Tips on Managing Consultants

Don’t let consultants run amok.  Nonprofits usually have limited budgets and should use consulting services wisely to get the most of it.  Remember that consultants are there temporarily to solve a problem or to create a software, create documentation for an audit, or…the possibilities are endless. These people should be managed well even though they are not regular employees and may be there short-term only. Below are some tips to keep things straight:

Identify a specific project for a consultant to work on — Select a particular area for the consultant to work on. The more specific, the better. Have a plan and don’t wait for the consultant to define his or her work. Give the consultant a place to work and all resources for the person to succeed and get the job done. If you have many goals, prioritize it and give the consultant the more important one to work on. When the consultant seems scatter-brained, he/she may be working on too many things at the same time, so clarify the primary goal and help the person focus.

Set up timelines and deliverables — Determine a reasonable schedule and get reports and updates regularly, at least once a week. Double check that the project and goals set for the consultant are being met and worked on. It’s very easy to get side-tracked and to focus on something else. Be sure the consultant is on target and not just following someone else’s ideas or requests, which is easy to do. Consultants want to be accepted and liked, and while they do that, they may be too willing to work on areas that are not that important.

Take advantage of the consultant’s “fresh eyes” — One of the main advantages of a consultant is to give nonprofits the benefit of his/her experience and background. This person is not supposed to agree with you all the time. Expect and consider ideas, processes, and recommendations made by a consultant, especially when he/she is new and hasn’t been “tainted” by group-think or politics. In addition, after a while, it gets easier to accept things that at one point seemed odd or non-functional. If you see this going on, ask about ideas from the person’s past that could be used, and remind the consultant about his/her value as “fresh eyes.”

Value your employees — Last, but not least, listen to your employees. It’s too easy to assume consultants are “all that” and forget that the employees should also be considered. Don’t take the consultant’s side right away if there is a conflict with one of the employees. Remember that employees will be there after the consultant leaves, and they need to show that you have their backs. I have seen executives lose good people because of this problem — just because someone is an outsider, doesn’t mean that he/she is a god.  Get some perspective here.

Finally, consider consultants as helpers that can do a lot of good to many nonprofits when utilized properly.  Beware of consulting firms that start to hire your employees — the idea may be to make you so dependent on them so that they never leave.  Don’t fall for that. I have seen this happening in the IT department of a large nonprofit that slowly kept losing employees to the point that the consulting firm became the IT department and that was not a good thing. Remember — you’re the boss.

 

Check out the second edition of the book”Nonprofit Finance A Practical Guide”– First Edition nominated for a McAdam Book Award.

Accounting Helping You?

“Business is great” is not as effective as “Business has had sales of $10,000 per month,” and you presenting a financial report with the numbers on it. The more precise you are, the more credibility you have. And to be precise, you need a way to compile, classify data — that’s the role of accounting in businesses, including nonprofits.

Without accounting, you really don’t know if your business is doing well, and you cannot answer simple questions, such as how much you paid for office supplies this year. If you’re small, you may get away by using your checkbook as an accounting system, but as you grow, you will see how hard it can be to control expenses and analyze transactions without a more formalized system.  Accounting software is so affordable and easy to use now that it makes little sense to be operating in the dark — without proper financial information.

Below are some compelling reasons to employ some form of accounting:

Objectivity:

Accounting is objective, rational, unbiased with no feelings attached to it. That’s why it’s so valued by managers who want data that is real and not based on gossips or recollections. Since these numbers are backed up by documentation, oftentimes the accounting department becomes the go-to place for many areas within a business. Of course, we have accounting fraud and bad accountants that make up numbers, but overall, if you have a well-run accounting department with proper controls, the information is good and reliable.

Accuracy:

The more accurate the information, the better off you are. It may not be 100%, but often financial reports can be relied upon for management to make decisions and plan for the future. You may have good intuition and make decisions based on that, but having something to validate someone’s intuition doesn’t hurt. For example, if you thought you had a great month and received about $100,000 in revenues, but the accounting system tells you that you made only $30,000, then you may need to re-think your estimation or look for reasons why the accounting system shows such a low number — it could be something you didn’t consider.

Organization:

Managers often use accounting to find specific information. Accounting organizes data so that it can be found easily. For example, if you want to find how much you spent on food for a program, you can go to a food account and see all food expenses there, organized. Because of accounting, all relevant data is in one place, in a certain order. Without an accounting system, you will need to look for paper docs, add them up and maybe miss a couple of those, making this task clumsy and ineffective.

Many people are scared of accounting, assuming it’s difficult and cumbersome.  But in reality, it‘s not.  Many popular programs, such as QuickBooks and PeachTree, have free online tutorials and help groups, making accounting accessible to many people with no accounting background. From experience, often the accounting system becomes the main information system of an organization with people relying on it for other functions, such as a customer service or membership information. Because of this need, many accounting systems offer other modules or add-ons to gather information besides financial data.

Check out the book “Nonprofit Finance: A Practical Guide- Second Edition” –– First edition was nominated for the 2016 McAdam Book Award.