When is it time to change your nonprofit accounting system?

When nonprofits grow in their mission and scale up programs, often their original accounting systems can’t keep pace with their new needs.

Some introductory accounting systems lack functionality; others are not specific to nonprofit accounting.

In today’s data-driven world, it is essential to have a nonprofit accounting solution that delivers easy access to real-time insights and efficient automation to help you operate in the leanest, most cost-effective manner possible.

As your organization expands its mission impact, it is crucial to re-evaluate whether your mission, objectives, and compliance requirements still align with the functional and operational capabilities of your nonprofit accounting software.

If your needs have changed, it may be time to adopt a more capable, cloud nonprofit accounting solution.

Keep reading for 9 questions you should ask yourself to determine whether your current software has functional gaps that could be holding your organization back.

Nine reasons it may be time for a new nonprofit accounting solution

The right nonprofit accounting software kicks organizational efficiency into high gear, gives you real-time visibility into the metrics you need to be successful, and streamlines compliance.

Answer these 9 questions to explore which functional areas could see the biggest impacts with a more modern accounting solution:

1. How easy is it for staff and executives to access reliable real-time financial information?

As your organization grows, it becomes more important to be able to access financial insights from anywhere in the world.

A true cloud nonprofit accounting solution keeps data secure while allowing easy access. Whether you are working from home or on the other side of the world.

And because everyone in the organization can access the system, information about expenditures, budgets, and revenues can stay updated in real-time, providing all stakeholders with timely information to make decisions.

2. Could your internal controls and compliance use an upgrade?

Funders and the board need to be able to trust the financial information in your nonprofit accounting system.

You need to be able to provide transparency and secure your financial information simultaneously.

Your accounting system helps you adhere to compliance standards and streamlines your organization’s audits.

For example, Sage Intacct Compliance helps ensure audit-ready financials, prevents fraud, spots outliers in your general ledger, and enables efficient communication with your auditor.

3. Has your chart of accounts become a monster?

After years with the same accounting system, many nonprofits have thousands of GL codes to manage—and the problem continues to grow.

Sage Intacct Dimensions let you tag any type of transaction as well as operational data, so you can track what is most important to your mission.

Not only does a dimensional database simplify your chart of accounts, but it also levels up reporting.

Being able to tag a transaction with multiple dimensions enables you to slice and dice your data and reports with ease.

4. Does your system provide easy-to-understand, real-time reporting and dashboards?

Nonprofit leaders need access to reliable, timely data insights to make decisions that expand mission impact.

If your current accounting system offers limited, backward-looking reports, it is difficult for your team to support executives and the board of directors.

Cloud nonprofit accounting solutions offer real-time multi-dimensional reporting, so decision-makers can see changes in trends and adjust quickly.

Role-based dashboards allow you to build custom views for different people, so they have the best information for their jobs in one place.

Sage Intacct enables you to create different dashboards for each executive, the board, program managers, and even your auditor.

Dashboards can include visualizations, KPIs—including both financial and operational outcome metrics—and reports you can drill into with a single click.  

5. Could you save time if more workflows were automated?

With a new accounting solution, your team could leverage technology to work smarter and create more space for strategic work.

Automated workflows for routine accounting tasks such as purchasing and payment approvals, vendor setups, and consolidations can free you to work on more important tasks.

Workflows should be able to be customized to reflect the way your organization operates.

There is no longer a need for workflows that require manual, paper-based processes and Excel spreadsheets.

6. Does your system deliver the advantages of artificial intelligence?

If your accounting system is older, it may not have been designed with AI capabilities.

Using AI can help your team improve accuracy, automate more tasks, detect potential outliers and errors, and close faster.

Sage Intacct has an intelligent general ledger that empowers continuous close accounting and quickly reviews thousands of transactions to detect outliers.

Sage Intacct AP Automation with Ai cuts AP processing time in half, allowing the accounting team to focus on more strategic mission-critical work.

7. Do you need multi-entity accounting features?

For many nonprofits, growth brings expansion into multiple entities or locations and a need to manage each entity with separate financial reporting as well as a need to roll multiple entities up into overarching reports.

Unfortunately, many entry-level accounting systems don’t handle multi-entity accounting tasks such as inter-entity transactions and multi-entity consolidations very well—if at all.

If your nonprofit has multiple financial entities and/or locations, you also need your accounting system to offer both entity-level and aggregate reporting.

Sage Intacct includes powerful multi-entity functionality and automates consolidations which can cut your organization’s monthly close time by up to 70%.

8. Are you able to track and manage your grants effectively?

Grants are an essential part of the funding plan for many nonprofits.

Whether you work with government agencies, corporations, or foundations, grantmakers demand transparency and compliance in order to win grant awards and renewals.

Many entry-level accounting systems don’t include grant functionality, but you will want to consider a better system if you intend to manage multiple grants, especially restricted grants.

Sage Intacct Grants Tracking and Billing enables nonprofits to streamline the grant funding process, track and account for funds, manage grant restrictions, and bill accurately.

9. Does your accounting system share data with other best-of-breed software solutions?

Being able to choose the best software applications and have them work seamlessly with your accounting system means being able to run your organization the way you want.

No one software vendor offers every type of solution—especially when it comes to nonprofits.

Your next nonprofit accounting solution should have a robust network of partners building integrations.

Sage Intacct Marketplace features more than 350 prebuilt integrations, including more than 60 nonprofit solutions.  

Final thoughts

Selecting a new nonprofit accounting system can feel daunting.

Build a more precise list of functional needs for your next system by addressing the questions above.

Many nonprofits find themselves in need of a new solution after they’ve grown enough to create some accounting complexities—for example by having multiple entities, global currencies, restricted grant funding, or a need for more sophisticated reporting and data analysis.

Whatever the reasons your organization needs to step up to a newer nonprofit accounting system, Sage is here to help.

Download a copy of The Nonprofit Accounting Software Buyer’s Guide to learn which key attributes drive mission growth and an overview of what nonprofits should look for in modern nonprofit accounting software.

About the author

Natalie Anderson

Natalie Anderson is a senior nonprofit industry marketing manager for Sage Intacct.

With 10 years of experience in software marketing, Natalie is passionate about helping nonprofits leverage software to achieve mission success.