There’s no denying the fact that charity accounts are complex entities. Research shows that a good level of education is needed to understand most annual reports – and that’s just the summary at the end of the year. While non-profits have a duty to report back on spending to key stakeholders, the way in which they do this varies hugely across the board. But how can technology drive success within charity finance teams?
Finance professionals have their work cut out tracking different pots of money, often with detailed requirements from donors. And then it gets complicated – there could be more than one currency, more than one funder, funds made up of different assets or you could be working in partnership on the same project with another charity.
Fund reporting has the potential to create many a headache within charity finance teams, but it doesn’t have to be this way. Technology can change this by streamlining processes and empowering professionals to make informed decisions which contribute to greater success across the board.
With this in mind, these are the key ways in which technology can help drive success in charity finance teams:
Helping you to focus on the right things
With the right software, it’s possible to automate many of the manual processes which take up so much of our time. By applying this to fund accounting, making sure transactions are coded consistently, as well as invoicing, bank reconciliation and payment processing, you can get rid of repetitive, manual entry tasks freeing up your time to focus on what’s really important. By spending less time on reporting, and more on analysing figures, the role of the charity finance professional shifts from that of an accounts clerk to business advisor.
Providing confidence in numbers
Figures aren’t just important to the finance team. Each department needs to track and evidence costs to justify their approach going forwards. Within many charities, individual budget holders will develop their own system of tracking funds, but the problem with this is that these may not be accurate. With the right software, which allows everyone to see and understand reports, this challenge can be eliminated. Allowing non-finance professionals access can seem scary, but it’s often the right approach. Instead of spending time querying figures, if people see a number that they don’t understand, they can look themselves – using the software to drill down into figures at a transactional level.
Enabling accurate decision-making
For many busy organisations, quarterly reports are not enough. When you’re making decisions on how to spend funds, where to make cost savings and where to invest, having the latest figures to hand will prove invaluable. Thankfully, with a finance system that consolidates automatically, it’s possible for charity finance professionals to gain real time insight. Not only does this allow for better, more accurate decision making, but it enables teams to spot potential problems with spending early on. In the worst-case scenario, if funds have been mistakenly misspent, correcting this at the start will help to save a much bigger problem later on.
Proving the finance team’s worth
Although it’s extremely valuable, work carried out by finance teams may not be visible to everyone. However, using the right technology platform can change this.
Many charities worry about allocating money away from the front-line, which is understandable when the main purpose of organisations is to support beneficiaries. That said, these kinds of projects wouldn’t be viable without the efforts of accountants in the back-office. Being able to communicate this to donors, so that they’re willing to fund the true cost of projects – including the cost of administrating this – becomes easier if you’re able to provide detailed reports, straight from your finance software.
Affordable finance systems
Technology is ever evolving – and one of the advantages of this is that it’s become more accessible for charities. Just 10 years ago, not-for-profits didn’t have the choice of software they have today. Finance professionals had the option of a simplified package, or a high-cost implementation and setup intended for large corporations. Now, there is a lot more choice for small and medium sized charities at an affordable price. Given the many benefits that these finance ERP systems can bring, it’s worth considering how you can deliver best value, including the cost of not making changes. After all, efficient stewarding of funds leads to better results for projects and a better impact on beneficiaries as a result.
Xledger equips non-profits and charities around the world with powerful capabilities for financial management. We combine fund accounting and donor management into one solution, giving you better insight into every corner of your organisation.
To get in touch with Xledger, click here.