Accepting that inadequate financial systems aren’t good for your charity
As a result of the challenges thrown up by the pandemic, digital transformation is no longer a buzzword or a concept for charities, it’s a reality.
The fact that a survey of charity leaders revealed 43% of respondents believe the Covid-19 crisis has increased their need for digital transformation is evidence of this.
But pandemic aside, you’ll know there are many wider finance challenges facing modern charities.
You’ll also know that the challenging circumstances in recent years have only exacerbated what charities have already been feeling and experiencing for a very long time.
For instance, when it comes to accounting and finance software specifically, for too many years – over a decade in fact – charities like yours have been under served.
The issue has been, historically, that the finance and accounting systems used have struggled to properly manage and segment funds and grants easily, and to enable reports to be produced efficiently. As a result, this has made it a difficult and time-consuming process for finance teams to carry out.
That’s why when it comes to accounting and finance software specifically, survey feedback shows that charities require a solution which reduces costs, increases productivity, and frees up man hours to focus on the things that truly matter.
Financial needs
From SORP reporting, sophisticated budget management and partial VAT to integration with donor systems, you will of course be aware that the financial needs of the charity sector are both unique and complex.
Also, while many charities appear to have one “face” of the organisation, beneath the surface they are incredibly intricate – with multiple legal entities and often various global locations to consider.
As a result, you need control and visibility over the finances – to be able to plan budgets effectively and with confidence, being safe in the knowledge that you have a thorough understanding of the cost model.
That’s why it’s vital to have the most comprehensive technology in place that both supports and empowers not only your finance teams but your entire charity, as well as reduces the administrative burden associated with legacy systems and manually intensive processes.
If this is the case, the end result should be one that ensures income revenues, donor and SORP/SOFA reporting, fund management, partial VAT payments and analysis, and authorisations all run smoothly.
ARE YOU SHACKLED BY LENGTHY ADMIN PROCESSES? Charities are under increasing pressure to justify their budgets, manage spend, and create maximum impact, and that’s why unnecessary finance admin – associated with on-premise or “fake” cloud systems (i.e. not full or proper cloud systems, still with an on-premise element)– 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 your charity, 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 likely often a significant drain on your charity’s time.
Control effectively
With cloud-native software, however, you 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.
Cloud-native is not just about putting everything in the cloud as a host; it is more about dynamically using the cloud to transform how you do things with speed and agility.
DOES YOUR CHARITY SUFFER FROM A LACK OF VISIBILITY AND INTEGRATION? In the charity sector, reporting is an essential task, yet many charities are using accounting systems that are limited in both their integration and reporting abilities.
You may have heard your finance teams complaining how donor reports can take weeks to manually compile. Yet this takes typically less than two days with a charity-specific, modern-day cloud system. And unlike cloud-native software, unagile legacy products are unable to offer the depth of financial detail and visibility that’s required by the sector’s regulators, supporters and donors.
HAVE YOU BEEN UNABLE TO WORK FLEXIBLY? When the various lockdowns created new dispersed workforce models, many organisations felt shackled by their legacy, on-premise finance systems. Tasks that were usually completed in the office – such as reviewing and approving documents – were either extremely difficult or impossible to action.
Moreover, with 80% of charity employees stating they want to work from home more in the future, it’s clear the appetite for “work from anywhere” flexibility isn’t going away anytime soon.
In fact, since the pandemic, 40% of charities have increased their levels of remote working.
This, coupled with the fact that many charities operate nationally and internationally, means that if their finance systems don’t support this, efficiency, productivity and compliance are likely to be compromised.
As a result, your networks need to be easily accessible by both staff and volunteers, in a secure fashion – without the need for a complex IT set-up, dedicated software installed on multiple devices or slow speed Virtual Private Networks that hinder productivity and progress.
Internet access
With true cloud, if you have access to the internet, you can connect to your system.
It 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, as well as offering accountability, peace of mind, and ease of use.
TRANSFORMATIONAL CHANGE IN PRACTICE. One of the world’s leading dance examination boards – and registered educational charity -the Imperial Society of Teachers of Dancing (ISTD), is a great example of digital transformation in action.
Operating in 59 countries and delivering 120,000 examinations – with circa 250 global examiners – the ISTD placed demands on its finance system that might typically be expected from a charity many times its size. It therefore required comprehensive income analysis and geographically granular reporting beyond the realms of entry level accounting software.
In addition, ISTD wanted an expense management and timesheet system that would enable the charity to take more control of its affairs and submit the details accurately and efficiently. It used to have a separate system for examiner payments, but it wasn’t ideal.
In a similar vein, it also had another “bolt-on” system to support its previous finance system, for document storage. The end result was that the charity had three systems that needed three sets of relationships and three sets of maintenance costs in order to keep everything running.
Therefore, the charity wanted to get rid of its “bolt-on” document storage and examiner payments systems and integrate them all, for maximum resource and operational efficiencies.
Other than connecting with the examiners and amalgamating the disparate systems into one, the charity’s underlying driver for change was the need to move to a true-cloud solution.
A FUTURE OF DIGITAL CHANGE. Above all, it’s important that you take the time to review your charity’s current finance practices, in order to benchmark where you’re at currently and to create a picture of where you need to be.
Charity finance directors and teams require quick and easy access to reporting to fuel accurate decision making – and this can be held back by the limited capabilities and “clunky” functionality offered by an on-premise finance solution that’s stored on a local server on a charity’s site.
You also need to be aware of and avoid fake cloud solutions too, as these won’t solve, but will rather mask, the problems you have.
On the surface it may appear to look like its true cloud counterparts, but the performance and troublesome integration can be an instant giveaway. You’ll soon discover that it simply doesn’t fit the bill for today’s agile, flexible and hybrid working model.
In reality, there are still tens of thousands of organisations that make do with the technology they have, applying “sticking plasters” to their on-premise tools – in the form of a multitude of manual workarounds, myriad Excel spreadsheets and a general acceptance that processes like reports take weeks rather than hours.
Fear of change
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 come 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.
And, if there’s one thing charities have learnt throughout the pandemic, it’s that agility and embracing change help to build a sustainable future.
While change can sometimes feel daunting, the ROI from upgrading to a tailored cloud solution enables charities to spend significantly more time on actionable insights and organisational progress instead of grappling with legacy systems and manual workarounds that don’t match your forward-thinking ambitions.
This constant compromising and fear of change associated with long-winded finance admin is a major drain on charities’ time, and one which, for many, can no longer be afforded.
For charities, digital transformation is only heading in one direction, and that’s straight up into the cloud – the true cloud.
