Apr 07, 2020 | International Payments

Going digital: Why NGOs should overhaul their approach to money management 

NGOs should closely monitor their cash flow and future projections in order to maintain their operation and make their funds go further. 

article ngo digital
NGOs spend almost 80% more than for-profit companies of the same size and employ about twice as many staff members in financial departments.

Financial planning in NGOs is usually centred around issues of fundraising. After all, most organisations are largely reliant on unrestricted public and restricted private funding for their operational expenses, which can be difficult to predict in today’s climate. Additionally, those responsible for finance operations must closely monitor their cash flow and future projections in order to maintain their operation s . For  I NGOs, this means more than simply budgeting, invoicing and allocating cash. Charitable leaders also need to factor in the impact of political and world events on currency fluctuations which can make financial planning even more challenging.   

Yet some not-for-profits still fail to prioritise financial strategies or invest in accounting tools. This is one of the reasons that these groups wind up spending almost  80% more  than for-profit companies of the same size and employ about twice as many staff members in financial departments.  

These are worrying stats for any NGO. Not only does this spending take away funds that directly contribute to their cause, but it also raises their administration budget. These fees are increasingly important as the public has  challenged not -for-profits that allocates too much towards these types of expenses.  U.K. government guides  also state that ‘trustees must use charitable funds only in furtherance of the charity's purposes’, so unnecessary operational expenditure may be heavily scrutinised.   

Here are three major reasons why NGOs may want to consider changing the way they approach billing today.  

  1. Reconciliation

For any business with an international money transfer component, reconciling invoices can take up a huge amount of time. This is particularly challenging for NGOs who can operate a world away from where their funds are heading and have a limited administrative staff. Foreign invoices and staff expenses can be subject to both exchange fees and unpredictable rates. Additionally, invoices can go missing, payment might be late, or processing time may be lengthy. NGOs might also have a bank for day-to-day expenses and use another method for international payroll, foreign exchange or keep overseas accounts. All these factors make balancing a budget a difficult task. Organisations should consider sending and receiving invoices through a digital platform that has a file upload capability. Not only should this automate many time-consuming  tasks  but it should also make locating particular costs and vendors quick and simple.  

  1. Centralisation

As mentioned, a typical NGO can have multiple financial accounts and systems for invoice and cash flow management. For example, an employee may search through multiple suppliers to find the optimal exchange rate for a  particular exotic  currency. They might follow this same strategy for all their international payment needs. Though this may initially seem smart, the time and effort involved in finding and maintaining numerous contacts and relationships can quickly become cumbersome. Each financial institution or service provider will also have their own set of fees. This is particularly important for non-profits who are likely stretching every pound in order to benefit their cause. Consolidating into a single source can reduce these extra costs. This change should also make reporting significantly less complicated and time-consuming.  

Today’s non-profits looking to maximise funds for their cause and reduce administrative expenses, should look to revamp their current system if they are plagued by delays, paperwork and excess fees. Hundreds of NGOs choose to partner with Western Union Business Solutions to manage their payments in a single platform; WU® NGO GlobalPay. Through the platform, charities can send mass payments overseas using our file upload capability. We also offer mobile payments to 16 countries, bank transfer payments in over 130 currencies and an easy-to-use, no software system.  

  1. Compliance, Sanctions and Regulatory Measures

Unlike corporate accounting departments, NGOs may not believe they need one-on-one assistance from a financial partner. Yet because each organisation has distinct and important goals, such services can be a huge benefit. Charities are unique as they often require money transfers to isolated regions without traditional banking infrastructure, areas with sanctions and places where fraud is a risk. At Western Union Business Solutions, we make it our commitment to invest in compliance programs, fraud monitoring technology, and continually engage with industry regulators so charities can operate with confidence. Our dedicated NGO specialists can guide not-for-profits through the best and most efficient method for payments in these  situations, and  help ensure that funds reach their intended operations in a timely an d  cost efficient manner.  

Western Union Business Solutions is a trusted partner for international payments and foreign exchange. Speak to an NGO specialist today to find out how we can help your organisation make considerable cost and time savings, and make your funding go further.  

Contact an NGO Specialist now