What You Need To Know About Accounts Receivable Outsourcing for Your Nonprofit

Managing finances and maintaining a steady cash flow is crucial for your operations as a nonprofit organization. However, handling accounts receivable can require valuable time and effort, which can be especially challenging for small nonprofits with limited resources. 

This is why many nonprofits turn to outsourcing accounts receivable services. Outsourcing accounts receivable allows your team to focus on your core mission while leaving the financial management to experts. 

In this article, we will discuss everything you need to know about how to outsource accounts receivable services for nonprofit organizations, from the benefits of outsourcing to the top companies you can work with.

Why Efficiently Managing Accounts Receivable is Crucial for Nonprofit Organizations

Accounts receivable management means tracking and collecting payments from customers or clients. For nonprofits, this includes donations, grants, and other sources of income. 

Efficiently managing accounts receivable is critical for nonprofit organizations for several reasons:

Maintaining a steady cash flow

Nonprofits rely on timely payments to fund their operations and carry out their mission. Delayed or missed payments can disrupt cash flow and affect your organization’s ability to operate effectively.

Building strong relationships with donors

Timely donation collection ensures consistent revenue, builds trust, and strengthens relationships with donors. A dedicated accounts receivable professional can stay on top of accounts and donation timelines.

Compliance with financial regulations

Nonprofits are subject to strict financial regulations, such as maintaining 501(c)(3) status. Efficient accounts receivable management ensures compliance with these regulatory requirements, as outsourced nonprofit accounting specialists know about all the rules and regulations related to the field.

Better financial planning

Accurate and up-to-date accounts receivable data allows nonprofits to make better financial decisions and plan for the future. External experts in the financial field can make sure your data is accurate.

What To Look for in an Accounts Receivable Service Provider

When outsourcing accounts receivable services, look for service providers with the following capabilities and characteristics to ensure you choose the right partner for your nonprofit:

An understanding of your values and mission 

Partnering with an accounts receivable provider that fits well with your culture and values will ensure smooth and productive collaboration and that you are working toward a common goal. Choose a service provider that understands and aligns with the unique values and mission of your organization.

Experience and expertise in nonprofit accounting 

Nonprofits have specific accounting and financial needs that may differ from those of for-profit businesses.

Outsourcing to a company with experience and industry expertise in accounting for nonprofits can provide peace of mind that your financial management is in capable hands.

Look for service providers with a track record of working with nonprofits and an expert team of qualified accountants who understand your unique financial requirements.

Integration capabilities 

Your outsourced accounts receivable service provider should be able to seamlessly integrate with your existing accounting software and systems. This will ensure a smooth transition and easy access to financial data when needed.

A commitment to data security and privacy

Nonprofits handle sensitive donor and financial information, prioritizing data security and privacy. Choose an outsourcing provider that utilizes robust security measures, encryption, and regular backups.

Suitable costs and service-level agreements

When outsourcing, it is essential to consider the cost of services and ensure they are within your budget. Look for transparency and flexible pricing plans. Additionally, examine the service-level agreements (SLAs) offered to ensure they meet your organization’s needs.

Accounts Receivable Services You Can Outsource

Before you outsource your accounts receivable functions, it is important to understand what these services entail. Outsourced accounts receivable services typically include:

Invoicing

Outsourced invoicing services involve creating and sending invoices to clients or donors on behalf of the nonprofit. They ensure all necessary information is included, such as payment terms and due dates.

Payment processing

Payment processing services involve receiving and recording payments from clients or donors. It includes online payment options like credit cards or PayPal and traditional methods like checks.

Collections management

Outsourced collections management services handle following up on unpaid invoices and managing late payments. 

Accounts receivable reporting

Accounts receivable reporting services provide detailed financial reports on the department’s status, including outstanding balances and payment trends. This information can be useful for making financial decisions and forecasting cash flow.

Credit and risk assessment

Some outsourcing companies also offer credit and risk assessment services, which involve evaluating the creditworthiness of potential clients or donors. This can help nonprofits avoid potential financial risks.

Debt recovery

In cases where clients or donors fail to make payments, outsourced debt recovery services can assist in collecting the outstanding balances. These companies have specialized knowledge and resources to handle difficult collection situations.

Top 10 Outsourcing Companies for Accounts Receivable Services

Below are the top 10 companies and services that specialize in providing accounts receivable services for nonprofits, in no particular order:

1. Near

Hey, that’s us! At Near, we recruit talented financial experts, including accounts receivable specialists, from Latin America (LatAm) with experience working with nonprofit organizations. 

With our extensive knowledge and experience in the region, we can provide cost-effective and efficient solutions tailored to your unique needs. 

Our pool of experts understands the complexities of nonprofit accounting and can handle complicated accounts receivable tasks. Take our work with Vanreusel Ventures, for example—we saved them $161,000 in annual overhead costs by helping them hire a skilled financial manager.

2. Heal Accounting

Heal is an all-women certified public accountant (CPA) and financial consulting firm with clients and advisors located throughout the US. It offers accounting, tax preparation and planning, and technology services to its clients, including nonprofits.

The company’s financial services include accounting personnel training, nonprofit status application filing, IRS Form 990 help, and more.

3. Chazin & Company

Chazin & Company is a nonprofit accounting and finance solutions firm. It won two Best of Accounting awards in 2024, is BILL Gold Certified, and reached QuickBooks ProAdvisor Program Elite status.

The firm provides accounts receivable/cash receipts, payroll, general ledger maintenance, and comprehensive financial statements.

4. Invensis

Since 2000, Invensis has grown to provide outsourced services to over 1,000 companies from its hub in Lewisville, Texas. It is a DesignRush Verified Agency and a Top E-commerce Development Company, according to SelectedFirms.

Its nonprofit accounting and bookkeeping services include accounts payable and receivable management, cash flow management services, payroll processing services, financial reporting, general ledger maintenance, and more.

5. Pacific Accounting & Business Services (PABS)

PABS is an accounting, finance, and back-office service provider in the US, Australia, and India. It was featured in the Best of Small Business Awards and provides internal accounting controls, BI and analytics, and more.

6. Applied Financial Services

Women-owned Applied Financial Services is a customized financial management and bookkeeping service provider primarily helping clients in the western US. It provides budget entry, financial statement preparation, funder reports, and cash flow projections.

7. Watson & Associates, PA

Watson & Associates is a CPA firm providing global services from its headquarters in Tallahassee, Florida. One of its main services is nonprofit and association accounting.

8. Fontana Consulting PLLC

Consulting firm Fontana Consulting serves clients throughout the southeast US. Its dedicated team of CPAs provides free consultations and tax tips for nonprofits, churches, and small businesses.

9. JFW Accounting Services

JFW is a Washington, DC-based virtual accounting and advisory firm with a focus on nonprofits and small businesses. It is a certified MBE/DBE/SBE in Maryland and is certified in popular accounting software like Sage and QuickBooks.

10. California Accounting

A division of The Hawaii Group, California Accounting is a business process outsourcing firm. It recently acquired Einhorn & Company CPAs, bringing it over 25 years of experience in the financial services industry.

Final Thoughts

Outsourcing accounts receivable services for nonprofit organizations can bring numerous benefits, such as increased efficiency, cost savings, and improved cash flow. It allows you to focus on your nonprofit’s mission while leaving the financial management to experts. 

When looking for a company to outsource your accounts receivable services, make sure it aligns with your nonprofit’s needs and values. 

At Near, we understand the importance of efficient financial management for nonprofits. Our recruitment firm specializes in finding skilled professionals from LatAm who can provide high-quality outsourced accounting services. 

Fill out this form to receive a list of pre-vetted accounting candidates from our talent pool who can help your nonprofit organization thrive financially.

Frequently Asked Questions

How do you run an accounts receivable department?

Running an accounts receivable department involves various financial tasks, such as creating and sending invoices to customers, tracking payments and outstanding balances, and following up on late or unpaid invoices. 

The department is also responsible for managing customer credit policies and processing refunds if necessary.

The cost and complexity of building and managing an in-house accounts receivable department makes outsourcing accounts receivable an appealing and affordable solution for many nonprofits, which often have fewer resources than for-profit businesses.

How many accounts receivable workers do I need?

The number of accounts receivable staff needed depends on the size and complexity of your nonprofit. 

Generally, small to medium-sized nonprofits can manage with one or two workers dedicated to accounts receivable, while larger organizations may require a team of experts.

Is accounts receivable harder than accounts payable?

In general, accounts receivable is considered more challenging and complex than accounts payable. 

This is because collecting payments from customers or donors can involve more extensive follow-up and communication compared with paying bills to suppliers or vendors.