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Deciding If You NeedEnterprise Accounting Software

BY CHRIS BERNARD

More than two decades have passed sincethe first widely accessible accounting soft-ware made it easier for nonprofit financialmanagers and small business owners to

balance the books. Today, accounting software is morepowerful -- and in many cases, more user-friendly -- andthe market is more competitive due to a wide array ofnew options and features.

But many financial people have not fundamentallychanged their accounting practices to take advantage ofthe new possibilities such software can provide. Many fi-nancial people still use the ubiquitous Intuit Quick-Books, a tried-and-true entry-level solution, condemningthem to entry-level accounting practices.Others make dowith a combination of QuickBooks and Microsoft Excel.

A new crop of low-cost or free software and mobileapps that prioritize usability over power are popping

up across the accounting landscape. These lightweighttools, which include Wave, FreshBooks, and ZohoBooks among others, are often a step up from Quick-Books, but can’t compete feature-to-feature with themore-enterprise level solutions such as those providedby Abila, AccuFund, Blackbaud, Intacct or NetSuite andothers. Smaller nonprofits might not actually need allthe power of the higher-end tools. There are trade-offsto sticking with the simpler solutions that all nonprofitfinancial managers should carefully consider.

One such question is whether your nonprofit needsa full-fledged enterprise solution or if it can it get bywith a more lightweight tool.

The type of system you need depends in part uponhow you will use it. David Geilhufe, senior director forNetSuite, whose Cloud-based ERP (enterprise resourceplanning) software suite includes an accounting solu-tion, said many small nonprofits are not actually doing

accounting. True double-entry accounting -- a methodof entering data twice to show both where funds comefrom and their effect on the bottom line -- is not beingdone. What is being done is more akin to bookkeeping,he said, simply tracking where money is being spentand keeping on top of bank balances and bills.

The lightweight tools on the market are sufficient forthis task. The tools don’t require a lot of accounting ex-pertise or experience. In fact, one of their selling pointsis they don’t rely upon users’ familiarity with the jargonor advanced principles of accounting. A staff memberwith a basic understanding of accounting fundamentalsand a good relationship with the organization’s CPA canmake do.

Enterprise systems, on the other hand, are designedfor more rigorous double-entry accounting and aimedat users with accounting experience.

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‘‘They canreport to theirinternal andexternal usersmuch morequickly, andwith betteraccuracy.-- Peter Stam

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“The old accounting solutions required a lot of ac-counting knowledge to make them be accurate, but thelighter-weight tools don’t,” Geilhufe said. “It’s one of theirselling points. This is not a new trend. It’s why so manynonprofits gravitated toward QuickBooks. You don’tneed to be an accountant to understand it or use it.”

That’s both a pro and a con, he said. “The pro is,you’re managing your money. The con is, you’re not re-ally doing accounting. The vast majority of nonprofitsnever do accounting and that’s not a problem. It’s moreimportant that they exercise fiduciary responsibilitythan have full accounting capability.”

But, they could be more effective if they did, he said.“There’s 20 years of evidence that small nonprofits canmake do with the lightweight systems, but if they wantto graduate beyond ‘Do I have enough money in mybank account to pay my bills?,’ you can’t do that inthose systems. You need the extra capability of modernenterprise systems.”

Tom Walker, senior product manager for financialsolutions at Blackbaud, vendor of the Cloud-based Fi-nancial Edge and Financial Edge NXT accounting pack-ages, agreed with Geilhufe. “When nonprofits are readyto start thinking beyond simple financial statementsand start to look at trends and program effectiveness, itis time to consider an enterprise solution,” he said.

HOW MUCH TO SPEND?Though he hates to admit it, Walker said, there’s an-

other determining factor at play: cost. Geilhufe said that though the lightweight systems

typically are targeted toward small businesses or con-

sulting firms rather than nonprofits, their low cost andease of use make them appealing to nonprofit man-agers just the same. “They’re oriented toward billingand invoicing, which is not how nonprofits function,”he said. “You don’t bill your donors.”

Enterprise systems can better fit the nonprofitmodel. For example, they allow for multiple revenuesources (such as federal and state grants and dona-tions), integrate with constituent relationship or donor

management systems, and work with restricted funds.But such a package can cost thousands of dollars a yearto license, and might require someone with relevant ex-perience and knowledge -- either on staff or as a con-tractor -- to work with it. The cost of such a tool alonemight be out of reach for a small nonprofit, much lessthe cost of a dedicated accounting staffer.

The additional expense could pay off for organiza-tions in the right position to make use of the features

and functionality provided by the tool.“They can report to their internal and external users

much more quickly, and with better accuracy,” said PeterStam, president of AccuFund, which offers a nonprofitCloud accounting system, among other financial man-agement solutions. “They get better results, for internalusers and external sources. And managers can spendtheir time working on insights, evaluating what’s goingon rather than spending all their time reporting,” saidStam. “When you get multiple people running multiplespreadsheets to create reports instead of managing pro-grams, they’re not spending their time effectively.They’re not looking at what it’s costing them in terms oftime to do things efficiently.”

Dan Murphy, senior product manager for Abila’snonprofit-focused MIP Fund Accounting, said a morerobust system gives the user greater insight into the ex-penses incurred by the organization.

“That gives you an increase in decision-making abil-ity about how to use resources,” Murphy said, “but it’salso a huge step in capacity increase when you movefrom a lightweight solution. Part of the benefit of thatisn’t just the time that you save or the work that yousave on reporting, but that it allows you to go afterother funds.”

Walker said that for the smallest organizations, alightweight solution might be adequate, but too manyorganizations settle for making a bookkeeping andExcel spreadsheet solution work.

“When that stops working, that’s when it makessense to bring it to the next level,” he said. “It costsmore, but making the leap opens you up to greater op-

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Not all enterprise-level accountingsolutions are created equal but most

offer the capability to implementthe following tips

1Configure auto-scheduling. Not all soft-ware solutions have it but people oftendon’t take the time to set it up even when itis available. Auto-scheduling lets you config-

ure reports to run at regular intervals triggered ei-ther by calendar dates or specific events, and thenautomatically email those reports to specific people-- for example, program staff, board members, orfunders. Not only is auto-scheduling an enormoustime saver, it can ensure a consistently transparentview of certain accounting features for the peoplewho supervise or monitor them.

2Integrate payroll. Most organizationsuse software to manage payroll. Many ac-counting systems can manage payroll orintegrate with other payroll-specific sys-

tems, though many lightweight solutions requireadd-ons or modules to do so. Another time-saver,linking payroll and accounting can also eliminateerror and reduce the need for double-entry.

3Use built-in time and expense-trackingsystems. Again, some of the lightweighttools don’t support this functionality,which is actually geared more at small

business users, but time and expenses can be crit-ical for small nonprofits. Tracking either or bothin a system can give an organization insight intohow and where it spends its resources, which canpretty quickly make them more efficient -- andoften more effective.

4Set email alerts and notifications.Whether you set dashboard notificationsor configure the tool to email users, auto-mated notifications are an excellent way to

ensure that the right people are alerted when cer-tain actions occur. For example, an expense reportthat needs to be approved or a purchase order thatneeds to be signed or a check that clears the bank.This simple step can cut down on wait times andmake sure nothing gets overlooked.

5Push your systems to achieve insightrather than rote reporting. Rather thana specific, tactical setting or feature, this ismore of a philosophy. Capturing outcome

metrics and move data between systems -- for ex-ample, so your organization knows how much itcosts to provide each meal or the per-participantcost of each program -- can add a ton of evalua-tion and management value. Take advantage ofthe technology and what it can offer you. Spendthe time it takes to figure out what you want tomeasure and track, and then set up your systemsto track them. -- Chris Bernard

5 Ways To Get MoreOut Of Your

Accounting Software

AbilaMIP Fund Accounting Up to three users, $249/user/month;$149/month each user after three800-811-0961www.abila.com

AccuFund Inc.AccuFund Accounting Suite StandardSingle-user: $2,995; three users:$6,495; add $895 for each additionaluser.Cloud-based pricing starts at$150/month

AccuFund Accounting Suite ProfessionalSingle-user: $6,595; three users:$8,995; add $1,195 for each additionaluserCloud-based pricing starts at$225/month781-433-0233www.accufund.com

AgilonAgilon Business FinancialsStarts at $27,000 for 1 to 4 usersStarts at $42,000 for 5 to 10 users800-480-9015www.myagilon.com

Aplos SoftwareAplos Accounting $15/month for one user$25/month for unlimited users

Aplos Oversight SuiteBasic enterprise platform free tononprofit users of Accounting Suite888-274-1316www.aplos.com

AraizeFastFund Nonprofit SoftwareSingle user, starts at $35/month; two tofive users, $60/month; $25/month forevery five more users

FastFund Premium$75/month single, $100/monthmulti-user up to five users919-460-3990www.araize.com

BlackbaudFinancial Edge NXTSingle user starting at $249/month 800-443-9441www.blackbaud.com

Cougar Mountain Software Denali FUNDBasecamp PackageSingle user $1,999; $357 eachadditional userAscent PackageSingle user, $2,999; $357 eachadditional userSummit Package Single user, $4,999; $357 eachadditional user 800-388-3038www.cougarmtn.com

CYMA Systems Inc.CYMA Not-For-Profit EditionBasic package starts at $795Typical 5 User System with GrantTracking: $5,800800-292-2962www.cyma.com

eTEK InternationaleTEK FundamentalsStarting at $5,000 for one user800-888-6894www.etek.net

FUND E-Z Development Corp.FUND E-Z Nonprofit AccountingSingle user $1,995; each additional userapproximately $500 FUND E-Z Nonprofit Accounting (Proadd-on) $1,495877-696-0900www.fundez.com

Grants Management Systems, Inc. GMS Accounting and FinancialManagement/Reporting SystemOne to two users, $3,500; three to fourusers, $5,000; five or more users,$7,500; License and warranty,$35/month/user

Revolving Loan Servicing SystemOne to two users, $3,300; three to four

users $3,800; five or more users$4,300. License and warranty, $35/month/user800-933-3501www.gmsactg.com

Intacct CorporationIntacctTypical entry-level pricing for nonprofitsis $3,600/year877-437-7765http://us.intacct.com

Intuit Inc.Quickbooks Premier for Nonprofits Starts at $499.95/year for one user877-683-3280http://quickbooks.intuit.com/premier/

Quickbooks Enterprise Solutions forNonprofits 13.0Starts at $1,000/year for one user 866-379-6635http://enterprisesuite.intuit.com/indus-try-solutions/nonprofit/

NetSuiteNetSuite Mid-Market EditionFree donation through TechSoupfor up to 5 users at qualifyingnonprofits NetSuite Fund AccountingStarting at $9,995/year for 5 users877-NETSUITEwww.netsuite.com

OneNFPOneNFP FinancialsStarts at $99 per user per month877-261-7045www.onenfp.com

Open Systems Inc.TRAVERSE for Not-for-Profit Starts at $195 per user per month 800-328-2276www.osas.com

Serenic SoftwareSerenic NavigatorThree users, starts at $16,000877-737-3642www.serenic.com

Accounting AutomationThere are many accounting software packages employed in the nonprofit world.

Below are some of the more prominent applications.

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‘‘Lighter-weightsystems don’tallow the kindof insightorganizationsare beingasked to track.-- David Geilhufe

portunity. You’re not going to be handcuffed by yoursystem and you can start to think about your programsat a greater level of detail.”

See the chart on page 15 for an idea of how muchthese systems can cost.

WHAT WILL YOU DO WITH IT?That level of detail can manifest itself in everything

from reporting to outcomes, said Joan Benson, seniorproduct marketing manager focusing on nonprofits forIntacct, which also provides a Cloud-based ERP finan-cial solution.

As organizations grow, they seek and acquire morefunding sources, she said, which not only adds com-plexity to bookkeeping but increasingly means in-creased reporting requirements. The lack of robustreporting functions in the lighter-weight tools ends upforcing organizations to go to other tools.

“They’re reporting to different funders, to grantors,to the board of directors, so as they’re growing they’regoing to have a lot more reporting needs,” Benson said.“They’re going to want to report on different levels,and when they start having to do all that outside thesystem, it becomes a lot more work and creates a lotmore room for errors.”

Stam said reporting capability is one of the primarybenefits of the more enterprise-level systems.

“I think as soon as your organization gets too com-plex for the very simple accounting capabilities of (thelighter-weight tools), you should move up to any one ofthe professional level systems,” he said. “As soon as youget beyond two actively managed funding sources, it

gets too complex to manage and report.” Benson said that charity evaluators such as Charity

Navigator and Philanthropedia are rating nonprofits onoutcomes, so being able to measure those outcomesand report on them is becoming critical. That requiresreporting not just from financial systems but fromdonor management systems, as well, to provide a moreholistic view of the organization and its programs.

“A good accounting solution lets you grab your key

performance indicators in real time,” Benson said.“When there’s a lot more pressure for that, it’s pushingpeople to better solutions.”

She said that a powerful system with open architec-ture -- essentially, a design approach that supports theability to speak to or integrate with other systems --can make it possible to import and export data acrosssystems.

“That can let you bring in, in real time, informationfrom other systems, compare it, calculate it, and export

it back into the other system so you really get the fullbenefits and realizations of having that data,” she said.

ACHIEVING INSIGHTYou don’t need to be an accountant to do the sim-

ple math -- a more robust system equals more features.But when is it worth the investment in an enterprise-level system?

Except for the smallest organizations, settling for alighter-weight solution means making tradeoffs and “notmanaging themselves to their highest level,” Geilhufesaid, which poses a minimal risk for a small organization.“But for a bigger organization, the reason to go to a big-ger system is you want to manage, you want to report re-stricted funds, you want to report to funders real financialdata that you and the funder have confidence in.”

In a phrase, Geilhufe said, it comes down to “achiev-ing insight.” When the sector is being pushed toward amuch higher level of providing insight to donors and ahigher level of stewardship for donor dollars, that re-quires stronger capabilities, he said.

“If data is the expectation, the most atrophied pieceof data inside a small nonprofit is transactional account-ing information,” Geilhufe said. “Lighter-weight sys-tems don’t allow the kind of insight organizations arebeing asked to track, and should be tracking. It boilsdown to whether the organization is ready to manageitself in a best practices way.” NPT

Chris Bernard is research and editorial director at

technology nonprofit Idealware and a frequent

contributor to The NonProfit Times. His email is

chris@idealware.org

How Non-Profits Can Reduce Operating Costs In The Cloud

••••

www.accufund.com/anywhere-npt 877-872-2228 ext. 215

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