August 2, 2018

QuickBooks Planning and Implementation

There’s a popular saying that to succeed in implementing any large-scale system you must “begin with the end in mind.”

In fact, Stephen Covey refers to this way of thinking in his book The Seven Habits of Highly Effective People. And while Covey’s book is not required reading, the concept of starting with “the end in mind” is never more true or relevant than in planning and implementing QuickBooks at your nonprofit.

Understanding the End Goal

The very first step in installing and implementing QuickBooks Premier 2018 for your nonprofit organization has nothing to do with software or computers. Instead, it has everything to do with communication and understanding — and the good news is these are normally among a nonprofit’s strengths. Working with nonprofits for over 25 years has made it very clear (to me at least) that the “right brain” is dominant in most nonprofit organizations.

So, please, before you go and install a left-brained accounting tool into a right-brained environment — step away from your computer or server. Put QuickBooks aside for a moment and take a deep breath. Use your imagination to go to a vantage point where you can see the end goal that Covey speaks about so eloquently.

Close your eyes and imagine that promised land where you can produce reports by grant or program or by the combined entity. Envision satisfying the reporting needs of grantors, program managers, the board, your auditors, and yourself.

Get the Right People at the Table

Now that you have stepped back and are in that clarity zone, set up a QuickBooks implementation and planning meeting. Invite ALL of the following people (I know that this may sound like the tea party in Alice in Wonderland, but just trust me on this one):

  • The treasurer of your nonprofit’s board of directors
  • All program managers
  • All accounting staff (often just one person!)
  • Your auditor (You may be charged a fee for this, so consider that in your plans.)
  • Your development director
  • Your executive director
  • IT consultants or staff
  • Any other stakeholder who uses or needs financial information to perform a job in your nonprofit

The main goal of the implementation and planning meeting is to best identify how information entered into QuickBooks should be grouped and presented to provide useful reports to all readers. Keep in mind that readers of these reports may include government and private funders, internal managers, data entry staff, board members, auditors, and others. And each may have a different focus related to your organization.

Once you have a vision and plan of how the reporting should come out of the system, you can work backwards to determine the best structure and setup to use in QuickBooks.

Prepping for Your Implementation Meeting

To prepare for the implementation meeting, create a “QuickBooks implementation questionnaire” (since nonprofits can never get enough acronyms, we’ll call it the “QIQ”). The QIQ will act as the centerpiece for the meeting.

You will send this questionnaire out to all the participants prior to the meeting and have them complete it. At a minimum, the following should be included in the questionnaire:

  • What is the nonprofit’s mission?
  • What programs do we offer? (Not who funds us — but what service or product do we provide or produce — what do we do?)
  • What are our sources of revenue?
    • Grantors
    • Corporate donations
    • Individual donations
    • Program income (fees for services)
    • Foundations
    • Special events
    • Other?
  • What types of reports are required for all users? Bring samples of these reports.
  • What does the nonprofit’s chart of accounts currently look like? Is it sufficient? Does the chart use account names that are understandable to all readers? Should we use account names that our funders use?
  • What is our current budget? Bring a copy. How does it sync up with the chart of accounts?
  • How is payroll processed? Is there a labor distribution? How is the labor distributed to each account, program, and funding source?
  • How do we request funding from our funding sources? How are the receivables and the subsequent receipts recorded?
  • How does the nonprofit enter invoices from vendors? Is there an approval process? How are the expenses coded with regard to account, program, and funding source?
  • What is the nonprofit’s current hardware and network setup? Is the current environment sufficient to run accounting software? Will we need to upgrade our system anyway?

The Best Possible Outcome from Planning

The result of this meeting should be a written plan that, at a minimum, defines your reporting requirements, chart of accounts, programs, and funding sources. This will be the raw material you will use to set up QuickBooks.

There is another equally important by-product. The above exercise will promote team building and allow stakeholders to walk a mile in another’s shoes. People will come to see what a challenge it is to be a bookkeeper or accountant in a nonprofit.

The accounting system will cease being called your system and start being called our system. Because good or bad, all the stakeholders had a hand in building it.

Additional Resources: QuickBooks for Nonprofits

Read the next posts in this series to learn more about configuring QuickBooks at your organization!

Mark McCallick, CPA, CGMA, is professor of accounting at Santa Ana College, where he created a QuickBooks course to prepare students to successfully pass the Intuit QuickBooks Certified User exam. He has a bachelor’s degree in accounting from Loyola Marymount University and began his career as a CPA at Ernst & Young. Prior to becoming a professor, he ran a CPA firm where he served nonprofit organizations in the areas of software implementation, audit, and tax for more than 25 years. Mr. McCallick is a Certified QuickBooks Pro Advisor. These posts were updated by Mr. McCallick in November 2017 for our readers.

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