Non-Profit Workflow

Many accounting systems seem to assume that the workflow fits a certain type of uses. While the ability to impose a specific workflow (e.g., for a bookkeeper who might make an error easily if the system doesn't require a workflow), the workflow should not be dictated.

Ideally, in fact workflows should be configurable in some way. Many systems try to do this and are a bit constraining on it.

The "Unaccrued Invoice" Example

The easiest example I have of this relates to accruing income upon invoice generation. Non-profits very typically generate invoices as part of a fundraising discussion even though the non-profit doesn't have a good faith belief that the invoice will be paid. Using an invoice to convince a donor to make a donation is, in essence, just a fundraising strategy to pressure for them to commit to a donation that the donor has hinted they might make.

Under GAAP, these invoices should not be accrued nor recognized, because the organization doesn't have a good faith belief that the income is forthcoming.

Many accounting systems assume that the user would never possibly generate an invoice without realizing the income immediately. In most for-profit setups, this is true, but for non-profits, there is good reason to generate invoices before accruing the income. In fact, if you're generating an invoice merely to "inspire" a donation, it's wrong to accrue that, since you don't have a good faith belief that the invoice will be paid.

The "Purchase Order Required" Example

Many organizations do require issuance of a purchase order before invoicing is permitted. However, this isn't mandatory, it's just common practice and likely this isn't even possible with the types of ?reimbursement requests that some non-profits have. (By way of example, Conservancy is sometimes "surprised" by a volunteer ?reimbursement requests, so there's no way we can "require" a PO issuance before accepting any invoice.