Bigger Isn’t Always Better: Why You Should Ditch the Extra Accounts
Although your nonprofit organization might be going a million different directions, your finances shouldn’t be. If you’re still using more than one bank account or even institution to control your money, you’re likely costing yourself time and dollars.
Separating dollars from different sources into different places can feel like a way to keep things simple, but it actually complicated your bank accounts and your life--and there are easier ways to create separation within your finances.
How it costs you
When you have multiple accounts, you’re probably paying multiple setup fees, monthly service charges, and even extra check ordering fees. For one account, they don’t amount to much--but when you have two or three or four, it amounts to quite a lot of money.
In addition to the extra dollars, you’re also using valuable time to track your accounts. There’s extra accounting work for each additional account, which also adds up over time. When you’ve got more accounts, you’ve got the potential for more errors, more reconciliations, mistakes in grant-based accounting, and overall difficulty reviewing deposits and withdrawals.
A simple solution
Instead of maintaining multiple accounts, your nonprofit should simplify by going down to one account that utilizes a variety of tools to help keep things running. Programs like QuickBooks help align your finances and track restricted and unrestricted funds. You can also get specific, identifying programs within each category as well as notes that will help anyone with access identify how the money is allocated or possible restrictions on it.
The right software will allow you to keep track of everything in one place, in one account. You can create labels, categorize, and generate easy reports for your organization or board.
You may also consider hiring an outside nonprofit accounting firm to get your accounts in order and keep them there. They’ll have advice about everything from software choices to budget, and can take a lot of pressure off of people in other parts of your organization.
Keep it simple
Having more than one account makes things complicated when they needn’t be. Take advantage of the tools and expertise available to you to simplify your nonprofit and maximize the money you’re bringing in. While you may occasionally encounter grant rules that mandate a separate bank account, it is not the norm, and can typically be avoided.
Make things simple for yourself, your staff, and your board and stick with one easy account.