How to automate financial processes

Do you have receipts, balance sheets, income statements, and cash flow forecasts piling up on the desk? It’s time to digitise and automate charity finances.

The benefits of automating finances are vast. Reducing mundane tasks, human errors, and greater transparency are just some of them.

Going digital also means managers spend time on strategic projects over number crunching. Taking a look at the why and how, we break down financial automation.

What financial processes can be automated?

Aside from reducing errors and improving visibility, automation brings other advantages. Oracle names a few, including cross-team cooperation, better risk assessment, consistent KPI tracking, finance and accounting integration, and software discounts.

Accounting and finance processes are automated because they can be time-consuming and repetitive. Computerisation cuts the boredom down to size.

The best areas for going digital are bookkeeping, invoicing and accounts receivable, accounts payable, tax compliance and reporting, payroll and expenses.

Walk through the workflow

Before choosing a financial management platform, take a look at how the money and work flows. Draw, or sketch out the inputs, workings, and outputs that are demanded on a daily and regular basis.

Aspects that charities will want to consider are the number of reports that need to be produced, bank accounts, and ultimately who will be using the system. Most finance managers will also want a robust reconciliation and approval process.

Choosing a financial management system

With the workflow defined, selecting a financial management system takes careful consideration. Decision-makers may want to consider futureproofing. This could be done by choosing a system which enables plug-ins and add-ons.

The other point to think about is whether the platform is approved by the HMRC. Making Tax Digital (MTD) requires that charities automate inputs into the government’s gateway. You can watch our webinar on the subject below.

Simple finance management software provides the basics. Most popular with non-profits and small businesses, Xero is perfect for less complex operations. The system connects with existing bank accounts, creates financial statements, and offers budget forecasting.

Payroll and expense management is also on offer. The best part about Xero is its ability to document each action – ledgers include an option to upload additional evidence. Other platforms which are equally easy to use are QuickBooks and Zoho.

For more complex operations, finance professionals will need a platform that marries up different teams, legal entities, bank accounts, and multiple income sources.

Sage Intacct’s offering works well for growing organisations. In addition to the basic functionality (comparable with Xero), the platform has futureproofing options. First, it can tackle multi-source revenue streams and international locations. Supervisors get the benefit of a financial view across the entire organisation.

The plug-ins are also important. Sage’s future proofing is done through the Marketplace. Cloud-based developers offer their additions in a pick-and-mix fashion. Sage users can search for any functionality required and integrate. Ultimately for complex, large and growing charities, having the choice of adding modules makes sense.

How to integrate new digital tools

Once the new platform has been chosen, integration starts. Our best practices for integration are:

Have a core team

A team of implementation champions drives the process. They can help with onboarding the new system and coordinate with the software provider on any challenges. Project management platforms help to stay on track.

Pilot a few functions first

Before going full throttle on all the newly acquired functions, test out a few. Prioritise trialling non-essential tasks before getting all teams on board. To really get a feel for the system, ensure that your organisation has done a free trial.

Use a phased approach

Once the pilot implementation is successful, keep on adding on other functionality until your system is fully up and running. Our top tip here is to ensure that there are at least a few weeks of smooth running before adding on more tasks.

Ensure there’s user support

Staff don’t all learn at the same pace. While the internal support of your core team ensures the project runs smoothly, there’s also the technical aspect. Most platforms include some type of digital support, so make sure that you’ve locked onto the contact details.

Regular reporting

Implementation requires regular reporting. Both during the pilot, full implementation and business as usual, keep track of how well the new financial management platform is performing.

Keep reviewing organisational needs

Grow your digital prowess at the same time as the organisation. With every new fundraising, event, or project challenge, spend time to review what the digital demands are. Decide what’s working well with automation and what’s not. Make sure there’s room to pare back or add on modules.

For more, check out our finance management podcast below: