The
environment is at the forefront of the social and political
agenda, with many organisations seeking to reduce their impact
on the earth. One such way of helping to accomplish this is
through the use of online accountancy software, which can
help charities to cut down on the amount of paper used throughout
the organisation.
There is a range of online accounting software available for
improving charities’ financial operations. The Revas
Online Accounting and Advisory Service, for example, allows
staff to log on to a web-based accountancy system remotely
and record financial information via a simple interface. “Our
people then produce the management accounts and report back.
Those accounts and reports are themselves available from a
secure internet site,” says Mark Holland, head of Revas
Online Accounting at Baker Tilly.
Savings can be achieved through the reduction or redistribution
of staff required for routine accounting tasks, such as re-keying
data, as well as the office space needed for paper storage
and money spent on postage. However, not all charities will
benefit from implementing such accounting software. “While
this might be a helpful service that saves money for some
charities, for others it might be a case of using a sledgehammer
to crack an egg,” says Holland. “This is not a
one-size-fits-all solution.”
According to Richard Pierce, managing director of PS Financials,
accounting software can provide charities with more immediate
information on their finances. “The problem for a lot
of these charities is that they have to respond to disasters,
and disasters don’t wait until 15 days after the end
of the month,” he says.
Strict controls on restricted and non-restricted funds can
be put in place to prevent the misallocation of funds. Charities
with designated funds also need to produce reports on the
progress of particular projects, which accounting software
can help with.
“Dynamic charities are looking to provide much more
information on demand for their budget holders so they can
more effectively manage their projects,” says Pierce.
“An additional benefit of this is that they are building
up an invaluable amount of data on the cost of providing their
services.”
This project planning capability is important for Save the
Children, which uses PS Financials accounting software. “Planning
for projects is the fundamental basis of everything that we
do,” says Robin Brown, financial accountant for Save
the Children. “What that really means is that you need
to have a very sophisticated analysis type product. Some systems
do that better than others. With PS Financials it’s
all integral within the main module – it’s part
of the design from day one.”
Stringent reporting
Charities now face financial reporting requirements as stringent
as those imposed on the business sector. They must be able
to show financial transparency and accountability to their
donors and monitor expenditure closely to ensure that as much
income as possible is spent on the cause, rather than administrative
costs.
The financial and internal reporting needs of charities are
somewhat different to those of commercial organisations though.
Key financial information reports need to be produced in different
formats depending on whether managers, trustees or other staff
are viewing them.
Charities are also subject to a two tier reporting strategy,
with statutory and operational requirements which must both
be met. “A lot of charities have got so caught up with
the statutory accounting side of things that they’ve
set up systems within their organisation to deal with that,
rather than what the business requires,” says Jon Jorgensen,
managing director of Asyst Solutions.
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Paper trail
The reporting functionality of online accountancy software
can help to reduce the amount of paper traditionally used
for producing reports. For example, trustees can have their
own suite of reports available online, from which they can
also discern any underlying transactions. “If a system
is flexible, and all financial and other information can
be held together in one database, it becomes very straightforward
to produce any of the reports required,” says PS Financials’
Pierce.
For Save the Children, efficient and accurate reporting
is essential. The charity replaced its AS/400-based software
system with the PS Financials software some years ago. It
provides the charity with automatic, flexible reporting
and multi-dimensional analysis, so that the finance team
can examine information at any level, from an individual
project up to the organisation as a whole.
“What typically happens with charities is that they
reach a level where they need to do a far more complicated
multi-dimensional analysis than would be true of commercial
companies of a similar size,” says Save the Children’s
Brown.
“So you start getting a need for more complex accounting
packages, perhaps at a smaller level in terms of your overall
turnover.”
Users are able to access the central system remotely, with
budget holders given read-only access to financial data,
allowing them to track budgets in real-time instead of waiting
for month-end reports.
“It [PS Financials] can handle the different levels
of analysis required for statutory reporting, donor reporting,
different currencies, splitting things between, for example,
the objectives in the various countries we have and what
types of project we run. There are many types of different
dimensions and to be able to slice and dice and report on
that data is crucial.”
Online accounting solutions can also show expenditure against
a variety of budgets and forecasts across the organisation.
“Our web system allows the account system, and also
payroll and HR functions, to be extended beyond the head
office functions to branch and remote offices. It allows
them to input financial information directly onto the web
system, which then goes straight through to the core finance
team,” says Grahame Marsden, not for profit manager
at COA Solutions.
Charities operating overseas often have budget holders working
in remote areas of conflict or disaster with poor communications.
As such, accounting systems which are efficient and simple
enough to operate on portable computers are of obvious benefit.
“They’ve all got a requirement now to provide
information to what we would class as non-financial users,”
says Pierce. “A person who looks after a project providing
water to Ethiopia probably won’t be an accountant,
but they will want to be able to look at the project and
see clearly how much they’ve spent, what they are
committed to spending and when the income is arriving so
that they can properly manage what they’re doing.”
The main risk posed by operating an electronic accounting
system is that information can be accidentally deleted.
“That is obviously addressed by the proper use of
back-up,” says Baker Tilly’s Holland. “Also,
data is not burnt onto CDs and shipped so you haven’t
got that physical access risk at all. The risk you have
got is of data being hacked into. Is that risk any greater
or lower than an office being broken into? I would probably
say lower.”
Storing all the paper documentation that arises as a result
of a standard accounting procedure can be costly, especially
when floor space is at a premium for many charities. Marsden
believes digital storage offers a more cost effective solution.
“Buying a bigger hard disk is not the end of the world
for a charity. All of the documents are retained on a central
server which is backed up onto tape, so the risk of losing
data is pretty small.”
For many charities, moving to an online accounting package
will require a significant culture change. “If you
go to a charity where they’re running Sage Line 50,
and they’ve been running that for the last six years,
and you say ‘we can give you an environment where
400 people have the ability to put purchase orders, time
sheets and credit card expenditures on the financial system
and get reports...’ that requires a completely different
mindset,” says Asyst Solutions’ Jorgenson.
However, according to Holland, the number of charities moving
towards a paperless environment is likely to increase in
future. “It is still very much in it’s infancy
at the moment,” he says. “There is an investment
required to get to the paperless stage, but I think it’s
something that potentially offers a degree of efficiency
over traditional systems.”
Getting staff to work without using paper can prove challenging
though. “We’re all used to our paper files.
The worst case scenario would be for a charity to go out
and invest in the technology and have staff use it, but
also print out hard copies of everything – all you’ve
done then is double your costs.”
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