Finance management software can bring a number of benefits to free up resources and make your organisation more efficient.
Towards the end of the year, charity leaders begin their planning for the next one. It is a period for assessing what is working well, and what could be working better. With a second lockdown forcing greater introspection of charities’ digital solutions and processes, this course of organisational assessment will be more important than ever. For all it’s challenges and hardships, this lockdown offers an opportunity to evaluate and build better digital infrastructure.
Finance management is unlikely to be the first thing on the agenda for many charities. But impact reporting is one of the most important things a charity does - more important than ever in the era of COVID-19 and the increased number of charities competing for a shrinking pool of funds.
Improved finance management can bring a number of benefits, and automation holds the key to unlocking them. We look at five ways automating finance management can add value to your organisation.
1. Overcoming Capacity Issues
During extensive research conducted by Sage and Charity Digital as part of the Organisational Financial Literacy (OFL) Project, capacity was identified as the number one obstacle to improved finance management for charities.
Often the problems of charity impact reporting and finance management are put down to a lack of knowledge and expertise. Whilst there is a gap in this area when compared to the private and public sectors, this is an overly-simplistic explanation that does not take into account the nuanced challenges facing nonprofits.
In many charity organisations, particularly smaller ones, the finance function is fulfilled by a single person in tandem with other, primary, duties. These other duties will often pull this individual away from finance tasks. In short, the finance function will be de-prioritised. Even if this organisation recognises the importance of financial management, and if this staff member has training in finance (both of which are statistically unlikely in smaller charities), it can be difficult to allocate the time necessary to move finance reporting beyond simple bookkeeping and into more sophisticated planning and analysis.
Finance management software can help to overcome these capacity issues by automating vital processes like procurement, month-end close, consolidations, allocations, grant management, and compliance reporting.
2. Save Money and Direct Resource Elsewhere
This process of automation can save time and allow charity finance staff to focus on building to more valuable impact reporting or other key operational tasks.
This is most readily apparent in these smaller organisations where one individual is fulfilling the finance function alongside other duties. They can then either spend more time on the other aspect of their role or increase the organisation’s degree of OFL by undergoing training to produce more detailed and insightful financial statements, plans and reports.
This saving in worked hours can also translate into financial savings. If you are paying an external consultant to look over charity accounts, then it is likely to be far cheaper to make the switch to an in-house system of automated finance management. Or, if you are currently employing in-house finance staff with skills in other areas, you may be able to encourage them to dedicate part of their working week to help out another team.
Time and resources can also be saved through increased efficiency and the breaking down of data silos.
3. Improving Efficiency
Accounting and financial administration can take up a lot of time, even in the most well-run organisations. Even charities fortunate enough to have in-house trained finance staff will find they have so many different processes to manage that it is easy to end up with a backlog - unless you can find the most efficient ways to work.
This backlog can put you at risk of non-compliance with your financial reporting and can deprive organisations of vital information that can guide decision-making.
Moreover, the roles of finance professionals are changing. There is an increased expectation for finance staff to take on a broader role within the organisation when it comes to providing management information and analysis. In order for this to be an effective way of working, finance processes must be optimised for efficiency.
The good news is that advances in finance management technology can allow finance staff to achieve this increase in efficiency through automating time-consuming processes.
Old software and poorly maintained systems can be a major impediment to efficiency, so make sure you have a modern, fit-for-purpose accounting solution in place. Finance management technology has made great adavances over the last few years, and a new system that makes the process more efficient will soon pay for itself with savings in time and capacity.
4. Remove Data Silos From Your Organisation
You may have heard the term ‘data silo’ thrown around by techy types in your organisation, or as part of wider discussions within the sector. Once broken down, the concept is fairly simple to understand.
When data within a charity is ’siloed’, it’s sequestered away in unconnected systems, is not being shared across teams or departments, and can’t easily be accessed by other parts of the organisation that need it.
Of course, not everyone needs access to all the information in an organisation, and security measures such as user access management mean that some siloes are deliberate. But when something impedes the flow of data from one system to another, this can mean that important insights are missed that could improve a charity’s decision making and help it innovate and grow.
A recent case study of World Learning examined how automating finance processes can break down data silos. As an organisation that had been utilising a dispersed workforce for several years before the onset of the pandemic, World Learning faced several unique finance management challenges. One of the most prominent of these was the flow of data from one database and team to another. Like many large organisations with dispersed teams, World Learning were concerned about a lack of data sharing between separate teams., leading to data siloing.
The organisation needed an integrated data flow - particularly between CRM systems and financial management software. Automating the transfer of data presented its own challenges, as data compliance is a moving target. But once the process had been automated, a great deal of time was saved, and the process became more streamlined and efficient.
By breaking down data silos, and streamlining accounting processes, World Learning was able to more accurately calculate the number of students they were working with, enabling them to implement more detailed scenario planning.
5. Lower Risk of Error
When relying on simple Excel spreadsheets to keep track of accounts (or even pen and paper methods) correcting errors can be a laborious and time-consuming process. If you are able to catch them at all, which is no guarantee. Even if you do, by that time it is likely that some degree of damage has already been done.
Automated methods of finance management have a twofold advantage in this area. On one level it is far easier to detect errors - in fact, this can be done through real-time automated monitoring, allowing you catch mistakes the moment they happen without the need for human oversight. And once these errors are identified, the process of correcting them is quick and simple.
By automating their finance procedures through the use of a digital solution, charities can make the most of these benefits and more. The use of digital finance software can lead to better, more detailed, and ultimately more valuable impact reporting that can inform an organisation’s decision making. At the same time, automation can increase efficiency and reduce costs. Together, these benefits can help to build a more sustainable future for your organisation