4 Key Steps to Choosing Your Next Finance System

Demand for change

Over many years, Customer Success Manager, Russ Emmerson, has seen numerous charity finance managers struggle to manage increasing workloads, with more and more being added to their plate. A recent survey of CFOs within the charity sector found that senior finance professionals were spending on average 10 hours every week on repetitive and manual tasks. Clearly, there is a need to create efficiencies.

Russ’ experience has found that slow and inaccurate reporting can be a result of reliance on spreadsheets and outdated technology. Especially, given the tendency for inaccuracies to occur, when many versions of the same document are created or saved in different folders, leading to confusion and miscommunication.

With so much emphasis on repetitive tasks, finance teams can get lost in the day-to-day, becoming tactical rather than strategic. All this, at a time when funding and gaining income is becoming more of a challenge.

Key takeout: demand on finance managers’ time has increased, while income has decreased – making automation of manual tasks essential to the overall success of your charity.

Fund accounting and project reporting

The problem with manual entry is not only the cost of your time and resource, but the risk of mistakes. Only last week have we seen news about the pensions scandal, where more than £1bn of pensions have been underpaid due to human error. What if we could use modern technology to automate many of these processes?

Fund accounting

Jen, Solutions Manager, has worked with many charities to understand their challenges and suggest solutions for bespoke needs. Fund accounting has been key, she adds: “The ability to have in-system fund pots enables you to transact across full trial balance, report balance sheet movements by fund, analyse transfers by fund, as well as month and year end reporting by fund. You can get all this reporting at your fingertips. Yearend rollovers happen automatically, and accurately. This removes reliance on tools such as Excel and hence will give you confidence in your numbers.

Project reporting

Furthermore, project management capabilities directly in the function can be incredibly helpful. Designated dimensions for project managers allow you to track, manage and forecast projects. These can be used for activities, campaigns, events, or even capital projects. The tools allow access to detailed reporting, for example, actuals vs budgets vs commitments. Slice and dice data at the click of button.

What’s interesting also, is the ability to share data between finance managers and others in the team, who may not need to know the full story – for example, project managers or fund managers. They can login to system and see the bits that are relevant to them. By “self-serving” this data, they are no longer relying on finance teams to provide it. Your CFO is away on holiday for two weeks, and you urgently need numbers three days in? Not a problem.

Real-time reporting for insight

Real-time reporting of live data allows charities to plan, react and look forward. When shared around the organisation, everyone in the team can access anywhere, at any time. This includes management accounts, so you can understand where you are at any point in the given month. This is the same with statutory accounts – meaning instead of an arduous, yearly drain on resources, it can be on demand throughout the year. With a modern, cloud-based finance system, these can all be accessed 24/7 worldwide.

Other types of reports that are commonly required by charities on a real-time basis are:

• Actual vs Budget vs Commitment
• SOFA by Fund
• Donor Reporting
• Self-Service Reporting

Digital processing

Timely integrations provide deeper insight also – meaning data transfers can be daily or even hourly, rather than waiting for a specific date each month. Many modern finance systems will have digital processing systems included, allowing you to automate functions such as:

• Expenses
• Invoicing
• VAT and MTD – as this is now a legal requirement, having functionality that allows VAT and partial VAT means there is no need for manual manipulation
• Automated general ledger journals ensure the ability to pre-pay and defer income on demand, or post accruals on the back of purchase orders, moving from commitments into actuals
• Fixed assets

Live and on demand

As part of a system like Xledger, your team can utilise mobile app technology, engaging end users with useful digital processing options, for example, expenses on the go. These options are user friendly, suitable for those not within finance function. Should you wish – your users could be on the platform of a train station, or even on holiday (not that we recommend this!) and still able to get things done.

Key takeout: live data means the right people in your organisation get the information they need, whenever they need it – whilst simultaneously taking the stress out of time-consuming reporting.

Automation of accounts payable

We’ve already discussed the benefits of automating your reporting, but there is additional functionality when it comes to accounts payable and workflows. When choosing a new finance system, ensuring you have purchase-to-pay is essential to increase efficiency.

For example, an invoice is sent in; built-in OCR pulls the relevant information straight from the invoice, applies coding rules, pre-populates fields, gets posted automatically, and awaits payment approval. Combined with digital workflows, users can see the invoice immediately, check, review and sign off. Furthermore, integration with your bank will reduce risk of fraud (removing the manual CSV download) and communicate with the bank directly.

The payment itself is made automatically, the voucher is posted, remittance is sent. Next, the bank statements come in, and accounts reconcile automatically. An end-to-end purchase-to-pay system that reduces errors and increases efficiency.

Key takeout: look for purchase-to-pay and built-in OCR when choosing a new finance system.

Migrating systems: 4-step plan

It can be a daunting task to switch systems. Follow these four steps:

1. Plan, and plan some more. Do you know what you want from your system, and how it aligns with business strategy? What are your critical goals?
2. Understand your full budget: this not only refers to financial budget, but the time and resource of your team. Migrating systems takes time, and you still need your day to day tasks to happen alongside this; so it’s essential to budget flexibility in those timesheets.
3. Gain internal support. It’s likely your new finance system will be used by more people than just you. Getting them on side will make the whole process much smoother and increase likelihood of success.
4. Pick the right partner. Ask them: will the system flex and grow with you? Will they support your team?

Next steps

Choosing a new finance system can seem challenging or even too much effort; however, with the right partner on board, you can keep up with the changing landscape and take advantage of the benefits of cloud-based technology. Get in touch with our dedicated team to learn more about how Xledger can help you transform your organisation.