How charities can make financial reporting easier

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The last quarter of the year is always a difficult one. As the financial year winds down, charities must pull together their financial data, ensuring the accuracy and completeness of their financial statements while preparing for the next 12 months ahead.  

Charity finances are particularly complex – keeping track of donations, grants, investments, expenses, and much more – and face considerable scrutiny from stakeholders, including donors, beneficiaries, and board members. Accurate and timely reporting is not only important from a regulatory point of view, it also builds a foundation of trust that can drive further impact for charities in the future, leading to more donations and more services delivered for the communities in need of them. 

However, in order to deliver this impact, charities must overcome two main challenges, namely the limited time and resource available to them. Research from financial software providers Sage Intacct revealed that it takes the average non-profit organisation seven days to “close its books”, finalising records for a specific period of time. That accounts for 35% of their entire work time “being spent on a low-value activity”, instead of being used more efficiently on tasks that actually require their attention, such as analysing data to discover trends or strategic planning for the year ahead.  

That many of these “low-value” tasks can be easily automated with digital technology only compounds the issue – organisations who have the most automation in place are able to gain one and a half days back when closing their books, according to Sage Intacct, days that can be better spent elsewhere in fulfilment of the charity’s mission.  

Charities are notoriously lacking in time, a matter than has been impacted by a recruitment crisis in recent years, so reducing the time spent on arduous tasks that can be automated is critical.  Below, we explore what is slowing charities down when it comes to financial reporting and how they can speed the process up without compromising on accuracy.  

How to speed up financial reporting 

Digital technology can transform financial management, making it far easier to redirect time and resources to responding to the data, rather than simply reporting it. However, many charities are still yet to take advantage of the financial reporting technology available to them, risking lagging behind their peers who have already done so. 

According to the “Fast Close. Faster Insights.” report from Sage Intacct, in the past year alone, 83% of non-profit organisations have looked at technology to improve how they close their books, while half of organisations not working in the cloud are planning to move to it within the next two years. As Sage Intacct puts it, “That means your competition is either already reaping the rewards of automation and getting closer to their mission or will be before you know it.” 

Indeed, organisations that have embraced automation within their financial reporting spend 58% of their time on more impactful tasks – those working manually spend just 14% of their time on the same work.  

The report points to the example of the East Malling Trust, a research and development charity that has embraced automation to improve how they spend their time, focus, and energy. “Operationally it has made us much more live and more current,” says Karyn Hood, Management Accountant and Company Secretary of East Malling Trust. “We’re getting our invoices out quicker, which means we’re getting our money in quicker.”  

In an uncertain financial climate, getting money in quickly is crucial, particularly at a time when demand for charity services is high and fundraising from donors less sure. But freeing up time spent on financial reporting also allows charities to make sure they are looking after their money efficiently.  

Two in five organisations that have embraced automation are focusing on analysing data to spot patterns and trends, while three in ten are spending time on personal development and training. With automation, charities can be sure data is correct and compliant, but leave themselves more time to understand that data and use it to make things better.  

In short, less time is spent on surface level reporting, more is spent on actually making decisions that will impact the future of the organisation itself. As Sage Intacct concludes, “[Automation] isn’t just a race; it’s a high-stakes dash toward the excellence your organisation needs to achieve its mission.”