What the charity finance department of the future could look like

Charities which don’t embrace the latest technology in their finance teams could miss out on the best talent – and might even have difficulty finding an auditor. 

That was among the messages at an event which considered how the future of the finance department could look. 

Anjali Kothari, Partner and Head of Education and Not For Profit at Moore Kingston Smith, joined iplicit’s Paul Sparkes for the event at the CFG Annual Conference. 

The session looked at the scope for software to handle many of the most time-consuming finance tasks, allowing people to focus more on the core purpose of the charity.   

‘Employers are trying to keep up’ 

Most of us spend a lot of time with their thumbs poised over a phone, ready to do everyday tasks the quick and easy way. But the same isn’t always true in working life. 

“As a consumer, I want my digital life to be really easy. I don’t want the mishaps, I just want to get on with life,” Anjali Kothari told the event. 

As an employer, she also needed to look for those simple digital methods, she said. 

“Also, I’ve got a huge number of youngsters coming through being trained as accountants in the ACA and they are streets ahead of us on so much that we as employers are trying to keep up,” she said.  

“If we don’t keep up, those youngsters aren’t going to come to our firms – and I think if you don’t keep up, you’re going to find it quite hard to attract those young people into your organisations,” she told charities. 

“I’m also an auditor and I can tell you now that unless we can bring the sector – and those commercial clients that we’re auditing – into this world more quickly, we are going to find it quite hard to audit you. And if we can’t audit you, then we are going to have to start walking away.”  

Today’s challenges 

iplicit’s Paul Sparkes set out some of the challenges that are common among the finance teams of nonprofits. 

These include: 

  • Time-consuming manual work
  • Cumbersome processes for staff and volunteer expenses
  • The complexity of partial VAT calculations and recovery
  • The demands of reporting, including the requirements of funds, SORP/SOFA standards and trustees
  • The pressures of providing budget information for other departments
  • Lack of integration between the finance systems and other software  
  • The scope for human error.

Covid and a tale of two finance teams 

Paul Sparkes said Covid had been a “massive wakeup call” for organisations everywhere about the need to modernise their technology. 

He said: “One day you’re in the office and everything’s fine. Why does it matter if my system’s accessible remotely? 

“The next day, you can’t go to the office and you can’t access your finance system in the way you could – and you need it more than ever because you’ve got to do a whole set of new planning, forecasting and working out of what you’re going to do. 

“I think that really changed the landscape.” 

Anjali said many organisations had been hesitant about adopting cloud technology before the pandemic, worrying about where their data was held and who was responsible for it. “All those fears suddenly just went away and everyone was pretty much on board,” she said. 

But since Covid, a gap had opened up, she said.  Regardless of size or budget, some organisations “have really embraced it” and some had not. 

Her own trainees were struck by the fact that some clients could do key tasks in a couple of clicks, whereas others were “still faffing about, five or 10 clicks later” and cross-referencing electronic records with paperwork. 

“The youngsters that you’re going to have to embrace into your next set of employees are thinking very differently,” she added.  

What the future could look like 

The session sought to visualise the finance department of the future. 

  • It will spend less time on mundane tasks. Automation will increasingly take over the more laborious work. For example, accounts payable automation tools will match incoming invoices with supplier records, ready for human review. Month-end reports will be compiled automatically without extensive work in spreadsheets.  
  • It will make fewer mistakes. Since duplication and data entry present opportunities for human error, automation has enormous potential for eliminating mistakes.
  • It will work flexibly. Members of the finance team – along with others who need access to the finance system – will be able to log in wherever they are, on any device.
  • Its systems will speak to each other. Core business systems will operate together smoothly, eliminating the tasks of rekeying data and resolving conflicting information. This will be made possible by both rich APIs and “codeless” integration platforms.
  • It will have better data. The whole organisation will be able to rely on a single, up-to-date and accurate source of information, available in the finance system.
  • It will empower people to help themselves. Better systems will allow non-finance users to do more themselves. Staff and volunteers will submit expenses claims online. Purchase requisitions will be raised in the relevant departments, not by the finance team. People will be able to see data and approve spending as appropriate.
  • It will be secure. The finance team of the future will have complete confidence that its data is being held securely in the cloud, with backups and disaster recovery taken care of.  
  • It will understand its technology costs. Instead of totting up the charges for licences, hardware, maintenance and hosting, organisations will pay a simple fee for everything.
  • It will concentrate on the core mission. Relieved of so much mundane work, the charity finance function of the future will be able to devote more time to the work that is central to the charity’s purpose.    

Paul Sparkes said: “The finance team of the future will focus on things that are going to help the nonprofit organisation move forward in a different way – on better use of funds, or other things that often aren’t concentrated on because too much time is spent processing.”  

Getting to the future 

How does any organisation start to make progress towards that brighter future? 

Anjali told how digital transformation teams at Moore Kingston Smith begin their reviews of charity finance systems. 

Instead of designing a system built around the finance team as its central point, the teams ask charities to reflect on their core purpose. Anjali said they ask: “What is it that you do as a charity and what is the key output?” 

She added: “Surely your systems should be designed to enable you to do the key output.” 

Paul shared his key piece of advice for those considering changing finance systems: “Look at lots of pieces of software.” 

He added: “I would say start with a longlist, do some good research. You’ll find out very quickly what you like and what you don’t like.” 

He urged finance teams to enlist the wider organisation when considering the change. 

“If you want buy-in and you want people to help make the finance function be more forward-thinking, any process needs to start by including their input and understanding what they’re looking for,” he said. 

“The best digital transformation projects I’ve seen definitely make sure that any team that comes together has representatives from across the entire organisation. 

“When you make a decision about what system you’re going to choose – be it fundraising, finance, whatever it is – you need everybody to be bought into it and if you haven’t included them at the start of the process, that makes it a lot harder. 

“If people feel they were part of that decision and that research process, it really changes the buy-in and engagement you receive.” 

Find out more

Download iplicit’s guide Changing Your Finance System: A Toolkit for Nonprofits, produced in partnership with Mark Salway.