In an age of decreasing donations and increasing scrutiny, charities are having to find ever more creative ways to reduce expenditure and streamline processes. Cloud accounting software has often been touted as a solution to some of these issues, but as previously reported on AccountingWEB many smaller charities remain reluctant to migrate for a range of different reasons.
To find out about the potential barriers, benefits and pitfalls charities face when moving to the cloud, AccountingWEB spoke with Jen Gerrard, whose firm Gerrard Financial Consulting specialises in charity accounting services, and Sonia Hutchison, chief executive of Bath and North East Somerset Carers’ Centre, a local charity supporting people who care for family and friends that has recently moved its systems to the cloud.
Time and money
Time and cost are among the main fear factors for charities when it comes to cloud adoption. However, Gerrard argued that there is a lack of knowledge about how expensive such packages will be.
“The perception is that it will take time and money – a major pain point for the majority of charities”, said Gerrard.
“However, if a charity is using an on-premise accounting and payroll solution costing £2,500 a year, with something like QuickBooks and Receipt Bank (for a smaller charity) you can get that down to £50 a month – £600 a year. And with the automation aspect of things like data input you are also saving labour costs.”
While those with access to a reliable internet connection may be able to access these savings, Gerrard admitted that cloud doesn’t work for everyone. “Yes, you do need the hardware to go with it. I was chatting to a charity with offices in Kenya where the broadband speed isn’t great, so cloud wouldn’t be the right solution for them – for now.”
One of the big drivers for Hutchison in moving the charity to the cloud was the amount of time taken up by processing. “Our systems seemed to have duplication in them so we wanted to look for something more streamlined, but still have all the evidence that we needed for our audits.
“We felt that we were storing it here, looking at it and putting it through a number of systems rather than being able to look at it once and agreeing on it.
“That [system] was costing us money”, continued Hutchison, “because our staff were taking more time and we couldn’t afford to employ someone else, so we needed to find a better way of doing it.”
According to Gerrard, one of the key barriers she encounters when advising charities about cloud accounting software was concerns around data protection. With budgets already stretched and without in-house IT staff to react to breaches, many charities fear that cloud could leave them vulnerable.
“A common theme I come across is ‘people can get at our data’”, said Gerrard, “to which I answer ‘do you work at home on a laptop via an internet connection? Because if you do, people can still get at your data’. You can be hacked. This really surprises people. Software like Xero or QuickBooks has military-grade security, so it’s actually harder to hack.”
Access and transparency
Part of Hutchison’s reasoning behind the move to cloud was that the charity is now spread over two sites. “Trying to make our accounting work across two sites was more difficult and we have a lot of people who work remotely”, she said. “Being able to access the software from wherever we wanted was quite a big driver.”
According to Gerrard, a major benefit cloud offers charities in this era of increased scrutiny is visibility.
“Cloud really provides enhanced visibility for potential investors and funders”, she said, “for example if a charity works with a cloud accounting software add-on, such as Crunchboards, anyone given access by the charity can log in and see what’s happening with their key performance indicators (KPIs) in real time. That means investors or investment management firms don’t have to wait for management reports.”
Quicker and more efficient – with a few reservations
In terms of outcomes Hutchison, whose charity started the cloud adoption process at the end of 2015, was broadly positive. “Everyone seems a lot happier”, she said. “It’s improved what we’re doing, particularly on the processing end – it’s much quicker and much more efficient.
“QuickBooks online has some features that are different and that can be frustrating if you are used to functionalities on the desktop version which aren’t all on the online version. But the benefits of everybody being able to see everything and being able to input from wherever they are outweighs some of those things and hopefully QuickBooks which catch their online version up as time goes on.”
“To properly embed it, it’s probably taken about six months. This will be the first set of accounts we’ve done with this system so I’ll hold reservations before we say that we’ve definitely bedded down!”
Asked for any tips on successfully transitioning to the cloud, Hutchison added: “We realised we needed to invest time in making sure all the staff using the software had training and that we needed to revisit and make sure people were using it in the right way.
“It’s simple things; because we are using Receipt Bank, the barriers are things like helping people install the app onto their phones rather than just saying ‘can you all put the app on your phone’.
“You need to take staff with you so they don’t think you are imposing it, but you are helping them see how it will help them.”
Has your charity moved, or is thinking about moving, to the cloud? How did you find the transition? If you haven’t moved, what’s holding you back?