Non-profits can significantly strengthen their internal controls by using platforms like Ramp and Bill (formerly Bill.com). These tools automate many financial processes, which in turn reduces manual errors, boosts transparency, and helps enforce policies crucial for preventing fraud and ensuring financial accuracy.
Ramp for Stronger Internal Controls
Ramp is a financial operations platform that combines corporate cards, expense management, and accounts payable (AP) automation. Its features give you real-time control and visibility over spending.
Here’s how Ramp enhances internal controls:
- Real-time Spend Controls and Policy Enforcement:
- Customizable Spending Limits: Set specific spending limits for employees, departments, or even individual vendors on corporate cards. For instance, you could limit a marketing team’s ad spending to $5,000 per month or restrict a specific vendor card to just $200 for a one-time purchase. This prevents overspending before it even happens.
- Policy Violation Alerts: Ramp automatically flags expenses that break company policies, like exceeding a limit or being spent at an unapproved merchant. You’ll get an alert if an employee tries to use their card at a liquor store when company policy forbids it.
- Virtual Cards: Issue virtual cards with single-use or merchant-locked controls for specific vendors. This adds an extra layer of security, limiting potential exposure if card details are compromised. You can create a virtual card for a specific software subscription, ensuring it can only be used with that vendor.
- Pre-approvals: Require pre-approval for certain expenses, ensuring funds are allocated and approved before a purchase. For example, any purchase over $500 could require a manager’s prior approval.
- Automated Receipt Capture and Matching: Employees can easily snap photos of receipts, and Ramp uses AI to automatically match them to transactions. This eliminates manual data entry, cuts down on errors, and creates a complete audit trail.
2. Streamlined Approval Workflows:
- Configurable Approval Flows: Set up multi-level approval workflows based on amount, department, or vendor. This ensures expenses and bills are reviewed and approved by the right people. A $10,000 invoice, for instance, might need approval from both the department head and the CFO.
- Automated Routing: Invoices and expense reports are automatically routed to the correct approvers, reducing bottlenecks and ensuring timely reviews.
3. Segregation of Duties (SoD):
- Role-Based Access Controls: Define clear user roles and permissions, ensuring no single person controls an entire financial process. One person might enter invoices, another approves them, and a third processes payments.
- Audit Trails: Ramp maintains comprehensive, time-stamped audit trails of all activities, showing exactly who approved, modified, or processed invoices and payments. This transparency is vital for accountability and investigations.
4. Automated Accounts Payable:
- Invoice Capture and Automation: Ramp automates invoice capture, cutting down on manual data entry and errors.
- Vendor Management: Centralized vendor management helps you keep accurate vendor records and prevents payments to unauthorized vendors.
5. Reporting and Analytics:
- Real-time Reporting: Gain immediate visibility into spending trends, budget versus actuals, and categorized spend summaries. This helps you spot discrepancies and make informed financial decisions.
- Custom Reports: Generate tailored reports to monitor specific metrics and ensure compliance with internal policies and external regulations.
Bill for Stronger Internal Controls
Bill (formerly Bill.com) specializes in accounts payable and accounts receivable automation, streamlining payment processes and enhancing financial controls.
Here’s how Bill strengthens your internal controls:
1. Robust Approval Workflows:
- Custom Approval Policies: Create custom approval workflows based on vendor, amount, department, or general ledger account. Bills automatically route to designated approvers or groups. For example, all invoices from a specific contractor might require approval from the project manager, while larger invoices need a second sign-off from an executive.
- Multi-Layer Approvals (Dual Control): Require a second administrator’s approval for key actions or payments over a certain threshold. This adds an extra layer of security and reduces fraud risk.
- Mobile Approvals: Approvers can review and approve invoices from anywhere, ensuring the approval process doesn’t become a bottleneck.
2. Segregation of Duties (SoD):
- Custom User Roles and Permissions: Define specific roles (e.g., administrators, accountants, clerks, approvers, payers) with varying levels of access. This ensures no single individual can initiate, approve, and process a payment. A bookkeeper can enter bills, but only a designated payer can release funds.
- Audit Trails: Bill maintains detailed audit trails of all transactions, showing who initiated, approved, and paid each bill, providing clear accountability.
3. Fraud Prevention and Data Entry Controls:
- Automated Duplicate Detection: Bill automatically flags potential duplicate invoices to prevent erroneous payments. If two invoices come in for the same amount from the same vendor on the same day, Bill will alert you.
- Invoice Matching: Facilitates 2-way and 3-way matching (invoice to purchase order; invoice to purchase order and receiving information) to verify invoice legitimacy and accuracy before payment.
- Standardized Data Entry: Promotes consistent and accurate data entry for invoices, reducing manual errors.
- Enhanced Security: Features like single sign-on (SSO), multi-factor authentication, and bank account masking (creating a unique routing number for transactions) enhance data security and prevent unauthorized access.
4. Payment Controls:
- Flexible Payment Options: Supports ACH, checks, and credit card payments, with clear tracking of payment status.
- Vendor Management: Centralized vendor information, including W9 collection, helps ensure accurate payments and tax compliance.
- Confirmation of Vendor Payment Information Updates: Provides a controlled process for updating vendor payment details, helping prevent fraudulent changes.
5. Reporting and Visibility:
- 360-degree View of Payments: Offers comprehensive visibility into payables and receivables, allowing you to monitor cash flow and spot potential issues.
- Status Tracking: Easily track the status of each invoice, from receipt to approval to payment, ensuring transparency and preventing missed payments.
Bay Business Group utilizes Ramp and Bill to help our clients build a robust network of internal controls to reduces fraud risk through segregation of duties, multi-level approvals, and fraud detection. This software minimizes errors by automating data entry, reconciliation, and matching processes. Bill and Ramp also improves efficiency by streamlining workflows and cutting down on manual tasks, freeing up staff for more valuable work. Additionally, the use of Bill and Ramp enhance transparency and ensures compliance with real-time visibility into spending, comprehensive audit trails, and detailed reporting as well as enforcing spending policies and providing accurate records for audits and financial reporting. These platforms offer affordable, scalable solutions, making enterprise-level internal controls accessible even for organizations with limited resources.
Please reach out to us at Bay Business Group to see how we can help your organization.