Money Matters

4 ways tech can transform finance for non-profit organisations

Discover how tech can lead you to have a leaner, happier NPO that works more efficiently and can boost its return on investment.

Gone are the days where finances were a historical bit of admin looming at the end of the year.

Accounting software has evolved into something of a strategic tool for leaders at non-profit organisations (NPOs).

It allows them to develop and execute strategies more effectively and helps to align processes more closely to the objectives of the organisation.

In this article, we’ll show you how technology can transform finance for NPOs.

Here’s what we cover:

Finances front and centre

1. Better decisions, sustainable growth

2. Set up new services for success

3. Manage mergers more effectively

4. Keep your organisation on track

Final thoughts

Finances front and centre

Accounts need to be filed accurately and on time with the right authorities, or charitable status can be taken away.

Bills, expenses, and salaries need to be paid, and the books need to be balanced just to keep things ticking along.

But there’s a big difference between ticking along and achieving your organisation’s goals – and that’s where accounting software can have the biggest impact.

If your people have the software they need to produce more accurate, relevant insights and streamline their day-to-day processes, then you’ve got a leaner, happier organisation that works more efficiently and can boost its return on investment.

Not quite convinced? That’s OK.

Here are just four of the benefits digital transformation can have for your finance function and the wider NPO sector.

1. Better decisions, sustainable growth

With the right technology to support your finance team, you get better decision support for the whole organisation.

Decision support is any system of information that informs organisational decision-making.

An NPO might, for example, use data from a customer relationship management (CRM) tool to make data-backed decisions about their service users’ needs.

Having decision support you can depend on is essential.

It takes emotion out of the equation and gives leaders the guidance they need to keep moving in the right direction, hit strategic goals, and stay on budget, no matter the size of your organisation.

NPOs need an accurate budget to build a realistic plan for the year ahead.

That plan will:

  • Define exactly what activities the organisation can perform
  • Determine the overall impact of the organisation
  • Outline the cost of rolling those activities out
  • Estimate and track the amount of funding coming in.

Beyond that, having a bang-on budget doesn’t just allow you to make timely decisions about today’s cost saving measures and fundraising activities.

It also allows you to chart a course towards sustainable growth.

A robust budget gives you the foundation you need to manage organisational performance throughout the year, making sure there’s enough in reserve if you need to pivot your operations overnight.

2. Set up new services for success

Launching a new service?

To make that a success, you need to understand and map out the full costs of providing that service.

The right accounting software will help you plan for and track everything, from the cost of providing the new service to other key areas like facilities, travel expenses, IT, and any costs associated with promoting the service and monitoring its impact.

When launching a new service, you’ll also need to account for the costs of getting started, including:

  • Recruiting new staff
  • Designing the new services
  • Compliance costs (such as Disclosure and Barring Service checks).

A clear view of it all will ensure that the service can be financed sustainably, whether that’s via a commissioner such as the government or NHS, a grant provider, or any other fundraising initiatives.

3. Manage mergers more effectively

Whether you’re merging as an opportunity for growth or teaming up with a larger NPO to make sure you can continue to provide your services, a merger is a weighty decision to make.

The goal of a merger is to boost the impact of two smaller NPOs by combining resources.

There are usually opportunities to save on overheads and minimise fundraising costs too.

But there are some risks to watch out for.

Without a clear view of both organisations’ accounts, there’s the chance that financial weak spots in one organisation could drag both down.

And let’s not forget the costs that come with a merger, too, the largest being staff time.

These costs can also include third-party finance and legal costs, and need to be planned for ahead of time to make sure the merger really is as attractive as it looks.

Having a digitalised finance function means you’ll have all the data you need to make the right decision for your organisation.

4. Keep your organisation on track

Competition for funding is intense, making performance management essential.

You need to be able to show that your NPO is consistently meeting its strategic objectives.

And the best way to do that is by tracking performance against budget.

Using cloud accounting software makes it easy to do just that. You can spot any potential problems before they grow, analyse them, and correct course.

If, for example, there’s an overspend on energy bills, shopping for a new provider might save money.

Travel costs too high?

Consider planning further ahead or replacing some visits with video calls.

Final thoughts

When you can show that your organisation is hitting its strategic and financial goals, you win funder confidence.

And that has the power to make your NPO thrive.

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