It’s no secret that strong financial management and careful forecasting is critical to sustainability in the voluntary sector. However, a recent piece of research conducted by Cass Centre for Charity Effectiveness, showed that small charities often exist in a survival mind-set; their primary focus tends to be on staying afloat in the short-term rather than scaling their work and building a sound financial model for the future.
Of course, it’s perfectly understandable – an increase in the demand for the services of the voluntary sector coupled with lower levels of funding makes for a tight budget to manage. What’s more, while many finance professionals within small to medium charities would like to spend more time on strategic planning, out-dated accounting systems and endless spreadsheets see their time taken up by basic level bookkeeping.
If they are to create a sustainable model and innovate their services, finance teams within charities must undergo their own digital transformation.
Forecasting and future-planning
In a volatile economic climate, charities must grapple with unpredictable revenue streams and no guarantee of grant or contract renewals. As such, the need for evidence-driven financial forecasting has become crucial to a charity’s survival. Unfortunately, many are held back by inflexible IT systems with limited capabilities. Adopting a modern, cloud-based accounting system can prove revolutionary for finance teams, equipping them with the key insights that leaders depend upon to deliver business objectives.
Even if your budget is a limited one, effective allocation of resources lays the foundation for a sustainable business model. Enhancing efficiency is not about compromising the charity’s outcomes to cut costs, but rather taking a look under the hood of your finances to identify the right areas to invest and reduce spend.
If operating with minimum overhead is the key to unlocking growth, sophisticated accounting software can play a vital role in transforming the finance department into a source of business-critical information. With a flexible cloud accounting ERP solution, finance departments gain complete visibility over income, likely expenditure, cash flow and reserves in real-time. Such information will be of critical value to senior management, as it will guide their resource allocation decisions.
Expanding and innovating
According to a recent survey by the Weston Charity Awards, most charities spent only a few days a year on the task of strategic planning, with 13 per cent spending no time at all. Consequently, three out of five small and medium-sized charities further admitted that they do not have the skills required to prosper in the next five years.
Thanks to the advent of automation, modern cloud-based accounting ERP systems have the capability to streamline a multitude of manual processes, freeing up finance staff to focus on budget management and forward planning. Harnessing the data drawn from past performance can give finance teams the fuel to craft a growth strategy based on real insights – and with the capabilities of modern technology, all it takes is the click of a button.
In a fast-changing donation landscape, the right ERP finance system puts charity finance staff in a prime position to influence change across the business. We deliver these advanced capabilities through our highly sophisticated cloud-based accounting software. To find out more, contact the Xledger team today.