Efficient financial management is crucial for nonprofit organizations to effectively carry out their missions and achieve high-impact outcomes. To foster transparency and shared accountability within finance and operations, nonprofit finance teams must earn the trust of their executive teams. This article explores how enterprise resource planning (ERP) technology can help improve nonprofit financial management efficiency and transparency.
Improving Operational Efficiency
Maintaining accurate and up-to-date financial statements is vital in keeping stakeholders informed. For enhanced organizational effectiveness, nonprofit finance teams need:
- Real-time financial, operational, and outcomes data
- Reports that are up-to-date, accurate, and communicate key insights
- Automation that can reduce manual data entry and redundant tasks
- Integration between systems that can help protect against data silos and improve internal and external communication
ERP technology can benefit nonprofit financial management by helping to improve efficiency, accuracy, and transparency in various reporting and planning aspects. Here are six ways ERP technology can help improve operational efficiency:
- Streamlined Operations: ERP systems can integrate and automate core financial processes such as budgeting, accounting, accounts payable, accounts receivable, and expense management. This automation can reduce manual effort, data entry errors, and juggling multiple spreadsheets. ERP technology also can accelerate processing times, which can help nonprofit teams spend more time on higher-value tasks.
- Real-Time Data Insights: An ERP system can provide real-time visibility into financial data, helping nonprofit teams monitor an organization’s financial health and make informed decisions. After all, strategic decisions can be only as meaningful as the data on which they are based. The availability of up-to-date financial information can support better budgeting, forecasting, and resource allocation. ERP technology also can enable organizations to drill into financial information, which can help improve insights and support long-term goals. This can translate into increased financial stability and scalability.
- Enhanced Reporting: Many ERP systems provide robust reporting and analysis capabilities, which can help nonprofits generate detailed, insightful financial statements and reports. ERP reporting tools often can provide deeper insights into financial trends, aid in compliance with regulatory requirements, and assist in demonstrating financial accountability to stakeholders.
- Integration & Data Centralization: Most ERP platforms can integrate various systems and departments within an organization. By integrating systems and creating a flow of information, data can be accessible throughout the organization—instead of stored in disparate locations. Data centralization can help enhance collaboration among teams, streamline workflows and processes, and reduce duplicate or redundant tasks. It also can facilitate easy access to consolidated financial information across an organization.
- Improved Audit Readiness: Nonprofits often undergo audits to assist with financial transparency and compliance. Audits can serve as more than just compliance measures; they can provide valuable insights into an organization’s financial results and overall health. ERP technology can aid in audit preparation by helping provide a reliable audit trail, automate documentation processes, and improve data accuracy. These features can help with audit readiness and simplify the audit process.
- Scalability & Adaptability: A modern, cloud-based ERP system, like Sage Intacct, is designed to accommodate the evolving needs of nonprofit organizations. The platform can scale with organizational growth, allowing organizations to add functionalities and modules as needed. Sage Intacct addresses many nonprofit financial management requirements. It’s designed to automate financial operations, conduct multi-dimensional analysis of key results, and synchronize data in real time across various systems and departments.
Key Report Findings
According to survey results in Sage’s annual Nonprofit Technology Trends Research Report:
Last year, 63% of nonprofit finance leaders prioritized the ability to automate financial reporting, and this number climbed to 72% for 2023. Reporting is essential to good stewardship and accountability. It’s how organizations measure and demonstrate financial performance.
In addition, 51% of leaders noted the importance of automating outcome metrics—up from 35% in 2022. Outcome metrics help nonprofits tell the story of mission achievement to donors.”
ERP technology, like Sage Intacct, can help nonprofits achieve better stewardship and transparency by automating accounting and finance tasks and more. Effective financial management goes beyond policy implementation and reporting. Implementing an ERP system can help nonprofits streamline their financial management processes and improve overall efficiency. Sage Intacct offers a tailored suite of features, including core fund accounting, dimensional general ledger, automated accounts payable, grant tracking and billing, automated nonprofit revenue recognition, user-friendly reporting and dashboards, and a reliable audit trail.
In conclusion, ERP technology can provide numerous benefits for financial management. By streamlining operations, providing real-time insights, enabling enhanced reporting, centralizing data, improving audit readiness, integrating donor management, and supporting scalability, a modern ERP system can help nonprofits increase efficiency and advance their missions more effectively.
Related reading: Automating Business Processes for Efficiency in Nonprofit Organizations
For more information on Sage Intacct or nonprofit financial management, please reach out to a professional at Forvis Mazars.