Optimizing A Nonprofit’s Operations

Problem

A nonprofit organization that provides training and services to low-income clients depended on third-party cost reimbursement for sustaining operations. Reimbursement levels depended on client utilization data that lagged service delivery by several months. The organization needed to determine how to maximize reimbursements and minimize related overhead while maintaining fiscal integrity.

Approach

Since the organization had already done a good job of mapping the process and identifying initial areas to focus on to increase efficiency, the focus turned to understanding the impact of timing. Transaction data was sampled at various time lag intervals and statistical analysis tools were used to identify the preferred timing for data extraction.

Results

The process map identified opportunities to streamline operations by reducing the number people that needed to touch and process the data. Overhead costs were reduced by approximately $40,000/year. Analysis of the timing data showed that cash flow was optimized by adjusting the booking lag from 4 months to 2 months, resulting in an average Receivables decrease of about $80,000.