Healthcare-related not-for-profits have a myriad of different funding sources that support operations. These can come in the form of contributions, program service revenue, and governmental grants. With all these different funding sources, it is imperative that healthcare-related not-for-profits have a general ledger system that can support both financial reporting and operational efficiency.
A general ledger system is a software application that records and summarizes the financial transactions of an organization. It provides a comprehensive and accurate picture of the organization’s financial position and performance. A general ledger system can also integrate with other systems, such as budgeting, payroll, inventory, and reporting, to streamline the accounting process and improve efficiency. However, for a healthcare-related not-for-profit, financial data alone may not be enough to measure its impact and effectiveness. Healthcare-related not-for-profits have specific goals and objectives that are related to their mission and vision, such as serving a certain population, delivering a certain service, or achieving a certain outcome. These goals and objectives may not be easily quantified or monetized, but they are essential for the organization to demonstrate its value and accountability to its stakeholders, such as donors, funders, regulators, and beneficiaries.
Healthcare-related not-for-profits would benefit from having a general ledger system that can match financial data and non-financial statistical data. Non-financial statistical data are numerical or categorical data that describe the characteristics or activities of the organization or its beneficiaries, such as demographics, service delivery, outputs, outcomes, indicators, or metrics. By matching financial data and non-financial statistical data, an organization can:
- Enhance its reporting capabilities. A general ledger system that can match financial data and non-financial statistical data can generate reports that show the relationship between the financial inputs and the non-financial outputs or outcomes of the organization. For example, a report can show how much money was spent on a specific program or project, and how many people were served or benefited from it. This can help the organization to communicate its impact and value to its stakeholders concisely.
- Improve its decision-making process. A general ledger system that can match financial data and non-financial statistical data can provide insights and analysis that can help the organization to evaluate its performance and effectiveness. For example, an analysis can show how efficient or cost-effective the organization is in delivering its services or achieving its outcomes. As an example, a healthcare-related not-for-profit can maximize revenues by having information in real-time to review patient volume versus provider capacity. Matching financial data and non-financial statistical data could identify peak days or times for services where more resources should be allocated or those for which resources can be reduced. When operating multiple locations, this can help the organization to identify its strengths and weaknesses at the various locations to determine if program offerings should be limited to certain locations.
- Increase its transparency and accountability. A general ledger system that can match financial data and non-financial statistical data can ensure that the organization's financial records are consistent and accurate with its non-financial records. This can help the organization to comply with the accounting standards and regulations that apply to not-for-profit organizations, such as GAAP (Generally Accepted Accounting Principles) or compliance with government funding sources and regulations. This can help the organization to avoid errors, fraud, or mismanagement of funds while maximizing revenue and programmatic outcomes.
A not-for-profit organization can benefit from having a general ledger system that can match financial data and non-financial statistical data in various ways. Such a system can enhance its reporting capabilities, improve its decision-making process, and increase its transparency and accountability. By doing so, a not-for-profit organization can better fulfill its mission and vision and create positive social change. Withum has a team of specialists that can assist with evaluating your organization with improving the current general ledger system to take advantage of these benefits or implementing a new general ledger system that can maximize all these benefits.
Author: James Trubenbach-Byrne, CPA | [email protected]
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For more information on this topic, please contact a member of Withum’s Not-for-Profit and Education Services Team.
