What Does a Standard GL Integration Using Salesforce Look Like?
General Ledger Integration on Salesforce, Part 5
Hello! My name is Alexandra. I am a Solution Engineer for Salesforce.org. Welcome to my blog series about GL integration!
In Part 4, we discussed the common factors that can make GL integration difficult for nonprofits. The remainder of articles in this series will walk through how to make GL integration easier using Salesforce Nonprofit Cloud tools.
THE GIFT CYCLE AT-A-GLANCE
Up to this point, we have discussed many principles of nonprofit fund accounting. Now it’s time to match the principles to the actual business processes behind posting a donation to the GL. To set the stage, let’s start with an overview of the CRM-to-GL process. (I will explain each step in detail in subsequent articles, including both the accounting treatment and the technology that powers it.) For now, here is the flow of a typical gift’s accounting cycle at a high level:
Step 1: Donor Makes a Gift
Depending on the types of gifts your organization solicits and the channels you make available for supporters to give, you might receive gifts in the form of checks in the mail, pledges or promises-to-pay, online credit card donations, peer-to-peer fundraising platforms, grant awards/contracts, PayPal, Facebook fundraisers, planned gift of stock or annuity, and more. These gifts might come in unrestricted, or be linked to a specific fundraising campaign or other restrictions and conditions.
Step 2: Enter Gift & Designate Funds
Next, your gift processing team will enter the gifts and designate the funds in the CRM. Each gift entry creates a donation record in the system and should be associated with the donor’s contact (or account) record. Each donation record also tracks any gift attributes, including a fund allocation to indicate how the gift funds should be spent. The donations can be entered individually or in a batch.
Your organization may also be receiving gifts from a variety of different revenue sources, each powered by their own technology system. For example, in addition to gifts that get entered directly into your CRM, your organization may have a peer-to-peer or online fundraising platform that generates revenue transactions. You may have an e-commerce solution that sells items. Maybe you use an events platform to sell tickets.
Leading practice is to integrate all revenue transactions into your CRM first (either through manual entry, batch data import, or an automated API integration), and then integrate your CRM with your GL. This is an ideal flow because it leverages your CRM as your true subledger. What are the benefits of this approach? First, it allows your GL system to stay much cleaner. Second, you will make any changes or adjustments in your revenue system of record rather than having to toggle between and duplicate work in two different systems. Third, your CRM always stays up-to-date with the most accurate revenue information.
Why are these benefits important to your mission? This makes your accountants happy and reduces the amount of “fact-finding” and “investigating” accountants will need to do during reconciliation. It also eliminates the confusion and potential for making costly errors by employees relying on two different systems that might be out-of-sync. By using your CRM as your true subledger, you are able to achieve a single source of truth view of your revenue all in one place.
Because Salesforce offers an Accounting Subledger solution, you can use Salesforce as your true subledger to follow leading practices in GL integration. But the reality is, not all CRMs are built to make this process easy. If your CRM does not have true revenue subledger capabilities, odds are you are entering transaction files from all those different revenue streams into your GL. I know from my days working with fund accounting technology that this often leads to additional manual reconciliation work and is a big pain point for many nonprofits.
Step 3: Post to General Ledger
The good news is that when you are using your CRM as your true revenue subledger, the hardest work is accomplished in Step 2 and actually posting to the GL is a breeze! Your gift processing office will establish a regular cadence (typically nightly or weekly) on which all the new revenue transactions that have come in will be “pushed” to the accounting system. There are a number of ways to push the data, a topic I discuss in detail in the subsequent How to Integrate Your CRM & GL Systems article. For now, know that the integration can be as simple as exporting a pre-built GL integration report (sometimes referred to as a “posting file”) from your CRM and importing it into your accounting system using its data import tool. Most data import tools are point-and-click and are pretty user-friendly for the average business user.
Once the revenue transactions have been loaded into the GL system, an Accounting Manager (or Controller or Senior Accountant) will review the transactions for completeness. Then finally, the transactions are posted to the general ledger! Remember, once posted to the GL the gifts are represented in a summary view by account, but you should be able to drill back into the subledger or even source transaction details as needed. More on that later.
Step 4: Make Adjustments
As I explained in the previous article, there will inevitably be scenarios that come up where you need to make a change to a gift even after it has been posted to the GL. If you are using your CRM as your true revenue subledger, you should make these changes directly in the CRM using an adjustment entry or write off. These changes will be captured the next time you run your GL integration process, thus ensuring both your CRM and GL systems stay up-to-date.
Step 5: Close Period & Produce Financial Statements
Now, it’s called the gift “cycle” because these steps repeat for each new donation that comes in. Since bookkeeping is managed by reporting periods (typically monthly periods), at the end of each period the finance office will go through a series of steps to “close the period” (often referred to as “closing the books”). Accountants will follow a detailed checklist every period. The checklist will vary by organization, but generally include reconciling all of the period’s transactions and bank accounts, ensuring that the ledgers are balanced, and locking (or “closing”) the period in the subledger and GL systems so that no new transactions can be mistakenly posted to a prior period.
When all is said and done, you have a balanced general ledger. What this enables you to do is produce your key business and financial reports like Cash Flow projections, Budget vs. Actuals, Statement of Activities, and Statement of Financial Position. Said plainly? You can now tell the complete story of the money you raised, where it’s going, how it gets spent, and ultimately how it impacts your mission.
What’s Next?
Now that you have an overview of the steps a donation takes from coming in the door to showing up on the nonprofit’s financial statements, in the next article we’ll dive a level deeper and take a look at how the initial steps of the gift cycle (and preparation of your gift revenue accounting data) are managed through your CRM.
