Implementing Automation and AI Accounting Tools for Nonprofits

By Jacqueline M. Tiso, Founder & CEO & Buu-Linh Tran, CPA, Senior VP-Financial Solutions, JMT Consulting, Inc.

Everything nonprofit financial leaders need to know about employing AI-based accounting automation software to streamline operations, reduce manual work, and gain deeper insights — including a tested process for getting started with these tools.

Nonprofit financial leaders can’t escape the conversations around artificial intelligence (AI) accounting automation these days, particularly as it relates to the automation of accounting systems. It seems that everywhere we turn, so-called experts and practitioners are talking about it.

The use of AI to automate nonprofit accounting systems is not a new development. It has been used for these purposes since around 2015. Greater awareness of the potential for AI began near the end of 2022 with the launch of ChatGPT.

However, these tools have now become an even hotter topic.

What is new today: A growing menu of capabilities to bring greater efficiency and insights, but also growing confusion and concerns around the use of it.

The following article can help bring clarity to the rapidly evolving technological advancements, addressing many of the top concerns, so you can better plan for integrating automation and AI accounting tools into your nonprofit.

Let’s start with a brief history.

A Brief History of Using AI to Automate Nonprofit Accounting Systems

Before 2015, automation in accounting was limited to rules-based systems, and the use of AI in nonprofit finance was discussed more in theory than in day-to-day practice. Some enterprise resource planning (ERP) systems, however, began testing machine learning (ML) capabilities for use in auditing and fraud detection tasks around that time.

Then, true AI-driven accounting automation features began to appear starting around this time.

For example, QuickBooks and Xero, two online tools designed for small businesses, started integrating such AI-empowered capabilities to categorize transactions and conduct bank reconciliations. Additionally, larger accounting firms, such as Ernst & Young and KPMG, have adopted AI tools to conduct contract reviews and perform audit risk assessments.

Finally, a few firms began employing chatbots that feature natural language processing (NLP) for client interactions.

More robust integration began around 2018. Expense report automation, invoice capture, and other functions became commonplace, resulting in greater efficiencies for users. Furthermore, real-time anomaly detection, AP automation, audit capabilities, and more became available through tools such as AppZen, BlackLine, and Vic.ai. And cloud-based ERPs like Sage Intacct, NetSuite, and others began leveraging ML for forecasting and insights.

Finally, the use of AI/ML grew rapidly in 2023, extending to mid-market and nonprofit organizations, as well as large enterprises. That’s because ChatGPT was launched to the public about a month earlier (on November 20, 2022), enabling widespread access to generative AI – i.e., the use of algorithms to create audio, video, and textual content in response to what’s being asked.

Almost immediately, this launch transformed the way nonprofit financial functions were conducted. That’s because generative AI enables automated report generation, conversational data querying, narrative insights, and more. And complicated financial tools became easier to use as well because now we could just “chat” with them using common, everyday language.

Today, many accounting platforms utilize AI to automate reconciliations, conduct cash flow forecasting, make predictions, and perform other tasks. Additionally, the functionality continues to increase, a topic we’ll explore toward the end of this article.

In the meantime, let us look at one of the core decisions a financial leader needs to make: Should they embrace an array of best-in-class solutions or should they adopt an all-in-one solution?

Best in Class or All in One: Which Nonprofit Accounting Approach Should You Consider?

For nonprofits, accounting solutions often fall into one of two categories: “best in class” nonprofit accounting software – software designed for conducting specific, specialized tasks – and “all in one” accounting solutions – tools that offer a comprehensive financial management platform.

While both approaches have their benefits, we at JMT Consulting typically recommend the best-in-class nonprofit accounting approach for several reasons:

Deeper Functionality – Best-in-class accounting tools like Sage Intacct are “purpose-built” to solve specific nonprofit challenges, including grant tracking, fund accounting, program-based budgeting, and compliance with the criteria from the Financial Accounting Standards Board (FASB). These systems offer features that “all-in-one” platforms often can’t match in their depth or nuance.

Faster Innovation – Software publishers who provide single-function solutions like accounting or budgeting can innovate more quickly, adopt new technologies faster, and respond more effectively to changing nonprofit needs (e.g., adapting to evolving compliance rules or specific donor reporting requirements).

Open Architecture & Integration – The bulk of best-in-class financial solutions – including Sage Intacct’s open API – allows them to connect seamlessly with a wide range of other nonprofit financial management tools such as Martus for collaborative budgeting, Velixo for Excel-based reporting tools, and Bill.com or Tipalti for AP automation.

In other words, this modular financial technology approach ensures that each system excels in its specific area while working together as a tailored, unified solution. As a result, these solutions give nonprofit organizations the depth, flexibility, and scalability they need for their financial operations.

For more details on our approach to nonprofit financial technology, visit our Nonprofit Accounting Solutions page.

The Key Financial Tasks Nonprofits Should Automate Today

While there are surely even more sophisticated AI-powered nonprofit accounting features to come, users can start leveraging a range of automations today, enabling them to:

Save Time – Users can eliminate repetitive tasks, such as bank reconciliations, expense allocations, and AP approvals.

Achieve Faster Monthly Closes – Many organizations reduce close time from weeks to days with AI accounting automation.

Improve Accuracy – Automated data imports, coding suggestions, and built-in validation, among other features, help reduce the number of manual errors that require debugging.

Boost Financial Visibility – Dashboards and real-time reports give your leadership instant access to nonprofit financial data by program, grant, or fund. Just imagine how this could help you provide stronger internal controls.

Enable Audit Readiness – Complete audit trails and clean, structured data will make compliance and reporting much easier.

In fact, one client, the Boys & Girls Clubs of Greater Tarrant County, Texas, increased its financial efficiency by 50% to 60% and avoided $65,000 in added headcount by updating its outdated accounting application to one that is AI-enabled.

So, what should you automate?

Here are three options to start:

1. Accounts payable automation to reduce or eliminate user entry and approvals.
2. Bank feed integration for the reconciliation process.
3. GL outlier detection for data entry anomalies.

Of course, these are just the beginning — the more tedious tasks that you can automate, the more efficiency you can achieve.

But the bottom line is that you simply need to get started. Learn how in the next section.

A KISS to Start: Our Tested Nonprofit Software Implementation Process

Before diving into the details, let’s discuss the timeline. Based on our nearly 35 years of consulting, recommending, implementing, and supporting management and financial solutions for nonprofits, we’ve found that a realistic timeline for AI accounting automation tools typically ranges from 3 to 6 months, depending on the complexity of your organization.

Factors to consider include size, number of entities, and number of modules required.

So, how should a nonprofit get started? At JMT Consulting, we follow a proven, streamlined methodology based on the principle of KISS – “Keep It Simple and Straightforward.” Our goal: To ensure a smooth and successful transition to your new ERP system with minimal disruption.

The implementation process we use, and recommend using even if you don’t retain us, can be broken into seven steps:

Project and Change Management – We begin by establishing a detailed project plan that outlines key milestones and responsibilities. Alongside this, we develop a change management strategy to help your team adapt to the new system, ensuring buy-in and adoption across the organization.

Requirements Review – We collaborate with key stakeholders to document the organization’s functional, reporting, and compliance requirements. These requirements guide the design and configuration of the system.

System Configuration – Based on the approved requirements, we configure the solution to reflect the organization’s chart of accounts, dimensions, workflows, and automation rules. Configurations, of course, are thoroughly reviewed and approved by the client before moving forward.

Data Migration – We migrate the agreed-upon data from your legacy system, including accounts, vendors, customers, opening balances, and transaction history. More importantly, the data is reconciled to ensure accuracy and completeness.

Training – Training is integrated throughout the process, with hands-on sessions tailored to your team’s specific roles. For example, for accounts payable, we would provide the relevant AP training. The best approach to training is either in-person or remote. Then, just before going live, we conduct training with real transactions to reinforce learning and build confidence in the new solution.

Cutover Plan – A clear, documented cutover strategy is created to manage the transition between systems. This ensures that all open transactions are accounted for, and no data is lost or duplicated.

Post Go-Live Support – The JMT Consulting team remains engaged after the go-live to provide ongoing support and optimization. We also help you stay current with quarterly Sage Intacct updates, and we work with you as your organization evolves to ensure the system continues to meet your needs.

As you can see, the steps are clear and logical. What isn’t always clear and logical is the user. Rather, they often have fears and apprehensions that need to be addressed. So how do you build trust and confidence in the new solution(s)? The answer can be found in the next section.

Gaining Trust for Financial AI Tools Among Others in the Nonprofit

Gaining trust starts with transparency, relevance, and timeliness. We believe that trust is built when stakeholders — whether internal teams, leadership, funders, or community members — receive accurate, easy-to-understand, and timely information that supports sound decision-making.

That’s why trust-building is a core objective when we implement a new nonprofit accounting solution. We engage teams early and communicate clearly about what is changing and why.

As you can see above, we also involve key users in the implementation process – they help shape how the system is configured – and we provide hands-on nonprofit accounting software training, which we’ve found empowers confidence and reduces resistance.

Most importantly, we ensure that the system delivers meaningful financial insights to the right people once it’s up and running. When users see over time how the new system is making their work easier and how quickly it surfaces valuable information, trust in the tool and the process grows naturally. And, of course, your team becomes more confident using it.

However, this leads us to one more issue to address – an issue that can erode trust in the system: identifying AI hallucinations.

Protecting Against AI Hallucinations and Eliminating Errors

While no system can guarantee 100% accuracy, implementing best practices and financial data controls can significantly reduce errors and associated risks. Key safeguards include:

Role-based Review and Approval Workflows – All transactions must pass through multiple layers of review before being posted.

Built-in Validation Rules – The system must flag missing or mismatched data before it’s accepted.

Audit Trails and Logs – Every action in the system is recorded, allowing for easy tracing and correction of any issues.

Ongoing Reconciliations – Regular comparisons between the modules (e.g., subledger to GL, bank to system) help detect anomalies early.

User Training and Accountability – Staff must understand their role in ensuring data integrity.

In short, the combination of AI accounting automation and oversight enables nonprofit organizations to benefit from increased efficiency without compromising accuracy or control.

On Our Radar: Emerging AI-based Accounting Tools for Nonprofits

At Sage’s annual user conference in June 2025, Sage Future, they shared some of the proactive insights and intelligent data retrieval capabilities that are soon to be released in their AI-powered accounting co-pilot feature. These may include identifying:

• Vendors with rising invoice volumes
• Customers with repeated overdue payments
• Year-to-date (YTD) budget variance analysis
• Top 5 vendors with outstanding balances
• High priority bills for payment

As you can see, the future is bright for AI-based nonprofit accounting systems, as they continue to expand their powers to automate and improve accounting operations. But the time to start is now, so you don’t get left behind.

If you’re interested in how AI-based accounting tools can help your organization, then contact your client account manager today or explore our Nonprofit Financial Management Solutions page for more information.