Brian McMurray, a Business Advisory Group Partner & Head of Tech at AAB, discusses that NFPs may have more to gain from cloud-based accounting systems than what was previously thought. Here are five reasons why.
Do you trust the cloud? Really?
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Are you comfortable managing critical financial information on an entirely digital, in-the-cloud system where nothing gets printed out – and where the system itself doesn’t run on the familiar server in the corner of the office, but in a data centre that you will never see?
Concerns like this have kept the debate raging over whether to choose traditional desktop accounting software over cloud-based solutions. It is particularly relevant to the not-for-profit (NFP) sector because trustees have a responsibility to ensure that the correct financial infrastructure is in place – and that includes the right choice of software. Yet few NFPs have a finance specialist on the board – much less one who understands the nuanced differences between the two approaches.
The right tool for the job
Certain controls need to be in place if an NFP is to be run responsibly and that there is a fully compliant audit trail if anything goes wrong. You must ensure your system – whether cloud-based or conventional – has all the necessary features and is robust enough for the job in hand.
But beware of using a sledgehammer to crack a nut: it is equally the trustees’ job to choose the most appropriate platform. One that fits in with the way the organisation works, and one that is the right price. Buying too much is as bad as buying too little.
The agony of choice has been soothed a little in recent years with developments both in the way we work and in the products themselves. This has helped to clarify the relative merits of the two approaches and may have helped NFPs to make the decision with more confidence. From my work with these systems in the NFP arena, I have seen five key developments:
1. Cloud-based solutions are increasing in maturity
Cloud-based systems have matured enormously in recent times. They are more resilient, more secure and more feature-rich than the early versions of a decade ago. But it is not just the products themselves that have matured, it is also the people who use them. Choosing a cloud-based product no longer means greater difficulty in finding staff who know how to use and manage them.
2. They are better supported by third parties
The major banks now offer reliable direct feeds and the open nature of cloud-based options has led to the development of a large third-party app marketplace. Plug-ins and add-ons such as ReceiptBank, ApprovalMax and Chaser (to name a few) have made them more powerful and more convenient to use. Integration with other online tools such as JustGiving pages is also now a reliable and easily managed process. Choosing the right add-ons can lead to significant time savings for the accounts team, as well as providing accurate and up to date information to management and trustees to facilitate informed and quick decisions.
3. They are more relevant to the new way of working
From my perspective, charities with cloud-based solutions seemed to fare better in COVID times because of the enormous flexibility they offered. Suddenly deprived of access to the central office environment, some finance teams struggled. Yet one of the key advantages of cloud-based systems was that you could work from anywhere. During the pandemic it was essential but, more recently, organisations of all kinds have realised that there are cost benefits and employee well-being benefits to remote working.
4. They facilitate outsourcing
Outsourced finance departments are nothing new; but they fit perfectly with the cloud-based model. Charities can share access to financial information with advisors, who offer outsourced support at a level that suits – anything from a finance assistant to a virtual CFO. AAB’s Virtual Finance Function (VFF) has proved popular with NFPs with limited in-house financial expertise, where we not only manage finances on behalf of clients but also conduct a review to recommend and install a bespoke cloud system that suits your needs perfectly.
5. They can be a more sustainable option
Working from anywhere means less travel, which means fewer emissions. Going paperless means fewer trees. The cloud is generally and rightly seen as the more sustainable option at a time when the carbon footprint of every business function is under scrutiny.
Time to decide?
While it is not our role to advocate one approach over the other, these developments may help clarify the benefits of cloud-based accounting systems. Whether it is for you or not depends on many factors, and AAB can advise you on the system that best suits your needs.
Brian McMurray is a Business Advisory Group Partner and also heads up the Tech Sector Team. He specialises in giving owner managed SME clients advice on all aspects of running and growing a business. Learn more about how Brian can help your business today.