By Paul Sparkes, commercial director at true-cloud accounting software provider, iplicit.
A 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 reduces costs, increases productivity, and frees 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.
For too long, grant and fund reporting has been a difficult and time-consuming process. Historically, this has been because the finance and accounting systems used have struggled to properly manage and segment these areas easily, to enable reports to be produced efficiently.
At first glance, it might seem easier to continue doing things the way they’ve always been done – even when it’s more burdensome 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 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
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 – 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.
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, yet many charities are using accounting systems that are limited in both their integration and reporting abilities.
Donor reports can take weeks to manually compile, yet 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 industry’s regulators, supporters, and donors.
Unable 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 nationally and internationally, means that if their finance systems don’t support this, efficiency, productivity, and compliance 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 on actionable insights and organisational progress instead of grappling with legacy systems and manual workarounds that don’t match their forward-thinking ambitions.
Find out more about iplicit’s cloud-native finance software and some of the charities that use it, here.