Case Study: How One Not-For-Profit Organization is Adapting to Changing Financial Environments

Case Study: How one Not-For-Profit Organization is Adapting to Changing Financial Environments

Despite the abundance of new “fintech” or financial technology to help organizations and individuals pay bills and receive cash, there are still many organizations that are still using traditional paper banking. These seemingly-laggard organizations may have legitimate reasons for why they have not yet implemented or caught up with the technology.

The following is a short analysis recently presented to a small not-for-profit organization that continues to operate using paper cheques, cash, and paper deposit books.

Background:

The organization:

• is a not-for-profit organization established more than 100 years ago;

• is comprised of members who are older (more than 50% of the membership is 55 years+) who pay a membership fee to belong to the organization;

• is run and operated by a volunteer team elected by its members at an Annual General Meeting;

• has bank accounts that require two of three signatories to release or pay cheques;

• sends out annual manual invoices using outlook mail-merge;

• accepts cash and cheque as means to collect membership dues; and

• has just recently purchased Quickbooks Online (“QBO”).

The issues:

• Banks are discouraging customers to use teller services so standing in line to deposit cheques and cash becomes more time consuming.

• As financial technology becomes more accessible for individuals with E-transfers, Credit Cards and Tap Technology, PayPal, Apple Pay, Samsung Pay, more members are asking to pay using such means as they, themselves, start to reduce the number of cheques they write.

• Manually creating invoices and sending them out to members does not integrate with the bookkeeping and duplication of work is done when recording payments.

Options:

There are a couple of options that can be considered given the context above:

1. Use QBO for invoicing & direct payment collection

   • Invoices can be sent out to directly with a link to pay by credit card.

2. Square Reader

   • The organization can accept credit cards only, but will require a mobile device that can connect to the internet on site to process payments.

   • This option does not solve the lack of integration between manual invoices and bookkeeping.

• Moneris (or equivalent merchant) terminal

  • Alternative option to Square Reader where instead of a mobile device, this is a permanent terminal located on site to accept debit and credit cards.

  • This option does not solve the lack of integration between manual invoices and bookkeeping.

1. Accept E-transfers

   • Depending on the bank settings of the bank account, it could be possible to allow for e-transfers

   • This option does not solve the lack of integration between manual invoices and bookkeeping.

2. Use Paypal

   • This option requires the organization to set-up a PayPal account and could circumvent existing banking controls of the two of three signatories.

   • This option could include invoicing, but more research is required to understand how the PayPal could interface with QBO (also known as the Application Programming Interface or “API”).

	QBO Invoicing	Square Reader	Moneris Terminal	Bank Payee E-transfers	Paypal
Cost	2.9% + 0.25 per transaction FREE – if invoice paid with e-transfer	2.65% of fees collected	CC: 2% & $0.1 per transaction Debit: 0.25% & $0.1 per transaction	Depends on banking package	2.9% & $0.30 per transaction 1.6% & $0.30 if CRA charity
Term of Service	Infinite so long as QBO account is maintained	N/A	Min. 3yr term	Infinite – so long as active bank account	Infinite – so long as active bank account
Invoicing	Included as QBO	No recurring billing	Recurring Billing accepted	N/A	Invoicing is an option
Accepted payment forms	All major credit cards; no debit	All major credit cards; no debit	All major credit cards; debit OK	Debit/ Interac only	All major credit cards; debit OK
Accessibility	Cloud – web browser/app log in	Any mobile device to log-in	Permanent on site	Via Bank account only	Via PayPal account only
Security	SSL CVV2 verification	SSL No CVV2 verification	No SSL CVV2 verification	SSL CVV2 – N/A	SSL CVV2 – N/A
Lag Time before deposit in bank	2-3 days (credit) 5 days for e-transfer	36 hours	+2 days	Real Time	6-10 days
Risk	Low	Medium	Low	Low	Medium
Other	Training for non-accountants to do invoicing Requires time-to set up invoices	Reader value is $9.99 Mobile device for office $100-200	Hardware costs depends - installation - locked on a permanent site	Need to consider signatories and banking controls	Need to set-up and familiarize with options – time consuming

Recommendations:

The recommended approach would be to use QBO as the invoicing function is already included in the software and the incremental cost is comparable to the other non-E-transfer options. This option will take the longest to get up and running, but will pay time dividends in the year following implementation. Alternatively, the lowest cost option would be to receive and collect payment via E-transfers. However, a conversation with the bank is required to ensure that such a set-up is feasible.

The recommendations are an improved way of collecting cash which will become crucial going forward if the organization wants to increase revenues streams.

The Organization’s Response: Due to the timing of the proposed change, there was not enough time to implement QBO for invoicing – as a result, the organization continued status quo. The organization is currently evaluating the options for a Jan 1, 2018 effective date.