5 Decisions Before Issuing Invoices so Everyone Follows the Same Procedure

Welcome back to our two-part series on invoices. There are two kinds of invoices a non-profit will encounter when handling bookkeeping. The first invoice is the one the non-profit receives and needs to pay. We talked about this last week and walked through the 4 steps to verify the purchase before making a payment. The second is the one the non-profit sends out for others to pay.

Many non-profits will spend years without needing to create or send an invoice. But eventually, a request will pop up. It might be a member who needs an invoice for their membership fees, to better organize their own financial systems. It might be a programming partner who needs an invoice before they pay their portion of the partnership costs.

A LOT of attention is paid to the money going out of a non-profit. Procedures are in place to ensure payments are made for genuine purchases of pre-approved budget items. Even more attention is paid to the handling of money coming in, that it is processed correctly and honestly, with a full receipting process. There is surprisingly little attention paid to the invoices sent out on behalf of the organization – the requests for payment.

If a non-profit doesn’t have a policy in place, anyone can issue invoices, can request payments be sent to non-administrative addresses, and there is a risk someone might pocket the funding without any intention of reporting. If your non-profit issues invoices, here are 5 decisions that need to be made, and all of them could very easily drop into an operations policy.

Decision #1 – Who

Invoices are considered part of a non-profit’s accounting system. Decide the 1-2 people who will be authorized to issue invoices. In the policy, prohibit all other employees from issuing invoices.

All board members and employees, other than [insert name of 1-2 people authorized to issue invoices] are prohibited from creating or issuing invoices.

Decision #2 – How

Invoices can be issued from an accounting software (Quick Books, Sage, etc.), or in a more homemade manner, using a word processing software, such as Word. Decide how invoices will be issued.

Decision #3 – Numbering

Invoices should be numbered sequentially, so they can be tracked. If using an accounting software, this will be automatic. If creating homemade invoices, a log and numbering system will be needed to track numbers used. Decide how invoices will be numbered.

Decision #4 – What

Not all funding coming into a non-profit will require an invoice. For example, grant funding will be paid upon approval by the funding agency, an invoice will not be needed. Decide what revenue types will warrant an invoice.

Decision #5 – Monitoring

Invoices need to be tracked to monitor for missing numbers, errors, or anything unpaid. Decide what type of reporting will be required and the process for the double-signature that is applied to all expenses.

Simplifying the invoice issuing process will ensure a non-profit’s bookkeeping is thorough and accurate. Invoices will all have the same formatting/look and will be received as a professional financial document. Numbering will be trackable and that will help to monitor for errors or dishonesty.

Start an operations policy. ‘Invoices are considered part of the [insert name of non-profit] accounting system and are administered by [insert name of 1-2 people authorized to issue invoices].’

If your non-profit is ready to start issuing invoices, or if that’s already happening, the easiest way to get started is to answer the 5 decision questions in the form of an operations policy. Then share the policy with the operations team, so everyone is following the same process.

When a non-profit wants to start issuing invoices and needs to ensure accuracy and accountability, these 5 decisions will build a clear policy everyone can follow. Thanks for taking the time to read my ideas. My mission is to take the mystery out of running a small non-profit. If you know someone who needs to read this, why not grab the link, and share it with them. Let’s work together to make invoice processes easy to understand.

-Christie

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Hi, I'm Christie Saas, former board member, current Executive Director, and non-profit volunteer. I remember well, those early years when I lacked the training, the confidence, and the work-life balance to focus on becoming the best non-profit leader I could be.

Fast-forward past many bumps in the road, lessons learned, and you’ll find me still in the trenches, but a little wiser, a little calmer, and a whole lot happier. I love my work and I want to help you love yours too.

I created ChristieSaas.com to give you tools, tips, and templates to remove the mystery of learning to run a small non-profit. If you’re a brand-new non-profit leader, or a little more seasoned, someone who’s looking to make a meaningful contribution and still have time for a full life away from the job, you’re in the right place.

© Christie Saas 2022 All Rights Reserved

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