Keeping track of invoices, reimbursements, and petty cash may seem like minor issues, but they can quickly get out-of-hand unless proper controls and policies are put in place. While there isn’t an expense management “Bible” specifically for nonprofits, there are tools and solutions that can simplify the process. With both employees and volunteers to consider, nonprofits essentially have four choices when it comes to managing expenses:
1. Personal credit card: Requires employees and volunteers to use their personal credit card for purchases, go through the process of submitting an expense report. And wait for reimbursement. In the case of volunteers, you don’t want to take advantage of a volunteer’s generosity by asking them to make a large purchase for the organization. You want to cultivate all that goodwill, so they will be back to volunteer for your organization.
2. Corporate credit cards: This is a higher risk option as you are giving the employee/volunteer your company’s line of credit and have to trust they won’t make any additional purchases or take advantage of having access to the company card. As with a personal credit card, an expense report also must be filed out, and then the finance department has to process this report and request.
3. Petty cash: Petty cash is simple, but has its downfalls — it needs to be distributed, tracked and accounted for. A finance executive needs to be on hand to distribute any cash to employees and volunteers, and follow-up with collecting change and a receipt. In addition, there is an inherent risk of carrying cash, especially depending on the total amount of money.
4. Business Prepaid Cards: With business prepaid cards, you essentially eliminate the three options above. There is no petty cash involved, no reimbursement checks, or expense reports. Prepaid expense card solutions allows users to instantly fund or defund any card, and most importantly, set limits and categories in which employees and volunteers can spend on expenses. A manager can issue cards to employees or volunteers, fund the cards to meet expense needs, and collect receipts.
How nonprofits use business prepaid cards
Nonprofits have the unique circumstance of often relying on temporary staff or volunteers to work toward their mission. It is often not feasible to issue corporate credit cards to volunteers, or require them to pay for expenses upfront and wait to be reimbursed. When using a business prepaid card, you can issue generic cards to volunteers and temporary workers, so whether they are working an after-school program and need to buy snacks, or working a fundraising gala and require last minute supplies, they’re covered, and so are you.
In addition to volunteers, nonprofit development staff are always on the move – whether it’s driving to visit local donors, or flying around the country to cultivate top prospects. A business prepaid card is a great way to help manage mobile employees’ expenses.
Just like small businesses, international organizations, and start-ups, nonprofit organizations need strong fiscal management to better improve processes and make financial reporting easier. There is no easy way out of managing expenses, budgets, and cash flow, but as a nonprofit, using a business prepaid card can significantly simplify the expense management process.
By Toffer Grant, CEO and Founder, PEX Card
Last modified on Monday, 12 May 2014