Pros & Cons – Part 1 – General Overview

What is – is a cloud-based financial solution that helps manage your payables (APs) and receivables (ARs). Our firm has been using it for the past few years and has consistently found it to be an asset to our clients. Read on for an insider’s list of pros and cons (with a few tips scattered along the way)! We’ve split this article into two parts—the first is regarding in general while the second will delve into more specifics, especially regarding the APs and ARs.

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The Journey From College Student to Becoming a Full-Time Professional

For millennials, the transition from college to full-time work is fraught with barriers and roadblocks. The underemployment rate for recent college graduates stands at 46%, so when I received my job offer from Lumix to become its first digital media and administrative assistant, I was grateful (and relieved) to have the privilege of finally calling myself a full-time professional.

Interestingly, this commenced my transition, or more appropriate, my journey, to becoming a consummate professional—a goal I chase and have yet to achieve. Luckily, my supervisors at this firm have taken the time to help me focus on a few professional skills that I needed to develop.  These primary skills, which I fostered when I interned at several outlets in college, were necessary to succeed at a digital CPA firm.

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Interpreting Results of Operations for Non-Profit Entities

For obvious reasons, executives and board members of non-profit organizations prefer to see that revenues exceed expenses.  This difference would normally be described as net income, but for non-profits, it’s referred to as the change in net assets.  Since non-profit organizations have a special type of revenue recognition, this bottom line on the financials can be misleading.

Non-profit organizations recognize revenue when received or based on the date of the promise, grant or contribution document.  Revenue is not recognized when it is actually earned as is the case with for-profit entities.  There may be some deferred revenue grants or contracts, but most grants are restricted money that will be used for a program that could run for a couple of years.  For example, a $750,000 three-year restricted grant received one month before year-end will be recorded as $750,000 revenue in the current year, but most, if not all, of the matching expenses will be incurred in the following 2 years and 11 months.  This looks great for the income statement, but does not give a true picture of the operations of the organization as gross and net income will be inflated.

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Aren’t Nonprofits Penalized for Having a Reserve?

This is a question, and many times, a forceful statement I hear at least once a month.  My clients and members of nonprofit boards I belong to have a deep misconception that nonprofits are not allowed to accumulate savings (aka reserves).  Several years ago, I did an extensive search and asked various experts in the field, only to arrive at the same conclusion – nonprofits are not penalized for having savings.  Most importantly, there is no reserve level at which the elusive penalty kicks in.  So why do people hold so firmly to this misconception?   If you’ve ever had a conversation with an inquisitive 6-year-old (the “but why?” loop), you will understand the conversations I have when trying to explain this conundrum.

“But aren’t we supposed to operate at breakeven?”  The term “nonprofit” refers to a legal entity type (corporation), defined by state law, that prohibits the entity from operating at a profit that will benefit an individual or another entity.  Nonprofit corporations do not have owners to which profits can be distributed.  There are also controls at the state and federal level (through IRS regulations) to limit excessive salaries, which could be a form of personal benefit.    The main point is that there is no legal prohibition from operating at a surplus and keeping that surplus within the organization for use in future programs or as a reserve to create financial stability.

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“Is It Too Early to Start Saving for Retirement?”

I was a teenager when Congress created the Individual Retirement Account, and as soon as I had my first summer job, my father advised me to open an IRA.  You can imagine my reaction; I didn’t yet have a full-time job, and my father was talking about retirement!  However, my father managed to persuade me by teaching me the Rule of 72 (72 ÷interest rate = number of years in which an investment will double).  At a time of double-digit interest rates, I imagined I would retire with more than enough in savings if I continued to maximize my IRA contributions.

Circumstances changed.  Interest rates fell; they’ve been below 10% for almost 30 years and hovering slightly above zero since 2009. In addition, the annual maximum IRA contribution did not keep up with inflation (in the first 25 years of the IRA’s existence, the maximum contribution was increased only once, in 1982, from $1,500 to $2,000).  Yet, despite my increasing reliance on employer-sponsored retirement plans to help me meet my retirement goals, investing in my IRAs has remained an integral part of my retirement planning, particularly now that I have added a Roth IRA to the mix.

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4 Fiscally-Responsible Changes You Can Make as a Board Treasurer

It is an honor being asked to be treasurer of the Board of a not-for-profit organization.  What seems like a time-consuming task is truly an opportunity to make a fiscal difference for the organization you are invested in.  As a CPA with an understanding of nonprofit experience, I have been lucky enough to serve on several Boards.

I served as a member of the Board for a particular nonprofit for about a year, allowing me to study the dynamics at the Board level and identify areas where, as a treasurer, I could make a difference.  When the new slate of officers was elected, I immediately discussed my ideas with the president. These are a few of the changes we immediately implemented:

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Creating a 5 Point CFO Report

Providing monthly financial statements to the president or executive director of a non-profit organization is essential to help them guide their organization to meet their strategic objectives, but the financial statements should be geared towards board members, too.  Unfortunately, many executives and board members may not understand what they are looking at.  To help these decision makers, the CFO can provide some pointers in a brief narrative report.

I call this a Board Summary CFO Report, which includes up to 5 points highlighting critical items on the recently provided financial statements.  Examples of areas I’ve recently covered are as follows:

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Help Wanted

This blog was originally published on the AICPA’s subsidiary,,website. Maribel is a member of the Advisory Board for and the AICPA Digital CPA Conference. As an advisory board member, Maribel helps empower CPAs and businesses for the digital age.

It’s no secret that staffing a CPA firm with truly qualified candidates has been a challenge for quite some time.   As I describe our recruiting troubles to others, they inevitably comment, “It should be no problem with the unemployment rates we have been experiencing.”  Not so.  The common concerns within our industry circles have always been the same: candidates need to possess accounting skills as well as common sense, organizational skills, attention to details, ability to close the loop, and a commitment to quality service.   Quite a package!  And for digital CPA firms, it is getting more complicated.

The digital CPA firm requires an additional skill set to the standard package.  Our next recruitment ad will say to candidates, “We want you if you have the following:”

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“My financial statements are always late!”

This is the number one complaint we hear from clients who reach out to us for services.  About a year ago we started working with a new client.  He reached out to us for our CFO services to help him understand whether his organization’s accounting work was too much for the one-person accounting department he had set up.  What we discovered was exactly what we find in most organizations for whom we do this type of assessment.  Borrowing the format from David Letterman’s “Late Show,” I have listed below the top 5 reasons we see for financial statements delivered late:

  1. Paving the cow paths.  The processes being used on a daily, weekly, and monthly basis get the work done, but are not the most efficient.  This is very typical with organizations that, at one point, had multiple staff members in their accounting department and consolidated those responsibilities to fewer employees or even one full-time person.  This is most common when the remaining person is also new to the organization.  For lack of understanding or fear of making a mistake, they continue following the same processes since they don’t have the time to question, think, and implement a more time-efficient way to perform the same task.

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Keeping the Focus on the Mission

This blog was originally published on the Standards for Excellence Institute® website, for which Maribel is a peer reviewer. As a peer reviewer, she evaluates an organization’s application for compliance with the Standards for Excellence: An Ethics and Accountability Code for the Nonprofit Sector.

You start with the mission – Point A.  This is your intent. You want to achieve the objectives – Point B, which is stated in your mission.  This is your goal.  You then create your annual report, which is a way of showcasing your accomplishments.  The fundamental message of this report is demonstrate how well you’ve connected the dots.  So why did your annual report miss point B?

Many organizations report on accomplishments that do not address their stated mission, or there is no clear and logical connection between their intent and their achievements.  Some organizations measure activities instead of results. I suspect that many find themselves confronted with having to report their accomplishments, and at the time, come up with the best available data that somehow measures what they’ve done.  This is a last-minute exercise at displaying such a vital aspect of your organization. I view this as a lack of proper planning at the time you set your mission and improper mapping of those essential points that align your intent with your accomplishments.

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