In my time helping Not for Profits with their IT investments, I’ve seen some crazy process workarounds, but some of the craziest occur when an organisation has outgrown its finance system.
Really?
I know it might seem like a strange view when other systems like the CRM usually get all the attention, but it’s true. The level of manual tasks for a finance system can be mind-blowing compared to others.
I’ve seen finance departments enter more manual journal entries or adjustments per month than the system assigns automatically.
I’ve seen dozens of new data fields created in other systems to help provide financial visibility, only to be downloaded and manipulated into spreadsheets later and compared line by line to the finance system entries.
I even know of Not for Profits that have a separate finance system per government funding source – resulting in a mountain of manual reconciliation tasks each month.
Whenever I see crazy workarounds like these, I find it odd that the organisation did not consider upgrading their Finance system earlier.
Organisations that usually need more advanced finance systems
For most Not for Profits – Xero, MYOB Essentials or MYOB AccountRight will meet all your needs. However, these systems will not generally work for more complex organisations that have:
- More than one ABN;
- Have significant reporting requirements to government or other funders.
In the case of the first complexity above, it’s more obvious that the org has outgrown its finance system because you can’t set it up properly in the first place.
However, for complexity #2, I often find organisations limping along with manual processes, unaware that their staff’s workday could be significantly easier if they just upgraded their finance system.
Signs you need to upgrade your finance system
- Lack of Visibility Because of the limitations of the general ledger, you struggle to get a detailed view of your finances at the level required for decision making and reporting.
- Significant Manual Processes Your finance team makes significant adjustments and manual journal entries each month, and/or your managers heavily rely on spreadsheets due to the constraints of the finance system.
- Insufficient Audit Trail – Your audits and month-end closes take forever because information is not traceable or you can’t store all the relevant information in your finance system.
Other things to consider for a finance system upgrade:
- When to upgrade: You generally want to switch finance systems at the beginning of a term, preferably at the beginning of a new financial year.
- Data migration: Data migration can be the hardest part about upgrading your system. So, ensure you only migrate the information you really need. Many implementation partners will recommend migrating just 12 months of historical data and any open payables and receivables. To ensure you have historical information for audits and other mandatory data holding periods, ensure that you keep a single read-only license of your legacy finance system until you no longer need it.
- Reporting: If you are making significant changes to your General Ledger during the upgrade, you could lose year-on-year comparables. Be sure to speak to your auditors before making big changes like this.
- Integrations: For any system currently integrated with your existing finance system, keep in mind that you will need to rebuild those integrations to the new one. Be sure to budget both time and costs as part of your project plan.
Final Thoughts
For some reason, organisations delay finance system upgrades more than other systems. As a result, I’ve seen some of the craziest process workarounds.
So, if your organisation is struggling with some of these signs I mentioned above, consider if it’s time for a new one.
I regularly help Not for Profits with system selections. Let me know if you need some help.
P.S. If you found this article helpful, you might want to read these too:
- Why Finance hates your Association CRM
- What if your Not for Profit cannot afford to upgrade your IT systems?
Tammy Ven Dange is a former charity CEO, Association President, Not for Profit Board Member and IT Executive. Today, she helps NFPs with strategic IT decisions, especially around investments.
