Nonprofits are struggling to adapt to the COVID-19 pandemic, just like everyone else. But they have arguably had it worse than other organizations for several reasons.
First, during an economic downturn, charitable donations tend to slow down. Nonprofits with reliable funding sources in normal times are having to make do with limited, sometimes shoestring financial resources. The same downturn also increases demand for the services nonprofits provide, adding further financial pressure.
Compounding these problems is the fact that many nonprofits are suddenly working remotely, entirely or partially, and finding that their operations don’t travel well outside the office. That’s especially true of accounting. Accountants need the data and applications they rely on in the office to keep funds flowing in and out effectively from home. Yet with many accounting systems, particularly legacy and introductory systems, remote access isn’t available or doesn’t work well. Consequently, the accounting system is strained to the breaking point exactly when it’s most essential.
Fed up with accounting technology that only works inside the office, many nonprofits are considering the Cloud for an upgrade. It offers the anytime, anywhere accessibility that nonprofits need to conduct all their accounting needs remotely. A cloud ERP platform can also save nonprofits money, spare them IT headaches, improve cybersecurity, and introduce best-in-class features – all big benefits to nonprofits that need to optimize the resources they have on hand.
The Cloud seems like an obvious asset. But in the middle of an ongoing and uncertain pandemic, it can feel like the wrong time to make big changes, especially to something as fundamental as the ERP. That’s an important note of caution, and nonprofits shouldn’t consider the Cloud to be a cure for all the problems of the pandemic.
Instead, each nonprofit should evaluate their own situation, survey the road ahead, and ask if now (or later) is the time to embrace a cloud ERP platform. To shine some light on that subject, we spoke with Andrew Harleman, Director of Sales at JMT Consulting. As someone who knows the strengths and weaknesses of cloud ERP in-depth, along with the circumstances that set new adopters up for success, he offers unique insight into when and why a nonprofit should make the switch.
Why do today’s nonprofits need best-in-class technology? What are the consequences for not having that technology, and how has COVID exacerbated these issues?
Andrew Harleman, Director of Sales, JMT Consulting: Nonprofits have always tended to lag behind on the adoption curve because they would rather spend their money directly on the programs they provide. We’ve found that even prior to COVID, many nonprofits relied on dated and borderline obsolete systems where the only way to use it is to be physically in the office. These nonprofits are missing out on the accessibility of the Cloud while they’re working remotely. They’re also missing out on the richer feature set it offers – things like interactive dashboards with drill-down visibility and purchase order workflows. COVID has exacerbated the challenges of using dated technology and really emphasized the advantage of moving to something cloud-based.
What level of collaboration should exist between nonprofit finance and other departments? How do we keep collaboration from turning into gatekeeping?
AH: Finance should be almost like an internal department whose clients are the other people in the organization, and accountants serve those clients by providing them with the information they need to make strategic decisions. Ideally, there’s a free flow of information between finance and anyone requiring financial insights or assistance. But what we’ve seen many times over the years is finance operating like a gatekeeper of information instead of a steward, collaborator, and servant.
What does successful nonprofit accounting require beyond basic accounting?
AH: You’ve probably heard of the Pareto Principle where you’re spending 80% of your time on low-value tasks and only 20% on things that really matter. At a lot of nonprofits, they’re spending most of their energy importing spreadsheets or trying to balance stuff manually when they should be focusing, primarily, on looking forward to predict cash flow, hiring needs, or program changes. Successful nonprofits flip the ratio and spend 80% of their time being strategic and analytic.
When is an accounting workflow ripe for automation?
AH: I think the number of people involved – whether it’s one person or six people handling a journal entry – is a big determinant of when automation is necessary for a workflow. Beyond that, automation should be considered wherever and whenever possible because it reduces human error dramatically while increasing speed and efficiency. The opportunity costs are huge because if you can free people from doing tedious tasks, they can focus on the mission of the organization.
What’s the one sign that tells a nonprofit it’s time to move to cloud ERP?
AH: Prior to COVID, I would tell nonprofit CFOs that if they were manually manipulating data to create financial reports, they were overdue for the Cloud. If you’re spending lots of time parsing spreadsheets and hunting down data from different sources, you probably know it’s an imperfect process. After all, nonprofits hire accountants for their experience and expertise – not because they’re good at Excel. After COVID, if you don’t have remote access to your entire accounting system, I’d say that’s a clear indication you need the Cloud.
What do you think is the future of the Cloud in nonprofit finance?
AH: People used to argue that they would never adopt the Cloud for finance. But we’re past those days. We’re now at a point where everybody who has their eyes open in 2020 knows there’s no excuse for avoiding modern technology. There’s too many risks and too many downsides to sticking with the technology of the past. The Cloud is the way forward. That’s where the world currently sits, that’s what all the market research tells us, and that’s what we’re observing first hand.
Is your nonprofit ready to move to the Cloud?
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