Why is financial management so important for Not-For-Profit organisations?
If an organisation is “not-for-profit”, why does financial management matter?
What sets an NFP apart from other organisations is not actually whether they seek to make a profit (or surplus in the NFP world), but where those funds actually end up going. For an NFP, a surplus will be used to fund future operations or directed to areas aligned to the mission of the organisation.
As a not-for-profit (NFP), you’ll likely have different goals and outcomes to your profit focused counterparts. So, it makes sense that you’ll also have unique needs when it comes your financial management software. From budgeting visibility to real time analytics, there are specific things to look for that will make financial management of your NFP more efficient, accurate, and straightforward.
So, although NFPs operate like other organisations in many ways, the financials involved in the running an NFP aren’t the same as other businesses. Regularly changing compliance rules, the increased need for budget visibility, and managing a range of stakeholders with different needs and priorities can create complexities that can quickly spiral if not kept under close control.
Having an easy to use, intuitive, fit-for-purpose financial management software is crucial for your NFP to successfully deliver on its mission. There are many factors to consider when evaluating a financial management system, and the options are seemingly endless.
So, what really matters for NFPs when it comes to choosing a financial management solution?
NFP’s are held to different standards than other professional organisations.
With these greater levels of scrutiny and accountability from those inside and outside the business, your financial management system needs to be able to handle the sometimes intense interest others may have in your financial dealings. This means you want software that gives you a greater level of control, access to more detail, and real time visibility. And you may need to provide all this with very little advance notice.
Without the right systems in place, these examinations have the potential to distract your people from delivering on your organisation’s mission for days, weeks or even months on end.
Your reputation matters
Philanthropists, whether it’s an everyday person giving a spare $20 or a multinational corporation spearheading a fundraising event that will raise tens of thousands of dollars, want to know the NFP they’re supporting has an impeccable reputation. Just one whiff of a financial scandal or financial wrongdoing can wipe away years of goodwill within moments.
And while most NFP’s rely on donations, grants or sponsorship from either the private sector, the government or a combination of both, your financial and accounting practises and systems must be beyond reproach.
Financial integrity
Financial management software built specifically for NFP’s ensures the integrity of all financial information flowing into and out of the business. With the added scrutiny on an NFP’s finances, getting this element correct and keeping it accurate – literally to the cent – is crucial.
What should you be looking for in NFP financial management software?
There’s more than just one or two main features you should be looking at when choosing the ideal financial management software for your organisation. Finance and accounting systems aren’t things you change or replace often. They’re also going to be a significant investment, so you want to choose wisely.
If you’re making this big investment and implementing the kind of financial management solution that will have the greatest impact on your NFP, then you want to make sure it’s going to go the distance.
While you’re researching the best financial management software, here are five key questions to ask to assess whether the software you’re considering is right for your NFP.
Ask yourself these 5 key questions
- How easy is it to use?
- Can I customise the software and get the information I need easily?
- Does it integrate with other functions?
- Is it secure?
- Is it scalable?
You can also download our eBook, Financial Management Software: A guide for NFPs.
Switching finance systems doesn’t have to be difficult
Truth be told, if your NFP is at a point where it needs change its finance and accounting software, it’s a great thing. It means your organisation is growing or changing so much the older systems are no longer getting the job done. Successfully switching to a more effective, efficient and purpose-built financial management solution is now crucial to ensure the continued proficiency and reliability for your finance teams.
If you’re ready to invest in an integrated business software solution that will provide benefits for people far beyond your finance team, book an Access Workspace demo today.
Check out our financial management switching resource hub for more inspiration and information on how to best set up your NFP for success.