Efficient Grant Payment Accounting: Best Practices and Solutions
Whether you are receiving or giving grants, tracking all of your incoming and outgoing payments is critical. Know best practices for efficient grant payment accounting.
Regardless of your business, accounting can be a stressful experience. It can be even more stressful when it comes to grant payment accounting because of the rules and regulations typically associated with grants. Whether you are receiving or giving grants, tracking all of your incoming and outgoing payments is critical.
With that in mind, below we’ll explore the best practices for efficient grant payment accounting.
The Importance of Proper Grant Payment Accounting for Grantmaking Organizations
There are several reasons that proper grant payment accounting is so important. These reasons include, but aren’t limited to:
- Compliance: complying with the grant funding regulations and requirements both at the state and federal level.
- Accountability: grantmakers must keep thorough records to be held accountable to donors, grant recipients, and the public in general.
- Risk management: grant payment tracking helps ensure that every dollar is tracked, and will go where it’s intended to. This helps reduce the risks of errors, frivolous spending, and fraud.
- Performance measurement: solid accounting helps you measure how your grantmaking organization is performing.
With grant payment accounting being so important, what are the best practices for doing it efficiently?
- Using automation to streamline payment processes
- Create a payment schedule and stick to it
- Implement robust internal controls to prevent errors and fraud
- Use high quality software to manage grant payment data, and
- Train staff on the proper accounting procedures and protocols.
Using Automation to Streamline Payment Processes
The use of automation reduces the burden on your organization’s time and resources. It also helps reduce the risk of errors. Improving accuracy is a natural byproduct of automation because when numbers are pulled automatically for example, it’s less likely for errors to occur. With manual data entry on the other hand, it’s much easier to mistype additional zeroes, forget to add a digit, or worse.
What does automation look like in terms of grant payment accounting? Typically, it means using software to track your incoming and outgoing payments for you.
But, it can also involve using if-this-then-that style software such as Zapier that triggers emails to go out to you and/or your team members when:
- Payments are due
- New donations are received
- Deadlines are coming up
- Reports are needed, and so on.
Create a Payment Schedule and Stick to It
When you utilize software to automatically manage payments this becomes much easier. However, even if you don’t, having a payment schedule is a good idea for grant payment tracking. Sticking to a schedule helps ensure payments are made on time. It also helps your organization keep up with financial reporting and compliance requirements. In turn, it builds trust and transparency with both your grant recipients as well as your stakeholders.
Implement Robust Internal Controls to Prevent Errors and Fraud
Double checking and triple checking records never hurt anyone! It’s better to be thorough than not thorough enough. Unfortunately, in the digital age, bad actors are constantly seeking ways to get their hands on money that isn’t theirs. The organizations that track and monitor are better equipped at catching problems early on which can save them hundreds if not hundreds of thousands of dollars.
Put another way, implementing and maintaining internal controls helps to ensure any financial transactions outgoing or incoming are authorized, recorded, and reviewed.
Use High Quality Software to Manage Grant Payment Data
We’ve already alluded to this a few times within this post, but software is a critical component in grant payment accounting. Not only can it help your organization manage your data more efficiently and effectively, but it can also help with automation, reporting, and improving transparency.
Train Staff on the Proper Accounting Procedures and Protocols
Proper training goes a long way in any industry, but it becomes even more important when a lot of money is on the line. At a minimum, your team members must be trained in:
- How your systems work
- Best steps to take when something goes wrong (i.e. how to plug the leak in the event of a data breach or fraudulent activity)
- Compliance regulations both within your organization and in accordance with federal and state laws
- Who has access to what
- Roles and responsibilities (i.e. chain of command for all needs related to your organization), and so on.
Just like you can’t review reports too frequently, you also can’t give “too much training.” With both small and large grantmakers, it’s always better to be safe than sorry.
Solutions for Efficient Grant Payment Accounting
To make things easier on everyone in your organization, here are just a few solutions you may want to consider implementing in your grant payment accounting:
- Adopt cloud-based grant payment management software
- Consider outsourcing grant payment accounting to a specialized provider
- Hire a dedicated grant accountant or team
- Use blockchain technology for secure and transparent payments
Case Study: Successful Grant Payment Accounting in Action
One example of an organization that has implemented best practices and solutions for efficient grant payment accounting is the Bill & Melinda Gates Foundation. The foundation is a global organization that works to improve healthcare and reduce poverty, and it manages billions of dollars in grant funds each year.
- Every year the Bill & Melinda Gates Foundation posts their audited financial statements as well as their 990-PFs for the public to see.
- The foundation maintains a public facing website that discloses everything they are working on, and their team regularly shares updates about how their funding is being used. Anyone from the general public can click on these updates and read about what projects are in the works, what has been completed, and the goals for future projects
- Within their annual reports the foundation discloses who they are giving grants to, as well as how the funds are intended to be spent. Furthermore, they make all of their grants data accessible for download.
- Through their media center, they make all press releases public so anyone in the press can keep abreast of ongoing reports and report on them to the public as they see fit. On the page they also share links to their fact sheet, financial information as well as committed grants.
- All of their staff members are listed on their fact sheet including their Chief Financial and Chief Legal Officers who are responsible for keeping their books in order and ensuring all laws and regulations are complied with respectively.
- Additionally, the foundation shares how the public can donate as well as who their donating partners are. While some donors have chosen to remain anonymous for privacy reasons, the foundation still states the amounts received in order to maintain transparency and trust with the public.
Though they do not publicly disclose what software they use, considering they were started with the founder of Microsoft, they no doubt use software to automate their payments, reports, communications, and more.
Overall, the Bill & Melinda Gates Foundation's implementation of best practices and solutions for efficient grant payment accounting has helped it to effectively manage its grant funds and maximize the impact of its grant programs.
The level of transparency they subscribe to can be achieved with your organization as well.
Conclusion and Next Steps
In summary, proper grant payment accounting is crucial for both big and small grantmaking organizations. This includes your grantmaking organization!
Efficient grant payment accounting:
- Ensures compliance with regulations,
- Helps with accountability
- Mitigates risk management, and
- Helps with tracking performance measurement.
To recap, the best practices for efficient grant payment accounting include:
- Using automation to streamline payment processes
- Creating a payment schedule
- Implementing robust internal controls to prevent errors and fraud,
- Using high-quality software to manage grant payment data, and
- Training staff on proper accounting procedures and protocols.
Organizations should also consider adopting cloud-based grant payment management software, outsourcing grant payment accounting to a specialized provider, hiring a dedicated grant accountant or team, and using blockchain technology for secure and transparent payments.
So, where do you go from here? The case study we shared above was just one example of how an organization has implemented the best practices as well as solutions for more efficient grant payment accounting. Though you might not be dealing with nearly the level of incoming and outgoing funds that the Bill & Melinda Gates Foundation is, it doesn’t mean you can’t use top of the line technology to make your accounting easier on you and your organization.
Enter SendGrant, the software solution that helps you distribute award money, keep tabs on where the money is at any given time, and run reports with the click of a button. With SendGrant, you never have to worry about transparency because the program keeps a digital transaction log as well as a client portal for you, your team, stakeholders, and more to refer back to whenever necessary.
The top priorities at SendGrant are:
- Privacy, and
We make it easy to hold your organization accountable, and simplify the grant payment accounting process.
Our software was developed by the same team that developed SmarterSelect. With 15+ years in the grant and scholarship space, we have a deep understanding of the pain points organizations just like yours face on a daily basis.
Let us help you make your accounting process easier. Click here to join the pre-launch and see what SendGrant can do for you!
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