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OKRs and the Org Chart

When each role in your organization has well defined OKRs, it can streamline management.

It provides clarity about what conversations need to happen between each layer of your org chart.

FULL TEXT:

Hi, I'm Burton. I'm the founder and CEO of Sutro Li. We provide accounting for great causes. The objectives and key results or OKR framework can streamline management in a company by providing clarity on what each team member needs to achieve and how much time they have to achieve it. When each role has a well defined set of goals that are specific and time bound.

It brings clarity to conversations between layers in the organization. Let's check this out in a simple example, here's an organization with three reporting layers, we could call them managers, directors and executives. Let's just focus on one branch for this example, let's say the financial OKRS are two achieve annual gross revenue of $5 million reduce annual overhead cost by 5% and end the year with a net profit of $500,000.

These goals are measurable and they are time specific because they know where they need to get to and how much time they have. The accounting manager and marketing and communications department are clear on what they need to report to the CFO as they move through the year. This is a very simple example of how OKRs can be used to get everyone on your team working together towards common goals.

When each role in your organization has well defined OKRs it can streamline management by providing clarity about what conversations need to happen between each layer of your org chart. Next week, I'll be talking a little bit more about goal setting if you'd like to hear more, give us a follow and we'll see you next week.

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XERO Beautiful Business - Community Entry

Here's how to effectively incorporate backlinks into your text while maintaining a natural and professional flow:

Strengthening Community Connection: How Are You Striving to Give Back to Your Community?

Hi, I'm Burton Li, the founder and CEO of Sutro Li. Sutro Li provides accounting capacity to community-based nonprofits using cloud tools. Cloud applications opened our doors for hiring internationally. My wife Trupti and I founded a branch of Sutro Li located in Pune, India.

Sutro Li India is now well known by local universities as one of the best growth opportunities for new graduates. We operate continuing education courses every month and emphasize the importance of learning as fundamental in our culture.

Sutro Li India has been a fantastic journey. We've learned a lot about differences between cultures, but even more about common ground. We all want to learn, be challenged, and be part of something greater than ourselves. We've also faced common challenges together like climate change and pandemics. These experiences have helped us understand we're all in this together. We need to collaborate across borders more, not less.

This funding would be invested in hiring the best trainers for our Gurukul training and development program, providing the best learning opportunities and building a learning culture.

This will support our long-term mission: to be the absolute best accounting support for change-makers and visionaries working on global challenges. Thank you.

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A Guide to Nonprofit Year-End Accounting

Closing the fiscal year can seem like a daunting process. At Sutro Li, we understand that behind every financial need is a human need, and we're here to make this as straightforward as possible. This checklist addresses the nuances of accounting for nonprofits and contains the essential tasks to keep you on track in the months before and after your fiscal year ends. 

General Guidance

Start Early: Aim to close your fiscal year within 60-90 days from the year-end. Coordinate your planning with your finance team, accountant, and auditor/tax preparer.

Audit Preparation: Complete your year-closing activities well before audit and/or tax preparation. Prepare "audit-ready" schedules as you close out the year.

Month and Year-End Closure: A solid process at month-close simplifies the fiscal year-end close. Similarly, a detailed fiscal-year closure simplifies your audit and tax preparations.

Pre-Year-End Tasks

Before the fiscal year officially ends:

Manage Cash Activity: Make all necessary cash transfers to allow for bank processing times so that necessary cash movement happens before the close of the year.

Plan for Bonuses: Schedule bonuses to be run before year-end.

Categorize Expenses Accurately: Assess all bills and expenses at the end of the fiscal year to ensure they are accounted for in the correct reporting year. Book bills for future-year goods/services to a prepaid account and create a prepaid schedule to note all items that need to be recognized in the future year.

Contact Your Vendors: Request all pending invoices, and give vendors a deadline to send invoices so you can book expense accruals.

Review Your Balance Sheet:  Give your Balance Sheet a good review and update as many of your Balance Sheet schedules as you can. Review open Accounts Receivable and Accounts Payable items and follow up on any receivables or payables that are not current.  

Update Your Restricted Net Assets Schedule: Include all new restricted grants from the year.  

Post-Year-End Tasks

Once the fiscal year has ended:

Late Invoices: Make sure that invoices received in the new year for services rendered in the prior year are recognized in the appropriate period.

Petty Cash: Confirm the year-end petty cash balance.

Review Clearing Accounts: Review and clear any balances in your balance sheet's clearing accounts.

Grants: Have you received any grant award letters that need to be entered but might have been missed because they are not yet received?  

Review Your Balance Sheet: Give your Balance Sheet a good review (again) and update as many of your Balance Sheet schedules as you can. Begin to prepare schedules to be final for audit or tax preparation.

Prepaid Expenses: Recognize expenses that were recorded as Prepaid in the prior year.

Organize deposits: When making deposits, separately group prior-year deposits from the current year. This makes it easy to find and enter income related to each fiscal year.

Discussion Topics with Your Accounting Team

Here are questions to help your accounting team understand your needs for year-end reporting. Share these within a month or two of the fiscal year-end before the fiscal year is fully closed.

Timeline: Are they on track for a close within 60 to 90 days?

Audit and Tax Filing: Has a CPA been chosen for audit and tax filing? Has an engagement letter been signed, and has the engagement been scheduled? 

​​Reports for Funders: Do you have any funders with year-end requirements or reports due in the first fiscal quarter?

Closing Words

Every organization is different, so these are reminders, not an exhaustive list. Discuss this with your accounting team. With good preparation and proactive communication with your vendors and accounting firm, you’ll have a smooth process to lock the books!

If you need assistance or simply a second opinion,contact us at Sutro Li. It’s our mission to make the world a better place one great cause at a time.

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Reconciling Nonprofit Development and Finance Numbers

If you've ever felt the tension between finance and development teams in a nonprofit, you're not alone. But why does this gap exist in the first place? Let's break it down in simple terms and get you ready to ace that next board meeting.

Why the Numbers Don't Line Up:

Different Languages: Finance and development often speak different languages. What development calls a "commitment," finance might label a "receivable." It's not wrong, just different.

Timing is Everything: Development might count a gift when it's verbally promised, while finance waits until the grant letter arrives.  This can create timing differences in when revenue is reported by each team.

Rules of the Game: Accounting standards (like GAAP) have specific rules about when to count money. These rules might not always match how your development team tracks donations.

Different Audiences: Finance teams focus on reporting that will pass the annual audit, while development teams prioritize donor relationships and fundraising goals. These differing audiences and areas of focus can lead to conflicts in how and when donations are recorded.

Reporting Pressures: Development teams may feel pressure to show strong fundraising results, while finance needs to ensure accurate financial statements. This can create tension when the numbers don't match up.

what you can do:

Schedule Regular Sync-Ups: Monthly "Finance-Development Alignment" meetings are a must. Cover top donations, gift pipeline, and upcoming board reports. Pro tip: Use Asana for action items with clear owners and deadlines.

Create a Translation Guide: Bridge the gap between finance and development lingo. Show real-world examples of how terms translate across departments. For instance, demonstrate how a "pledge" in Development becomes a "receivable" in Finance. Share this guide with your board to boost their understanding.

Implement Monthly Reconciliations: If these issues recur within your team, spend some time to uncover why discrepancies happen. Is it a timing issue or different recognition criteria? Use findings to refine processes and prevent future issues. It's not about pointing fingers; it's about continuous improvement.

Master Your Agreements: For multi-year grants or complex donations, create a simple table with crucial details. Include grant amount, payment schedule, recognition rules, and any restrictions. Ensure both teams are on the same page.

Develop a Multi-Year Grant Tracker: Build an Excel workbook with all grant details including grant name, total amount, grant term, payment dates, restrictions, and any conditions on the grant. Update weekly and use it as your go-to resource for aligning finance and development teams.

Align Your Reporting Systems: Create a solid monthly data transfer process if you can't use a single system. Set clear deadlines for exporting, importing, and reconciling data.

Clarify Projections vs. Actuals: Consistency is key. Try color coding for clarity: blue for actuals, green for projections, red for variances. Include context for significant differences.

Educate Your Board on Financial Statements: Conduct a "Financial Statement 101" session for your board. Walk them through key areas of your statements, explaining how development activities impact the numbers. Use real examples from your organization to make it relatable. Your accountant should be able to help with this.

Implementing these strategies can transform how your finance and development teams collaborate. Reach out to your accountant for help. Remember, your accountant should be more than just a number-cruncher – they should be a strategic partner in bridging these departmental gaps and driving your organization's mission forward.