Pennies count, and pennies add up in every business.

Transcription

1 WHITE PAPER

2 Pennies count, and pennies add up in every business. For nonprofits, every penny is not only reported, but board and public accountability demand a reason for spending it. Earning and maintaining public trust is core to the success of an organization. In that light, few, if any, nonprofits dispute the need for reporting oversight and accountability. 2

3 THE CLIMATE OF ACCOUNTABILITY The first decade of the millennium saw the demise of enterprise-level corporations and budget crises rising to city level across the U.S. The public became increasingly aware and skeptical about proper stewardship of funds, and a renewed focus on financial transparency fell on all organizations, particularly nonprofits. As the nonprofit sector worked to regain public trust, an increasing number of accountability standards and best-practice guidelines were put into place to boost confidence and credibility of nonprofit associations and organizations. Even the 2002 Sarbanes-Oxley Act, aimed primarily at publicly-traded companies and designed to tighten standards and operational oversight, required nonprofits to develop written policies that addressed the handling of employee complaints and document destruction. The impact of nonprofit organizations A report by the Congressional Research Service demonstrates the impact nonprofits have on the American economy. Charitable organizations employ more than 7 percent of the U.S. workforce, and the broader nonprofit sector employs 10 percent of the U.S. workforce, according to the report. All states currently have statutes in place that govern nonprofit organizations incorporated within them, and more than a few have enacted laws that address accountability and transparency issues, typically dictating a threshold level of financial transparency. Adding to the woes of nonprofits is the response many states have made to close their budget deficit gaps by cutting funds in the nonprofit sector at a time when the need for food, health care and other community services is rising. In October 2009, the Internal Revenue Service (IRS), found that more than 1.1 million nonprofit organizations were registered under Section 501(c)(3), and another 400,000 were registered under the remaining provisions of 501(c), making this a substantial sector of the U.S. economy. With so much scrutiny, it s imperative that nonprofit organizations be proactive and strategic, not only about how they spend their funds, but how they collect and report those expenditures. Nonprofits are a vital component to overall community health, and they must remain strong and vital. In contrast, the majority of the sector is made up of small and medium-sized organizations, of which 82.3 percent have annual expenditures of less than $1 million. Many are monitored by charity watchdog associations that rate charities against measurement standards, many of which include specific expectations for accountability. 3

4 Nonprofit challenges to accountability Payroll typically represents a nonprofit s greatest resource, as well as its greatest expense, and the challenge is maximizing the resource while minimizing the effort. Payroll and HR functions have changed profoundly in recent years. Economy and funding changes have forced nonprofit organizations to blur duty lines, challenging traditional job title and job function definitions. There is an increased demand for feeds of payroll and HR information throughout organizations, as well as a recognition that HR information no longer stays in HR, just as payroll information no longer stays in payroll. Today, information must flow across the organization to supervisors, directors and management, as well as to the board. Providing this information on a timely basis is mission critical for nonprofits. Considerations for organizations include: Reducing processing costs, while increasing efficiencies Meeting current and future staffing needs Grant fund tracking Containing and reducing employee benefits costs One of the most effective methods for creating greater accountability and financial visibility for the governing board is by automating core HR, benefits and payroll processes through software. When determining whether or not to automate, consider: Scheduling, time-off accruals, attendance management, workflow and alerts/ s to supervisors, electronic approvals, but the need to provide hard copies for audit records. Consideration also must be given to tracking the dollars spent on mileage, supplies and other expenses. Automated tracking should integrate easily with other systems, including: HR Payroll Accounting Benefits of automation for nonprofits The most visible benefit of automation is the efficiency gained in payroll. With an automated system, supervisors can approve time sheets electronically. The time tracking program automatically calculates the hours and transfers the information into a payroll system. Managers and supervisors can also access a real-time view of hours worked and labor allocated. Automated time keeping reduces inaccuracies and alleviates problem situations that add up to a lot of unnecessary money spent over time. These situations typically occur when employees punch in early, punch out late or don t report extended lunch hours. Automated time keeping also helps identify employees who are approaching overtime status, allowing organizations to adjust employees schedules to avoid the extra expense. Automated time keeping helps ensure efficient and consistent administration of time-off policies and payments, and improves reporting of approaching overtime, absenteeism, budgeted versus actual hours and time-off balances. 4

5 The following are typical challenges reported by nonprofits, and how they can be alleviated through automation: 1. Manual entry process is time-consuming. Automated integrations streamline the time entry process for payroll processing. 2. Duplicate entry is prone to errors. Employees enter their own time as it happens and the data is transferred for payroll processing. 3. Validation of time information is minimal or non-existent. A workflow approval process allows managers or others in the organization to review and approve the time before it is transferred to the payroll system. 4. Labor allocation is an estimated process and is not necessarily an accurate reflection of time in programs. Time can be captured based on specific programs and actual hours worked and transferred for actual labor allocation. 5. It s difficult to track time for employees in multiple locations. Web-based time entry provides time capture from anywhere there is an Internet connection. Recording time manually can create enormous costs when performed thousands of times a year by every employee in the workforce. By automating this action, you can save money in payroll costs. Additionally, payroll processing time can be reduced by as much as 75 percent when automating time and attendance, according to the Society for Human Resources Management (SHRM). TimeStar reporting allows us to review and analyze historical information, which allows us to be much more flexible in how we spend our time and in allocating our staffing. Before TimeStar, it was virtually impossible to get those details. - Operations Director TimeStar is designed to integrate with payroll and accounting platforms, as well as HR information systems (HRIS). It also offers the most comprehensive variety of time data collection options available, including badge and biometric time clocks, smartphones, telephony and Web-based time clocks. The Insperity TimeStar solution for automation An increasing number of nonprofit organizations are turning to Insperity for help in automating their time keeping systems. Payroll is often the largest cost for any organization, and proactively managing that cost has a significant impact on the bottom line. 5

6 TimeStar professionals provide every nonprofit client with unparalleled attention. Through a thorough understanding of organizational goals, the TimeStar team confirms objectives, then implements and optimizes the solution to support the organization s project and keep it in line with stated, specific needs. TimeStar is state-of-the-art software that offers: Elimination of human error from manual methods Reduced overtime due to monitoring and alerts Expedited payroll processing A paperless system Personnel activity reporting Program information reporting Time, labor and grant allocation Employee self-serve solutions Reduced overpayment due to rounding errors Insight into labor costs with comprehensive reports With TimeStar, attendance tracking is just one way automating manual systems can help nonprofit clients improve their bottom line. Savings can also be realized in scheduling, employee self-service options, labor allotments and other capabilities. For all nonprofits, automation can improve visibility and accountability to the board. 6

7 About Insperity Insperity, a trusted advisor to America s best businesses for more than 27 years, provides an array of human resources and business solutions designed to help improve business performance. Insperity Business Performance Advisors offer the most comprehensive suite of products and services available in the marketplace. Insperity delivers administrative relief, better benefits, reduced liabilities and a systematic way to improve productivity through its premier Workforce Optimization solution. Additional company offerings include Human Capital Management, Payroll Services, Time and Attendance, Performance Management, Organizational Planning, Recruiting Services, Employment Screening, Financial Services, Expense Management, Retirement Services and Insurance Services. Insperity business performance solutions support more than 100,000 businesses with over 2 million employees. With 2012 revenues of $2.2 billion, Insperity operates in 57 offices throughout the United States. For more information, visit To find out more or learn how Insperity can help your company, call us at Visit us at insperity.com/timestar The information contained in this document is for general, informational purposes only and is not intended to be legal advice. This information is not a substitute for the guidance of a professional and should not be relied upon in reference to any specific situation without first seeking the advice of a qualified HR professional and/or legal counsel regarding applicable federal, state or local laws. Insperity and their respective employees make no warranties, express or implied, and make no judgments regarding the accuracy of this content and/or its applicability to a specific situation. A reference or link to another website is not an endorsement of that site or service. GLX-P