The Worst Way to Solve a Cash Flow Problem…EVER!

The Worst Way to Solve a Cash Flow Problem...EVER!The Nonprofit Quarterly has an excellent, if unsettling, article called ‘The Worst Nonprofit Financial Choice in the Face of Stress: One More Example‘ about Nonprofit organizations dealing with cash flow issues by not paying payroll taxes. In short: DON’T do it. Don’t EVER color outside of the lines when it come to the IRS.

The article quotes Kate Barr:

On average, we meet with ten or twelve nonprofits every year that are trying to untangle the problems caused by unpaid payroll taxes. Every one of them wishes that they could go back in time and make different decisions. If they could, they would pay the taxes and juggle finances another way.

Take accounting seriously. Good stewardship goes way beyond good intentions.

Get the financial help you need before you need it. You can do this by hiring an experienced Finance Director. However, most small to mid-sized nonprofits rarely have the budget for this. That’s why I am such a strong proponent of outsourced accounting for nonprofit organizations. Outsourcing is an affordable alternative to an in-house accountant – and I’d say a preferable one as outsourcing automatically implements financial safeguards such as separation of duties that protect your organization from fraud and embezzlement.

Look into to outsourced accounting – select a firm that specializes in nonprofits. Select a firm that works with a variety of nonprofit accounting solutions so that you can gain efficiencies and cost-savings by automating.

I know of some excellent outsourcing firms (but you can always do a quick Google search on your own):

Qbix Accounting Solutions (Georgia, Florida, South Carolina, Alabama, and Tennessee)

Unalp CPA Group (California)

Cordia Partners (District of Columbia, Virginia, Maryland)

Financial Technologies and Management – Accounting Services for Nonprofits (Indiana, Illinois)