Enkel Backoffice Solutions With Omar Visram, CEO & Co-Founder

In today’s episode of The Discovery Podcast brings you into the financial space of an organization. Douglas welcomes Omar Visram, the CEO and Co-Founder of Enkel Backoffice Solutions, to take us into the delicate and essential relationship between finance committees, executive directors, and the directors of finance. Omar also talks about how leaders in our social profit sectors can better engage their treasurers and recruit members and the importance of financial statements. Witness how optimism that drives our sector could also work against us. What are you waiting for? Join Douglas Nelson and Omar Visram today as they unlock more insights into the financing space.

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Enkel Backoffice Solutions With Omar Visram, CEO & Co-Founder

On this episode, I’m pleased to share our guest, Omar Visram. Omar is the CEO and CoFounder of Enkel Back Office Solutions. Omar and I have gotten to know each other. He’s a friend and he’s a real champion for our social profit sector. In our conversation, we talk about the delicate, important, essential relationship between finance committees, executive directors, and directors of finance. How leaders in our social profit sectors can better engage their treasurers, recruit board members, and tell the story of purpose using their financial statements and what’s hidden in those annual reports. Always read the notes, people.

Our conversation is wide-ranging, talking about the optimism that drives our sector and sometimes works against us as we lead our organizations, track our finances, and look down the road. If you have questions about the best conversations to have with your finance committee or if you wonder what happens at the finance committee as a leader coming into your role, you’re going to want to read this conversation with Omar Visram. Welcome, Omar.

Thank you for having me.

I’m looking forward to the conversation. I think we’re going to cover some areas that are important for a number of our readers. Let’s jump right in. As someone who is seeing firsthand how the financial engine rooms of so many social profits work, what is the number one question you hear from finance committee chairs about how their organizations are operating?

I would say that that question tends to change with economic tides. The question I’m hearing, and I’m paraphrasing a little bit, but the question is, are we financially viable over the long-term? Finance committee chairs we work with have varying levels of accounting knowledge and expertise. Finance committees are concerned about funding and financial governance. Many macroeconomic factors suggest that funding that may have been available over the past decade is in jeopardy. This is where having a clear financial picture every month becomes so important.

That definition of long-term and sustainability probably varies from organization to organization, and it does over time. Let’s turn the tables. We’ve got the board side, but let’s look at when you and your team are working with the CEO or the executive director or the finance lead. What are the issues they bring up? What are the questions they’re asking nowadays?

It’s interesting. We get to know our clients fairly well, given that our relationships with clients generally last many years. Repeatedly, it is resource constraints and costs. Resource constraints are not new to the sector. I have so much respect for the sector, such a commitment we see to keeping costs low and maximizing impact. That said, turnover and lack of talent have become significant issues in recent years.

We also have a lot of discussions around automation. When we enter new engagements, in particular, we find that a lot of our clients have redundancy and paper-based processes that are consuming a lot of time and energy. These are actually usually exciting conversations because we give clients the opportunity to do something better, something different. Leverage some level of AI, automate expense, capture. Some of those small tasks can have a significant impact.

I had a flashback while you were giving that last answer when I was in my first CEO role and the finances of the foundation were in transition, we’ll say. I would meet every week with the director of finance, and she would bring in a list of accounts and where we were in terms of our income statement. She would put a piece of paper in front of me that was covered in pencil marks. It was, “Here’s what’s in our system, but here’s why it’s wrong. Here, I’ve corrected all of it.” I had this incredible sinking feeling that if we need to put pencil marks on everything coming out of our system, we’ve got a problem.

I went through the second committee meeting with the finance group. The finance chair said, “Here, let me give you some advice, Doug. If they bring you a piece of paper with pencil marks, refuse to look at it. Say, ‘This has to come out of the system, or I’m not going to look at it.’” I was keen. I thought, “I’ve got this figured out. I’m going to fix this. Can we see this without pencil marks? We got to get our systems fixed.” The director of finance said, “Doug, that’s not how our systems work.” We needed you way back then, Omar.

To add to that, one example I saw was we use an expense automation app, and Doug, you’re familiar with that app. Clients send in receipts there. The receipts are retained in that system, and a backup is in QuickBooks online. It turns out there was also a copy being scanned in and saved in a unique and specific way in Google Drive that took something like eight hours a month for one person. There were a variety of other tasks that we were able to eliminate, but that was one that was not needed. The question was, “Why do you do this?” It was, “Because I’ve always done it that way.”

“This is how our system works.” One of the things that we sometimes see in our work with clients in organizations that are in financial transition or have concerns about viability or sustainability is the misalignment between expectations or levels of comfort between management and the board. In your work, how do you help bridge that connection between what management wants to put forward and the reservations, or maybe even the accelerator the board wants to push?

Actually, a lot of our work is around creating a single picture of where the organization stands. This can be a tricky one. It can be a tricky one when people have their own data sets that they’re working off of. In my mind, to get management and the board aligned, the answer is simple. It’s simple, but it’s an important message. It’s that you need clear and accurate monthly financial statements, but more than this financial statements that show you more than how much money is in the bank.

The statements need to show you how each program or fund is performing with full accrual base numbers. Often, the gap is that we’ve raised so much money and had so much money come in from these grants, why are we struggling? It’s because funding is restricted and must be directed towards specific initiatives and programs, limiting the organization’s ability to spend money. Often, we see organizations that have raised a lot of restricted funding, but they’re quite cash poor when it comes to administrative expenses.

 

I appreciate that answer, Omar. I think that single clear picture is so important to have. People still have relative feelings of, “We need to have 6 months in the bank, we need to have 18 months in the bank. We shouldn’t have more than 1 month in the bank in terms of operating expenses.” There are different perspectives, but at least we can have a conversation about what’s happening in the finances of the organization and set those risk tolerances and comfort levels. Given the work you do with CEOs, EDs and finance directors, what are some of the most common mistakes you see social profits making when it comes to financial management?

In some ways, it relates to the previous question, but it’s thinking that the organization is in better shape than the organization is because of money in the bank or commitments that are made. Another aspect that I see all too common is relying heavily on one funding source. It’s like a stock portfolio. Diversification is essential. You cannot afford to have all of your eggs in one basket, so to speak. This is where we see a lot of organizations struggling, particularly when there are political changes, changes in administration, and funding sources get cut. The one piece of advice I’d have for people that are running organizations is think about where your money’s coming from and how you can diversify.

Think about where your money comes from and how you can diversify it. Click To Tweet

Often, there’s a cost to diversifying the source of revenue that some of the sources of revenue that social profits look to, like annual giving or events or those types of fundraising avenues, come with some significant upfront costs. The advantage is those dollars tend to be unrestricted. While they are expensive, they are very valuable. They’re like $1 plus.

The other challenge that organizations are facing is there are fewer dollars to go around. I had some data, and I can’t remember the numbers, but donations from Giving Tuesday and from the holiday season were down. There are fewer dollars out there available, and organizations are competing for those dollars. Unfortunately, you have to compete for those dollars. They matter a lot.

We had Duke Chang from CanadaHelps on the show. He was underlining it’s a 30-year trend of fewer Canadians giving more money. As we’re seeing, there’s this been this consolidation and wealth. We’re also seeing that consolidation in donations and it puts organizations in a difficult place. To your earlier point, I think that underlines the value of understanding what’s the true picture of the finances of the organization.

It’s probably not a surprise when you hear from CEOs, executive directors, particularly if they’ve come up through the fundraising side of the house and their organizations. We’re professional optimists. We want to have those rose-colored glasses on for what our finances are like. It may not be good now, Omar, but we just need a couple of good donations to come in and we’ll be fine. The reality is, for a lot of organizations, it ultimately works out okay. As you said, there’s probably a better way to give your finance committee some comfort. Omar, if our readers recognize some of those mistakes or challenges in their own organization, what’s the first step to changing course?

I think it’s engaging the team and engaging the board. Coming back to what we were talking about earlier, I’m going to use the term we broadly, we tend to get into this idea that I have to do the same thing as last year. This is not a time when organizations can sit still. Organizations and leaders of these organizations need to be able to be nimble with their time.

Pick up and pivot, as they say in the tech world. Pivot your fundraising strategy, change the way you’re doing things. Turn things on their head. As a leader, you need to be prepared to do that. Often, that means going outside of your comfort zone and venturing into new things, technologies, and platforms for raising money. Think about all that you can do differently, how that might impact the bottom line, and how that might take your organization forward.

This is not a time when organizations can sit still. Organizations and leaders should be nimble with their time, pick up, and pivot. Click To Tweet

One of the issues I’ve heard a lot, along with the scarcity around donations, the fear of the scarcity around donations especially, has been the challenge that a number of organizations are having in recruiting new board members. If you follow along on LinkedIn, the number of organizations that are looking for people with the CPA designation to be on their board. I think if you have a CPA, you could be on 6 or 7 boards, no problem.

Yes. I can make that my full-time job, Doug.

Why don’t you join the board, Omar? Come on. The water’s fine. What are the questions that existing board members and management should be prepared to answer about their organizational finances when they’re recruiting or onboarding a new director, especially one with a financial designation?

Of course, all of those standard rules apply. You need to find somebody who’s a good fit, somebody who’s aligned with the mission of the organization and where it’s going. However, coming at it from a board member’s perspective or specifically a treasurer’s perspective, treasurers are often, I would say, unfairly saddled with the burden of managing finances. That is what I’ve seen has led to burnout and turnover with, specifically, treasurers.

 

You need to have a financial system in place where financial statements are generated every month, good quality financial statements, without the involvement of the treasurer. This is challenging in smaller organizations that are resource-constrained, but I would say this is important. Your treasurer, a finance professional, goes to work and does this work all day. They want to work with your organization to utilize their skills to help move the organization forward. When they’re stuck in the weeds and have to do the bookkeeping or work with the bookkeeper to understand the numbers, their challenge is.

They get grouchy, in my experience. That’s good advice. One of the things that we hear often, or I’ve heard several times from somebody with a financial designation, is, “I’m willing to come on the board, but I don’t want to be on the finance and audit committee. I’ll do anything but be on the finance and audit committee.” What tends to happen is say, “Sure, come on. Get on the board,” then they watch someone chairing that finance and audit committee with no financial background do it, and they’re like, “Just get it. I’ll do it. Let me look after it.” It does lead to burnout. I think that’s a great point you’re making.

I want to switch to how organizations themselves tell their story. In particular, how our social profit sector talks about its value in the community. The sector sometimes struggles to counter the sensational, and I think very largely misguided media stories about scrutiny of financial matters. How can organizations use their financial statements to demonstrate their impact and commitment to purpose?

That’s a powerful one. When I was getting my letters back in the day, we didn’t talk so much about the story that numbers can tell. I look at a lot of financial statements. I look at a lot of annual reports as well. To be honest with you, I find the financial statements a necessary evil. They tell us where the organization is.

The story is often told in these annual reports where there’s data. There are metrics being shared. The impact that the organization is having, the administrative spending as a percentage of overall funding and budget. There are some great metrics that give donors a lot of comfort, that give potential stakeholders a lot of comfort. I think it’s important to take a bit of a step back and understand what those numbers are for your organization. Quite honestly, they’re different for every organization.

 

Getting into specifics would not be overly fruitful in this conversation. Usually you can find somebody, and it might be somebody outside of the organization, somebody in a fractional CFO capacity that can help you figure out these metrics. They can be very powerful for telling the story. When I’m speaking to a potential client and I’m able to read these reports and these metrics, I often find our initial conversation ends up being so much more fruitful. It gives me so much immediate insight into the organization. I would encourage organizations to figure out what those numbers and metrics are, figure out how to capture the data, which can also be a challenge, and then report. Fewer metrics are better than no metrics. You have to start somewhere.

I thought you would say fewer metrics are better than having three pages of metrics.

There’s that, too.

One of the things that I was taught as a non-financial person now when I was responsible for annual reports was the story is in the notes. Read the notes. Don’t worry about what the actual numbers are. The notes will tell you everything that’s going on and everything you need to know. It’s something that I have had in a conversation with a lot of CEOs. I read their financial statements or read their annual reports and I’m like, “Can I ask questions about what’s going on in their organization?” They’ll say, “How did you know that?” It’s in the notes.

The reason I raise that is not because I think people aren’t doing what they’re supposed to be doing. I think there are powerful stories of impact on organizational health in those notes. I often encourage organizations to bring those stories out of the notes and put them in the headlights to talk about how you think about the sustainability and the viability of your programming and the sustainability of your organization. That’s a feature that you can lead with rather than a hidden diamond that you’re hoping some donors find and like as they go through the second page of notes.

You hit the nail on the head. There’s so much data and information in those reports a lot of the time. Can you get your marketing person to post some of these metrics on LinkedIn? They get great engagement, typically. They tell a wonderful story. How do you pull those little sound bites out of the annual report and share them more broadly? I totally agree.

I think it’s lead with an understanding of your own financing. It invites less questions about overhead. When it’s clear that you know your finances well, people who may ask that question have some assurance that you know what you’re talking about and at least you’re paying attention to it. Speaking of paying attention to it, what is the question you wish more organizations ask themselves about their own financial health?

I’ve been having some tough conversations lately with some of our clients. I think back to your point about looking at the world through rose-colored glasses. Organizations, leaders, and executive directors get into this: “I have to survive just the next crisis.” It was COVID for the longest time, which brought about some wonderful, innovative thinking, but they don’t give thought to the next fiscal year and the year after that. It’s the long-term viability of the organization.

Often, these organizations came about as somebody’s passion, but will that survive once that person is gone? How can it survive? I think it’s important to be practical, and this is where organizations sometimes need to detach the emotional aspect of decision making. Don’t get me wrong, the emotion is what gets a lot of wonderful things to happen on an ongoing basis. I sometimes look at organizations that are so small that having any administrative infrastructure doesn’t make sense. Does it make sense to partner with an organization? I think that in order to do that, it is the responsibility of the leaders to think beyond the next crisis.

I think that’s great advice. Whether it’s a smaller or larger organization, certainly, when something is urgent and important, it has everyone’s attention. We need to make payroll or the fiscal year’s ending. We want to end this in a good way. In working with clients, where we encourage them is to make sure they’re spending some time on those things that are important but not urgent.

Those longer looks down the road in terms of their financial health or their fundraising success or their programmatic implementation. Make sure that they’re asking those big existential questions. Maybe not every day, not every week, but certainly on a fairly regular basis to have a sense of how their organization fits into the purpose they serve. If they don’t do that, they end up calling you and saying, “Where’s all the money, Omar?”

We can’t help after the fact. Sorry.

We’re about planning and looking down the road. Absolutely. Look down the road. What do you think holds organizations back from taking that look?

I hate to use or draw the same themes that we’ve been talking about, but it comes down to continuously feeling resource-constrained. That’s where, in many cases, organizations are resource-constrained, but I think the board can help an executive director prioritize. This is where the role of the board can be quite powerful in seeing the bright lights. What do we need to be focusing on as an organization? Holding the executive director accountable for making those few but important things happen.

Going back to your earlier point, I think that having that single shared picture of the organizational finances, “This is where we are now. This is the trend line that we’re currently writing. Let’s make clear eye decisions about what needs to happen next.” You and your team at Enkel work with more than 100 social profit organizations. I’m curious that few people wake up and say, “I want to provide financial services and back-office solutions to the social profit sector.” You were probably 10, 11 years old when you came to that realization.

Thirteen.

A late bloomer. What drew you to this work with social profits?

I’m going to give you a little bit of an honest story here. Before I started Enkel, I had very little interest in working with not-for-profit organizations. The reality was I hadn’t done much of it. I’d done a little bit of it in my audit journey, but a lot of my history had been in tax planning. No exposure there to not-for-profit organizations.

When I started Enkel, we got a few clients in the sector and a light bulb went off for me, I guess you could say. I saw how our services could significantly impact the sector, because at the end of the day, not-for-profit organizations have very limited resources and need to make their dollars stretch quite far. With our service of getting the best payroll person, the best bookkeeper on a fractional basis, in a very systematic way, allows a not-for-profit organization to get great value and excellent outcomes for the stakeholders. What it came down to was I started seeing our work’s impact, which got me more and more excited and continues to be. Not-for-profit organizations aren’t all that we do, but they’re a big part of the business now. Quite honestly, it’s a big reason why I get out bed in the morning.

You mentioned earlier how difficult it is for organizations, particularly small and medium-sized social enterprises, to have the expertise on staff and that financial acumen on the team. Being able to access that expertise through something like Enkel and the work that you and your colleagues do does add a real margin of excellence for a lot of those organizations. It’s great work that you do and I appreciate the service that you and your team do for our sector. If a reader is wondering whether Enkel Back Office Solutions would be suitable for their organization, what would be the main characteristics that might make them a fit?

It can be a variety of different situations. We typically work with organizations with an annual operating budget of between $500,000 and about $10 million. It can even be greater than that sometimes. I will say that for an organization that is looking to do things differently, to disrupt, to an extent, the way that they’re doing things to get better outcomes, it’s probably worth a conversation.

The magic of Enkel is in three places. We see ourselves as a services business, but it’s about how we combine people, process, and technology to deliver great outcomes to our clients every month. On top of that, we can reduce some of the risks you get in a typical bookkeeper-client relationship in that not all of the knowledge is in one person’s head. That person becomes a risk point, but we have protocols in place where we document processes quite extensively and reduce the risk to the organization on one person.

Bring a combination of people, processes, and technology to deliver great outcomes. Click To Tweet

Omar, thank you very much for that. I’m excited to ask you the question we ask all our guests. I’m curious, since you’ve been working at this since you were thirteen years old, Omar, what are you looking forward to?

I am looking forward to seeing the sector thrive in 2024 and beyond. For me, I often look back on our COVID days, all of the innovative things that our clients did. There are economic challenges, but how we see organizations coming through those challenges and getting stronger, that’s what I’m excited about. That’s what I get inspired about.

I’m also looking forward to helping a lot of not-for-profit organizations modernize, but very excitedly, I’m excited about seeing them use AI and some of these great tools that are becoming available that we used to speak about conceptually only becoming a reality. Also, tools that can help us make meaningful change. Personally, as much as we’ve started this with a little bit of doom and gloom, I feel like. I am optimistic. I think we’re going to have a great year. I think that the next years are going to be very promising for the social profit sector.

Thank you so much for being a part of the show.

Thank you so much for having me.

 

Important Links

• Enkel Back Office Solutions
• Duke Chang – Past Episode