Data Hygiene: How to Keep Your Financial Data Accurate!

Non-profit organizations are under intense financial scrutiny - they must show accountability through the willingness to explain actions to stakeholders, and must be transparent by publishing critical financial data about the organization. These two tasks, however, can become exceedingly difficult if multiple systems are used to track financial information without regular reconciliation. Luckily, CiviCRM has an Accounting Batch feature that allows you to avoid manually re-keying financial data into your accounting software. The Accounting Batch feature requires preliminary configuration and has a significant impact on how financial data should be maintained in CiviCRM - to ensure a smooth implementation and ongoing process, it is highly recommended to partner with a service provider (such as Cividesk) who has an in-depth understanding of all things financial in CiviCRM. If you are a Cividesk client, please reach out to your Account Manager if you are interested in implementing this feature.

Regardless of whether or not you use the Accounting Batch feature, here are a few simple guidelines to maintain healthy financial data in CiviCRM:

  • Report Constituent-Related Income Data Consistently in CiviCRM First
    To avoid duplicating data, constituent-related income should always be recorded in CiviCRM first - other than interest income and occasional correcting journal entries, no constituent-related income data should be recorded into your accounting software before it has been recorded into CiviCRM first. Similarly, if your organization collects funds from constituents using external payment processing (i.e. not connected to CiviCRM), that information should also be recorded in CiviCRM first - in this way, you can be confident that the financial information you gather from CiviCRM has not yet been reported in your accounting software.
  • Do Not Edit Financial Information of Completed Contributions
    When a contribution is initially recorded with a status of “Completed”, it is associated with a single financial transaction. Editing the financial information (e.g. financial type, amount, date or status) of a contribution results in the creation of additional positive and negative transactions nested under the original contribution. Transaction details are automatically exposed if you use a line-item based search or report, but can be easily missed when looking at a contact's Contributions tab or the results of a contribution search since one must expand each contribution to view transaction details. If reversing transactions are recorded instead of editing the original contribution, one is presented with an at-a-glance view of changes to contributions everywhere you look.
  • Reconcile Every Month!
    Reconciliation is an accounting process that compares data from multiple systems to ensure figures are correct and in agreement. It confirms whether the money leaving an account matches the amount that is going into another, and makes sure the two are balanced at the end of the recording period.