Charities need to prepare for difficult times. You don’t have to be a gifted economist to know that it is going to be an extremely challenging year for charities and other non-profit organisations. Rising inflation is tightening everyone’s belts – whether they like it or not. With the UK economy facing a long recession, there will be further pressure on donations – just as more funding is needed to cover increasing costs.
It’s a disquieting double-whammy. So the time to prepare is now, before the situation worsens. As economist Jamie O’Halloran of Pro Bono Economics puts it: “The luxury of being unconcerned about inflation in the UK has ended abruptly.”
One easy win is to replace old on-premise software with a true cloud accounting system. It helps to cut costs (despite being more powerful). Here are 14 signs that it’s time consider moving to the cloud.
1. Your server infrastructure is becoming expensive
The server on which your data is stored has a finite lifespan. From time to time, this server will need maintenance. And sooner or later, you’ll need to replace it. That’s a large capital cost to have to deal with in one hit. It’s not ideal for any organisation’s cashflow, especially in the current financial climate.
Migrating to a true cloud accounting system means you’ll no longer need an on-premise server for your finance function. Your accounting data and the software you use to access it will instead be stored in a data centre. This offers added security and convenience, and the cost is broken down into monthly charges, making it much more manageable.
2. You are facing costly software upgrades
Like the on-premise server, desktop software is also a large and less manageable upfront cost. But the fact that you pay for it in advance doesn’t mean that the costs end there.
Accounting software, like any other app, requires upgrades. Typically, these occur around two or four times a year. They can add around £1,500 to an organisation’s annual IT costs. And if the upgrades become more regular, more time-consuming and more expensive, it’s a sign that the software is getting older.
All that is fine for the on-premise software provider who makes money from patching an outdated product. But it’s not so great for the customers who have to pay for it.
3. You are not running the latest version of the software
Even with the various security patches, you still may not be running the latest version of your desktop accounting software. Those bug fixes may be enough to keep the old version rolling along, but that’s no guarantee you’ll be on the latest version with all the added functionality. For that you’ll have to pay, you’ve guessed it, more money. And then the whole sad and sorry saga starts again.
But cloud-based accounting software is a different matter entirely – you are always running the latest version with new features, added security, and compliance with the latest new rules. Cloud-based software gets updated at source and rolled out to everyone simultaneously. Long gone are the old days of doing it desktop by desktop.
4. Disaster recovery is becoming more of a worry
On-premise servers can be vulnerable to a range of threats: IT failure, fire, flooding and burglary – any of which can lead to a catastrophic loss of data.
Yes, any responsible user will always have back-ups but data centres do it so much better with multiple copies in disparate secure locations. There is much less risk. Your eggs will be in plenty of well-guarded baskets. If there are concerns about your on-premise system’s disaster recovery capabilities, then it’s time to consider migrating your data to the cloud.
5. Your accounting software can’t cope with modern flexible working
Even the most hands-on of charities still have roles that can be performed remotely. Finance is an obvious example. But desktop accounting software and fake cloud systems tend not to cope well with working from home or hybrid working. That’s a shame because true cloud solutions make workplaces more flexible. They also reduce overheads – offering the opportunity for smaller offices, lower energy bills and fewer miles on the road.
6. Your accounting software is struggling to integrate with your CRM system
Good software platforms are designed to integrate with each other smoothly and seamlessly. And generally they do…at first. But software evolves, and not always at the same speed. Perhaps one app has transitioned to the cloud while the other is still stuck on the desktop. Therefore, it is not uncommon for two systems to grow apart, compromising the effectiveness and efficiency of one or both apps. And that can be a real issue if the two apps concerned just happen to be your organisation’s accounting software and its fundraising/membership database.
True cloud accounting software has a better chance of integrating smoothly with other cloud-based apps because it will have been designed specifically for that purpose. But old on-premise systems find it much harder because cloud functionality has been grafted on as an afterthought.
7. Your accounting software doesn’t cope well with partial VAT
Partial VAT is important for non-profit organisations. The ability to recover a proportion of input tax creates vital savings. But legacy desktop software doesn’t always handle this process as well as its cloud-based counterparts. At best it can be a hassle. At worst there is the risk of paying more VAT than necessary.
8. Your software struggles to cope well with SORP requirements
Non-profit organisations face unique challenges when dealing with compliance. They have to meet the requirements of the Charities SORP. And that pressure has been increasing over recent years. In 2019, the Charity Commission reported that only around half of charities’ accounts met its external scrutiny benchmark. But some charities still have entry-level accounting software that struggles to cope with the SORP.
9. Budget management is becoming more difficult
Trying to get more out of basic accounting software often involves spreadsheet workarounds. These aren’t just time-consuming – they can result in more than one version of the truth. And that makes it harder to make informed decisions about whether or not it’s safe to spend money. Being able to see the right numbers in real time has always been crucial. And these days, that doesn’t have to be difficult.
10. Your organisation now needs better control
Growth empowers non-profit organisations, enabling them to carry out more of the good work that’s their raison d’être. But the downside of that expansion is the seemingly inevitable increase in management and administration. It doesn’t have to be that way though. The best mid-market accounting software is feature-rich and very scalable – but it’s also intuitive and easy to use.
11. Managing expenses for your staff and volunteers is stressful
As your charity grows, then so does the number of employees and volunteers – along with the number of claims for expenses, even if those claims are not high in value. With lots of small individual claims, a messy pile of disparate paper receipts, and growing pressure to account in triplicate for every penny spent, processing expenses can be time-consuming and soul-destroying as you try to track down missing paperwork, confirm proof of purchase and approve expenditure.
Sometimes this ever-accelerating merry-go-round of emails and phone calls can take months. It’s no fun for you – and even less so for the individual who put their hand in their pocket and now requires reimbursement.
Fortunately, there’s an easy alternative. Good cloud accounting software speeds up and simplifies the whole expenses process. Users can file claims via their mobile phone. Approved expenditure items can be pre-specified. Receipts can be photographed and attached to the claim – so everyone can see them at every stage of the process. Approval workflows further accelerate the work, saving a significant amount of time.
12. You need more detailed trustee and stakeholder reporting
Charities sometimes have multiple entities, typically the charitable and trading subsidiary arms of the organisation. And that can create hurdles for entry-level software platforms which tend to be incapable of handling consolidated accounts. Switching to a more advanced midmarket platform will give you better real-time reporting. And it could well be cost-neutral, given how much time it can save you. You may even save money.
13. Your system needs to integrate with other apps
This is a common issue. Increasing numbers of apps are migrating to the cloud because of added security and convenience for all concerned – the charity, developers, end-users and other stakeholders. But what about older desktop accounting software that has failed to evolve? It can often struggle to integrate properly with newer cloud-based apps. These integration failures usually mean more workarounds for already hard-pressed finance function teams.
14. Your staff are becoming disillusioned
Or disgruntled. And neither is good. Both can lead to burnout…it’s a slippery slope. But organisations can sometimes continue to slide down it because they think the devil they know is more palatable than upgrading. (Spoiler alert: it isn’t.)
It’s the old dilemma (or rather a big misconception) – organisations need more powerful software but they can’t justify the cost of making the big leap to NetSuite, Dynamics or Intacct. And they don’t relish the disruption of changing systems. That dilemma doesn’t exist anymore. It’s a fallacy – because now there is good, scalable true cloud accounting software to fill this gap in the mid-market.
And best of all, this affordable software takes only 16 applied days to implement and install. No more months of disruption. No sledgehammer to crack a nut. Just the right software implemented in a timely fashion.
How soon do we need to move to the cloud?
Some organisations may have more immediate need of this technology than others (and that’s the tactful way of putting it). Worrying numbers of organisations still rely heavily on old desktop accounting systems that are careering headlong towards obsolescence.
Worse still, some systems are already obsolete in the sense that while they still function, they are no longer being supported. With no more security updates or code fixes, there is no saying how well they’ll continue to perform on the desktop.
But let’s not be negative. Quite the opposite – this is a wake-up call that many users will be very glad they received. That’s because, aside from all of the benefits outlined above, new cloud-based accounting software also has the power to transform working practices and cultures for the better. It could well be the change you’ll wish you’d made ages ago.
Paul Sparkes is commercial director of iplicit
Charity Finance wishes to thank iplicit for its support with this article
Related articles
