Understand Your Finances with the Right Software

Transcription

1 Understand Your Finances with the Right Software As a not for profit organization grows, its accounting processes often progress along a traditional path. Handwritten records in a file folder evolve into an Excel spreadsheet which eventually gives way to an accounting program picked up from the office supply store. At a certain point, however, the specific requirements and challenges of not for profit accounting outstrip the capabilities of off the shelf software packages. A for profit based accounting program such as QuickBooks, for example, lacks many of the functions that not for profit organizations need to properly understand and report on their finances. Many not for profits use QuickBooks or Excel spreadsheets with manual workarounds that become more and more laborious as the complexity of funding and programs increases. Making a transition to a true not forprofit (or fund based ) accounting software can be a great investment for an organization, in terms of both the efficiency and the accuracy of accounting and financial reporting. When considering your next investment in accounting software, keep the following points in mind. Is it able to: Appropriately track income and expenses, the software should allow transactions to be recorded and reported by fund, (i.e. unrestricted, temporarily or permanently restricted) program, funder, or any combination of the three. Minimize errors and ensure efficiency by eliminating manual reporting, financial reports should be able to be produced directly from the software. Since funders often specify the format in which expenses are to be reported, the software should allow for easily customized reports. Allow you to understand the true costs of programs, the software should be able to automatically allocate overhead expenses based on a consistent application of your cost allocation methodology. Ensure internal financial controls, the system should use assigned user IDs to limit access to adding, changing, or deleting transactions. Help you keep track of your revenue and spending goals throughout the year, the software should allow you to enter your overall and program budgets and report budget to actual results at the program and funder levels. It is important to keep in mind that the price of the software itself is only one component of the total cost of implementing the system. Yearly maintenance costs and fees for software publishers version upgrades should also be considered, as well as any increases in technical or hardware capacity that would be required to operate the system. Finally, a software implementation budget should include appropriate staff training to ensure that the system will be used to its full capacity. Features of a good accounting software include: Flexible chart of Accounts Records Payables and Receivables o Accrual accounting means invoices (expenses) are entered when received (incurred), not when the invoices are paid. Billing Purchasing and Receiving Flexible Reports o Ability to print reports for funders, board, department heads without using Excel downloads User Security software security plan should tie to the organization s internal controls. For example, o Users with access to enter vendors should be different from with access to enter invoices or cut checks o Users should have access rights, appropriate to their responsibilities, to add, change, delete and/or view transactions Budget Module for tracking of budget and variances Checks printed directly from software o Automated Allocations important to ensure consistency Data integration with donor tracking and payroll data systems including capacity to download data into the accounting system

2 Not-For-Profit Software (prices as of June 2008) Software Comments Pricing (see notes) QuickBooks Not-For-Profit Version [quickbooks.intuit.com] FUND EZ (v 9) [fundez.com] MIP Sage MIP Fund Accounting Sage Fundraising [sagenonprofit.com] BlackBaud The Financial Edge The Raiser s Edge [blackbaud.com] Dynamics GP (Great Plains) [microsoft.com/dynamics] Appropriate for less complex organizations with limited restricted or government funding and one to two fiscal staff. QuickBooks does not offer True Fund Accounting, Allocations or a true Fundraising module but does includes basic fixed asset tracking and additional add on services such as integrated credit card processing and payroll. Appropriate for more complex organizations with restricted and/or government funding and two or more fiscal staff. Fund EZ does not currently offer an integrated fixed asset module. sophisticated grant and fundraising tracking requirements as well as decentralized fiscal and purchasing functions. sophisticated grant and fundraising tracking requirements as well as decentralized fiscal and purchasing functions. sophisticated grant and fundraising tracking requirements and the need for more commercial features such as inventory tracking. Also appropriate for organizations with a more complex fee-for-service models as well as decentralized fiscal and purchasing functions. Dynamics offers Grant Management and CRM, but no integrated, out-of-the-box Fundraising software. $300 to $3,000 based version and number of $990 to $3,685, based on number of $12,000 for first user (Sage MIP Fund Accounting), less for additional $3,500 for first user (Sage Fundraising), less for additional $16,000 for first user (Financial Edge), less for additional $3,500 for first user (Raiser s Edge), less for additional Consulting Averages $25,000 to $40,000 $3,980 (Advanced Management Bundle) per user Consulting Averages $25,000 to $30,000 Pricing Notes All packages include G/L, Budgets, A/P, A/R, PO, Billing (grants), Fund Raising, Data Access / Custom Reporting, Audit Trail, User Security. Expect where noted, all packages also include True Fund Accounting, Allocations and Fixed Assets. Consulting prices can vary considerably based on complexity of organization, current technology and software modifications requested. We have attempted to normalize the software prices across the product shown. Due to differences in user and modular pricing, these estimates could be higher or lower. Total costs include Fundraising software where appropriate but does not include the additional consulting time for Fundraising implementation.

3 Organization Name: Date Completed: Financial Software Assessment: Needs Analysis Completed by: Type of Legal Entity: Annual Budget: Total Staff: Fiscal Year: # of Staff in Fiscal Office: # of Staff accessing financial software (Transactional Access/View Only): Current Software: Average # of transactions per month (checks cut, invoices tracked, payments received) Plan for converting GL & AP history? (Balance sheet only/ Trial balance level/ Transaction level - How far back?) Project Budget (incl. software, installation, setup, training): Anticipated growth in coming years? What documents are you currently creating manually/using spreadsheets? a) Reports (Including to board, staff, funders government, foundations, etc)? b) Sub-schedules (e.g. A/R)? c) Other financial Information (e.g. fixed assets)? Are there any reports, data, actions, etc that you want to be able to produce that you can t with your current software and haven t been able to address using spreadsheets? Are there any other comments, concerns, thoughts about how your current software is not meeting your needs? Outline Chart of Account segments (ex: 1: Legal Entity, 2: Account, 3: Department, 4:Project, 5: Funding Source, 6: Grant) Current: New: Software Modules Description Current Need General Accounts Payable Records bills from vendors, schedules pmts, issues checks Accounts Receivable Creates and tracks client invoices including amounts due for contracts and

4 Software Modules Description Current Need grants, makes aging reports, receives pmts Development Software Integration Allows for integration with development software Budgeting & Planning Helps org. create multiple budgets, track and report budget vs actual Cash Management Manages bank accounts, including cash, deposits, bank reconciliations General Ledger Center for all accounting operations, provides financial statements Payroll Holds payroll info for employees, processes paychecks, W-2s, etc Download Payroll Info Allows direct download from payroll system into financial software Purchase Order Creates and tracks purchases placed with vendors, can include automated 3-way matching and encumbrances Electronic Requisition Enables departments, managers to make electronic purchase requests Report Writer Allows for creation of complex reports, incl. custom dates across FYs User Security Sets security settings/levels of access for each user + tracks use Goods and Services (Fee for Service) Order Entry Creates invoices for products/svcs (for inventory heavy business) Point of Sale For retail, replaces cash register + tracks sales, linked to inventory Time & Billing Tracks time, expenses of employees, usually for billing customers Sales Analysis Provides sales related reporting, helps track sales opportunities Inventory Control Tracks inventory of goods for sale product info, volume, etc Fixed Assets Tracks purchases, depreciation, tax treatment, gain/loss detail Additional Customer Rel. Mgmt Provides management of customers - sales, marketing, customer svc. E-Commerce Functions using internet, e.g. credit card processing, internet sales Foreign Currency Converts currency between different countries Project Management Tracks progress of and manages resources for complex projects Sales Force Automation Applications for sales + marketing to improve performance Fund Accounting Allows for tracking cost of projects by funding restriction Allocation Management Allocates amounts to segments in COA based on specified information Consolidation Managmnt Automates roll-up of financial data from multiple databases for reporting Grants Management Enables reporting for separate projects, events w/out adding new segment

5 Software Modules Description Current Need values to the chart of accounts; track grant + grantor details Document Management Enables attachment of scanned documents to various transactions Other: Other: