that aren’t overly complicated.

AI, on the other hand, involves using machines that can analyze data and carry out tasks based on that data. AI-enhanced tools that use machine learning or generative AI remove some of the human elements to process data or summarize information faster than a human could. It continues to improve and learn the more tasks it completes, getting more efficient as it works.

Even though AI and automation have some key differences, they can be powerful when combined, helping you automate processes and carry them out seamlessly. Invoice scanning, a capability coming soon to our fund accounting software, Financial Edge NXT, uses AI-powered technology to extract data from paper invoices and leverages automation to input the data into your accounting software system for you. It can read the invoice and intelligently match it to expenses, providing more optimal automation and processing more diverse document formats—including crumbled receipt from your development officer’s recent lunch with a donor—than traditional OCR.

Check out our latest Product Update Briefing for Financial Edge NXT to learn more about exciting advancements with AI.

5 Ways to Automate Your Nonprofit Finance Office Processes

Here are some areas within your financial office where it could make sense to incorporate automation and begin your journey to a more efficient finance office.

1. Payments

Using fund accounting software with native automated payments can help your team quickly process invoices and automate payments without lifting a finger. Seth Hurd, controller and director of information systems for Berwick Academy, saw his workload cut in half when they implemented automated payments.

Once you’ve identified the automated payments solution that works best for your organization, the process will go like this:

• Choose the invoices you want to pay and set up a workflow to receive the proper internal approvals before payment.
• Once the invoice has been internally approved, money is sent from an operating account you select to a custodial account, which adds a layer of security, before the payment is made.
• The automated payments vendor handles sending the payment in the way your vendors prefer—virtual card, ACH, or even printed check. You can easily keep track of invoices and payments made and received directly in your software.

2. Grant and Donor Reporting

Integrating your fundraising software with your accounting system enables the system to automatically pull relevant data, making it easy for your team to track dollars from start to finish. Your team can show your donors the impact they’re making with their donations, and you can get the information you need for your grant reporting.

To automate this process, first evaluate your current CRM software and ensure that it integrates with your accounting software. You may be able to automatically sync data and set up workflows using Power Automate, APIs, or native integrations. Miracle Hill Ministries was able to streamline its gift entry and reporting processes with the integration between Blackbaud Raiser’s Edge NXT® and Financial Edge NXT to ultimately maximize fundraising potential and insights.

Another workflow example would be setting up a monthly donor report to send to leadership on the first of each month, which provides a donation summary with amounts, sources, and campaign names.

3. Expense Management

Managing expenses doesn’t have to be a hassle. By automating key processes, your finance team can save valuable time, reduce errors, and foster better collaboration across the office. When tasks like tracking receipts and sending approval reminders become easier, everyone wins—and your finance team can focus on what really matters.

Switching to digital expense reports with electronic submissions eliminates unnecessary back-and-forth. Staff members get immediate feedback if they forget to attach a receipt or try to submit an expense to the wrong GL account. Built-in automated workflows ensure every approval process is followed correctly, while contingencies can redirect approvals seamlessly if someone is out of the office. It’s streamlined, efficient, and hassle-free.

Credit card integration offers another simple yet effective way to automate expense management. Instead of manually downloading monthly statements, daily expense flows feed directly into your fund accounting system. This ensures your finance team gets up-to-date information in real-time, speeding up payment processing and simplifying month-end close.

4. Payroll

There’s no way around it—manual payroll is a huge time suck for any finance office. Estimates for small businesses put payroll hours at five days per pay period, or 21 days per year, and those numbers jump dramatically as a company grows.

By automating payroll through your fund accounting system, such as NXT Time and Financial Edge NXT, you can automate journal entry creation and easily allocate employee wages, leave, and benefits for simplified grant reporting.

5. Audit trail documentation

An audit trail typically includes transactions, approvals, adjustments, donor information, reports, reconciliations, and access logs. Trying to track those manually can take hours.

Luckily, your finance team can automate this process using your fund accounting software’s built-in audit features. The right solution can automatically record the information you would need to know, such as what changed, who changed it, and when it was changed, as records are altered. Your auditor can easily see the approval rules and internal controls within the system and verify you have the appropriate checks and balances in place.

Improve Efficiency with Fund Accounting Software

Software designed specifically for nonprofit organizations can drastically improve your finance office’s processes, without any complicated onboarding. Cut costs, save time, and accelerate your workflows with fund accounting software created for organizations like yours. Financial Edge NXT was built to handle restricted funding, making it easier to automate your workflows and maintain compliance.

One way to boost your finance office’s productivity is with automated payments. Payment Assistant, a powerful tool fully integrated with Financial Edge NXT, simplifies financial workflows, helping you save time, minimize mistakes, and allocate more resources to achieving your mission.

 Check out all the features and benefits of Payment Assistant and get started today!