Legacy Nonprofit Software: it has probably served you well for decades.
You’ve learned to live with its inability to integrate with other mission-critical software in use within your organization. You’ve kept a stiff upper lip when its reporting shortcomings became obvious and resorted to spreadsheets. You’ve made weekend and early morning trips to the office in order to access information or prepare reports, and you can’t count how many nights you’ve stayed late.
This can’t go on any more. Your talents, expertise and insights hardly have a chance to be exercised because you are caught in the grind of overcoming the shortcomings of your legacy software. Most legacy software was designed in the ‘80s. Is it any wonder it can’t keep up with the demands you face in 2016?
Nonprofit CFOs and Finance Directors are challenged daily to provide more and better reporting; assist with delivering data for greater transparency; and operating effectively and accurately with lean staffing.
These challenges provide an opportunity for the nonprofit finance function to take on a key role in the organization. Four trends in 2016 will help nonprofit finance and accounting departments seize this opportunity.
Nonprofit Accounting Trends:
- Leave behind the manual processes and focus on the strategic
- Increased use of business intelligence
- Rapid adoption of mobile computing (smart phones and tablets)
- Making the shift to real-time fund accounting
1. Focus on Strategy through Efficiency (Leave behind Manual Processing)
Nonprofit accounting staff members are far too often bogged down with necessary but low value activities such as re-keying daily activity, tracking down purchase approvals, or providing one-off reports to department heads or board members. These manual activities could be eliminated with a modern fund accounting system that easily integrates with other nonprofit mission-critical systems be they fundraising, tuition management, patient billing, grant writing, etc.
Reduce Processing Time
Increased team member efficiency is one of the primary benefits of process automation. Studies have shown that recently automated accounting processes with modern technology and process automation through the use of financial accounting and management software yielded the following results:
- Saved 500 hours a year on manual data entry
- Reduced month-end cycle from 8 hours to 6 hours
- Reduced time for monthly reports from 1 day to 2 hours
Increased Satisfaction Among Management, Stakeholders, Funders and Constituents
Switching from manual to automated data entry and processing means nonprofit managers can spend less time creating and maintaining spreadsheets, less time fixing data errors and tracking down lost documents and spend more time focusing on what really matters to their nonprofit: fulfilling the mission.
2. Increased use of Business Intelligence (Ditch the spreadsheets!)
In recent years nonprofit organizations have been able to shift the responsibilities of their accounting departments from traditional accounting operations to strategic nonprofit management guidance and support through the use of business intelligence. Business Intelligence has many advantages in a nonprofit environment.
Within financial accounting and management systems this has allowed savvy nonprofit organizations to create reports and dashboards that automatically combine operational data with financial data so that they can analyze results for each grant, fund, program, and more. Nonprofits can slice and dice their financial and operational data the way they want, without having to use external reporting tools, Excel spreadsheets or modifying their chart of accounts.
Financial and operational data can be analyzed in real time. This means automated daily postings that show nonprofit managers the latest data regarding donations, grants, expenditures, as well as enabling them to produce reports combining different views of the organization. Real-time business intelligence solutions give nonprofit management up-to-the minute information that allows for more accurate data-driven decision making.
Data available for reporting is not limited to the financial domain. The combination of reporting on financial and operational information across multiple dimensions mean that nonprofits are able to see their information structured in ways that allows them to make meaningful decisions. Business intelligence solutions allow management to draw connections across unrelated data, unlocking its meaning. Once connections have been established and trends have been identified, management and/or the board can feel comfortable using the data to make decisions.
3. Rapid adoption of Mobile Computing (smart phones and tablets)
The use and capability of mobile technology in nonprofit’s financial and operational departments is growing every day. Top nonprofits are leveraging mobile technology to approve transactions, gain access to their financial information, and manage their programs. Traditional approval workflows fall victim to the same fatal flaw – approval processes come to a standstill when the person with approval authority is not somewhere they can access approvals – namely, in front of his or her computer. Mobile workflow is changing all of that. Gone are the days when a nonprofit manager can’t approve because they are away at a conference, across town at a meeting, or in the field.
Savvy nonprofits are using mobile approvals to:
• View approval tasks on a variety of mobile devices
• Gain instant access to invoice header and line item details
• Approve, reject and leave comments for invoice approval tasks
• Access reports by grants, programs, funds
• Get financial information in the format they want, straight to their mobile device
4. Making the shift to Real-Time Fund Accounting (Live Data)
Pop Quiz: How many days does it take your organization to complete your month-end close?
Well-run nonprofits, with the right fund accounting solution, are closing their books faster. Ideally you should have your books closed within two working days of the end of the month.
Benefits of Real-Time Fund Accounting
Real-time reporting in financial fund accounting systems (real-time accounting) offers many benefits when compared to conventional periodic reporting. Traditionally, nonprofits look at monthly, quarterly and annual reporting periods. This simply won’t cut it anymore. With the demands coming from donors, funders, constituents, and other stakeholders for more transparency and information on program efficiency – real-time accounting allows you to fulfill these demands.
3 Benefits of Real-Time Fund Accounting
1 – Close Your Books Faster
Posting transactions in real time or near real time reduces activities that need to be completed at month end. This in turn allows for a more streamlined monthly close process that can offer productivity improvements of up to 20%.
2 – See Your Data Live
By moving to a fund accounting system that allows for reporting live data, nonprofits are able to make smart decisions and seize the right opportunities faster – all towards the goal of better serving constituents and fulfilling the mission.
3 – Know Your Organization Better
With access to see your nonprofit organization’s financial and operational metrics sliced in any number of relevant ways, stakeholders throughout the organization are understanding their programs and areas of responsibility better than ever, helping them to make improved strategic decisions.
Calling it quits with your legacy system in favor of a cloud-based accounting solution for nonprofits will benefit your organization in so many ways – we’ve only touched on a few nonprofit accounting trends here. Please visit our website for more Nonprofit Resources.