Small changes, big impact. Patrick Lane from AccountsIQ shares five ways charity finance teams can use digital technology to boost productivity.
When thinking about quick digital wins, we must be realistic about the environment in which charity finance teams operate. Money is a means to an end, but it still matters. You need to use limited resources to maximum effect, as you’re expected to spend as much as possible on delivering frontline services.
Restricted or designated funding, and the need to build up reserves, add to your financial management challenges. It’s not about spending as little money as possible. It’s about spending money wisely, justifying expenditure, and finding ways to improve efficiency.
Good financial management enables your organisation to carry out its mission effectively and achieve value for money. That’s why funders and donors will commonly ask:
- Does the organisation have adequate data around costs, outputs and impact so it can assess whether it is making the most efficient use of all its resources?
- What steps are they taking to improve efficiency?
- Can they demonstrate best practice and a commitment to improving their financial and operational management?
Digital technology can streamline and improve almost every aspect of your finance processes. Here are five examples of relatively simple, inexpensive changes that can have a big impact on finance productivity. They’re what I would call ‘quick digital wins’.
1. Optical Character Recognition (OCR) technology
Processing invoices often involves handling documents in various formats, such as paper, email and PDFs. It can be time consuming; keying in data and tracking and chasing invoices for authorisation. The need for handwritten signatures can be an added frustration.
OCR works by scanning documents, recognising their contents, and automatically translating them into electronic information in your database. That means no more manual data entry; instead you can approve invoices remotely and automatically create an audit trail. There are numerous OCR providers, but I’d recommend you look for one that seamlessly integrates with your finance system.
2. Mobile apps
Expenses or workflow approval apps enable teams to scan and upload receipts, invoices and purchase orders, and make approval/rejection decisions from almost any location. These easy, efficient tools are particularly popular with teams who travel or are based away from your head office. You can still maintain all the workflow history, and approval tasks for actioning, in one central location with a searchable audit trail.
3. Automated financial reports
A clear understanding of exactly how each of your funding streams, marketing activities and service provisions are performing is essential. However, getting that data often involves lots of manual work for finance managers manipulating multiple Excel spreadsheets. Instead, you can now use Financial Management Software that brings all this data together in a matter of minutes.
Charities have some highly specific reporting demands – from donors, trustees, management and regulators, that make it worth investing in accounting software that can handle SORP reporting with ease. At the same time, you’ll need to ensure the system is user-friendly, so non-finance team members can also access the dashboards and gain a full understanding of your business model, cost structures and overall financial position. After all, efficiency is everybody’s responsibility, not just the finance team’s.
4. Integrate systems across your organisation
Integrating your finance system with your other software, such as front-of-house, point-of-sale, fundraising and payroll systems, is a key efficiency driver. It enables you to automatically populate your finance system with data from other systems and integrate it with your financial reporting. Don’t forget, Open Banking means you can now set up live bank feeds to automate bank reconciliations.
Many charities use Salesforce to manage donor admin, so ensuring a seamless integration here is a quick, easy win. It means you can share vital information, such as when supplier invoices are paid, with your frontline teams. If you have specific in-house systems you want to integrate, I’d recommend talking to your accounting software partner about customised integrations.
5. VAT reporting and Making Tax Digital (MTD)
Accounting software can make this very straightforward. Even the complex processes that many charities have to deal with, such as partial exemption from VAT, can be done quickly and easily. For example, we have several multi-entity charity customers who handle zero-rated, exempt and standard rate VAT under the same charity number.
Case study: AccountsIQ and Artichoke Trust
Neil Goulder, Director of Finance & Operations with arts charity, Artichoke Trust, summarises their digital wins:
"We’ve achieved greater efficiency through automation and streamlined workflows. For example, automated bank reconciliations have helped us speed up the period-end reconciliation process. We can also upload paperwork against transactions.
"With AccountsIQ, we keep all our data in one place, largely automated, without the need for other spreadsheets or manual processes. This makes it much easier to provide information to auditors. It also means we have a mostly paperless environment.
"We use the multi-dimensional reporting analysis to cover cost centres, projects, project phases, and individual installations. This significantly reduces the risk of human error when tracking costs. It also saves us a huge amount of time, as I can get every piece of information needed into AccountsIQ and I don’t have to maintain control accounts manually in Excel.
"AccountsIQ’s Excel Add-in gives us a real-time data link from AccountsIQ to create tables in Excel which are fed into the SORP compliant statutory accounts prepared in Word. This means updates are refreshed instantly as changes are made to statutory accounts."