Our commercial director, Paul Sparkes, recently spoke to Charity Today about whether outdated on-premise finance software is holding not-for-profits back.
If you missed the original article, catch up below…
A recent survey of charity leaders revealed that 43% of respondents believe the pandemic has increased their need for digital transformation.
When it comes to accounting and finance software specifically, survey feedback shows that third-sector organisations require a solution that will reduce costs, increase productivity, and free up man hours to focus on the things that truly matter.
From SORP reporting, sophisticated budget management, and partial VAT to integration with donor systems, the financial needs of the charity and not-for-profit (NFP) sector are both unique and complex. Also, for far too long, grant and fund reporting has been a difficult and time-consuming process for non-profits.
The issue has been, historically, that the finance and accounting systems used have really struggled to properly manage and segment these funds and grants easily, to enable reports to be produced efficiently. Older systems often fall short of being able to meet these requirements effectively and require extensive reworking of data to produce management, funder, and statutory reports.
Ultimately, at first glance, it might seem easier to continue doing things the way they’ve always been done – even when it’s more onerous and complicated than needed. This mindset is particularly fuelled by the fear of change and the perceived cost and disruption that comes with it.
However, this perspective is not only misplaced, when considering some of the ‘lighter touch’ cloud-native systems available, but it can severely hinder a charity’s ability to live into its vision – being less time and cost-effective in the long run.
Shackled by lengthy admin processes
For too long now, charities have been held back by legacy systems.
They are under increasing pressure to justify their budgets, manage spend, and create maximum impact, and that’s why unnecessary finance admin – associated with outdated, on-premise or ‘fake cloud’ systems – needs to be eliminated.
Taking authorisations and paper-based expenses as an example, when they have to be physically filled in, signed off, and approvals sent via email, this isn’t only onerous for the organisation, but it increases the chance for human error too.
The manual partial VAT calculations and adjustments, alongside the physical collation of documents for end-of-year audits – especially when dealing with multiple legal entities – is often a significant drain on charities’ time.
Donor reports – to provide detailed feedback on how and where particular funds have been spent – can also take weeks to compile, yet typically less than two days with a charity-specific, modern-day cloud system.
With cloud-native software, NFPs can control spend effectively and automatically through configurable workflows – improving the ability to audit approvals – and all documentation and backing evidence is stored on one centralised, digital system.
Suffering from a lack of visibility and integration
In the third sector, reporting is an essential task for stakeholders including finance, departmental managers, and donors – not to mention the legislative requirements of SORP/SOFA.
Yet despite this, many charities are using unagile legacy accounting systems that are limited in both their integration and reporting abilities. This lack of visibility of real-time information leaves finance teams unable to interrogate real-time data to deliver actionable insights. That means they cannot piece together the relevant income and expenditure information from the various donor, membership, and grant management systems, spreadsheets, and paper-based files. And for the organisations with multiple legal entities, they are effectively operating in the dark.
Being hindered to work flexibly
Since the pandemic, 40% of charities have increased their levels of remote working. This, coupled with the fact that many NFPs operate on a national and international scale, means that if their finance systems don’t support this capability, the efficiency, productivity, and compliance of the organisation is likely to be compromised.
Cloud-native software empowers remote workers to be able to submit timesheets and expenses from any device, anywhere, in a highly secure, high-speed fashion – reducing time taken for submission, along with accountability, peace of mind, and ease of use.
While change can sometimes feel daunting, the ROI from upgrading to a tailored cloud solution enables charities to spend significantly more time dealing with actionable insights and working on organisational progress and spending less days per month grappling with legacy systems and manual/spreadsheet workarounds that don’t match their forward-thinking ambitions.
Visit our charity accounting software page to find out more about iplicit’s cloud-native solution and some of the charities that are using it.