The decision to purchase a nonprofit accounting software solution requires careful consideration and research. After all, your organization’s financial management system will play a crucial role in your mission. The right accounting software will help you measure and analyze your financial performance, program outcomes, and mission impact and share those results across your organization and key stakeholders. Conversely, choosing the wrong nonprofit accounting software can create cross-departmental inefficiencies and hamper your board’s visibility and decision making.
After working with thousands of nonprofit organizations, the Sage Intacct nonprofit team understands the issues involved in evaluating and selecting accounting software specific for the needs of nonprofits. We’ve assembled a list of the 20 questions you should ask to help you consider some of the main factors for decision-making.
20 Questions to Help You Decide
Discuss these twenty questions with your team and stakeholders to uncover organizational needs and requirements for a new accounting system:
1. What is the right software delivery model for our organization?
Nonprofit accounting software solutions have three possible delivery models: Native cloud (multi-tenant), on-premises, and hosted (single tenant). With true cloud nonprofit accounting software, you do not buy, license, or manage the underlying hardware, software, or networking infrastructure. Upgrades are performed at no cost to you.
2. Does our team need to work outside the office?
If you need to support work-from-home or remote field work, then your organization will benefit from the “anytime, anywhere” access of cloud solutions.
3. Do we need our accounting software to integrate with other software systems, such as Salesforce.com?
Cloud nonprofit accounting software offers APIs and web services to easily integrate with other cloud software. Easy integration lets you leverage key data from donor management, payroll, budgeting, CRM, and other systems without costly custom programming and maintenance from expensive IT resources.
4. Does our organization struggle with inefficient processes?
The cloud can help you gain organization-wide operational efficiencies. By streamlining classic finance processes, by automating processes like procurement, allocations, grant management, and compliance reporting, you can free-up resources for value-add activities.
5. Do key stakeholders at our organization want self-service access to KPIs?
The real-time visibility enabled by cloud systems lets you extend access to dashboards beyond the finance department to executives, employees, auditors, CPAs, and board members.
6. Do we need to scale for growth without growing our IT budget?
With a cloud-based financial system, the vendor provides world-class infrastructure with 24x7x365 operations, continuous backups, disaster recovery, and superior security. Cloud applications are upwardly and downwardly scalable, to accommodate rapid growth or budget changes.
7. Are we trying to accelerate financial processes without expanding our staff?
Cloud systems greatly accelerate processes like accounts payable, consolidations, grant management, and revenue recognition. They also offer extensive automation and integration capabilities to help eliminate manual data entry, paper-based processes, and spreadsheet maintenance.
8. When do we expect to get a return on our investment in accounting software?
High ROI and rapid payback are common with cloud applications. In a recent study by Nucleus Research, cloud-based financial management and accounting implementations were found to deliver 3.2x more ROI than on-premises software.
9. Do we have multiple entities or multiple locations?
Some nonprofits account for different locations or programs as separate entities. If you support multiple entities, you need a system capable of multi-entity accounting and global consolidations.
10. Do we conduct transactions in multiple currencies?
If your organization operates internationally, you probably need an accounting system capable of recording transactions in local currencies and calculating exchange rates for consolidated reporting.
11. Do we need to shorten our reporting cycle?
Many nonprofit finance teams spend up to a week or more running reports each month-end, quarter-end and year-end. By improving the ease of reporting and analysis the right system can help you save days and weeks when you close the books.
12. Do we want to simplify our Chart of Accounts?
As nonprofits grow, GL codes in their chart of accounts tend to proliferate. Each year can bring hundreds or even thousands of new codes and greater complexity. True cloud accounting can greatly reduce the number of codes by categorizing each transaction by donor, program, grant, location and more for a “clean GL.”
13. Do we want to automate reporting to ensure compliance?
Systems that make it easy to create report templates and dashboards make it easier to provide timely reporting for funders, board members and executives. Report templates can ensure compliance with FASB and government requirements, including: Statement of Financial Position, Statement of Activities, and Statement of Functional Expenses.
14. Do we need to be able to manage fund restrictions and grant requirements?
Look for nonprofit accounting software that gives instant visibility to restricted funding, program outcomes, and budget-to-actuals.
15. How easily can we “slice and dice” information to tailor reporting?
A good nonprofit accounting software should provide the means to pull information you need quickly and easily. Operating dimensions, such as location, grant or program, should allow you to quickly get a holistic view of performance and outcome measures.
16. Do we need access to our financial management data from mobile devices?
24/7 visibility from mobile devices helps staff stay in control of budgets and expenses from anywhere.
17. Do we need to automate revenue management?
With automated revenue management, you can decouple your fund invoicing schedule from revenue recognition, helping you manage the most complex schedules.
18. Would it strengthen our financial management to have better control over spending?
Systems with spend management capabilities help you balance cash inflows and outflows to avoid overspending and ensure budgets are followed.
19. Does our finance team receive too many requests for ad-hoc reporting from stakeholders?
Self-service reports and custom dashboards can reduce these types of requests, while delivering real-time updates and drill down capabilities for visibility and insight into the numbers.
20. Does our organization have good visibility into how financial decisions impact outcomes results that drive mission impact?
A modern cloud accounting system should enable you to create reports and dashboards that automatically combine operating results with financial data.
Taking the time to answer the 20 questions above can help define why your organization is ready for a new accounting system and what benefits you expect to gain. Now, you know how to research solutions and evaluate how their features fit your organization.
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