The Financial Edge. The Financial Edge. An Introduction

Transcription

1 The Financial Edge An Introduction When we launched this project, we began by reviewing thousands of customer suggestions and interviewing hundreds of nonprofit organizations. Through this process, it became apparent that nonprofit accounting software needed to be more than a mechanism for capturing transactions and preparing standard financial reports. Faced with the need to stay competitive, improve internal management, and answer the increased calls for accountability, our customers needed more information. Information that would help them make solid management decisions. Nonprofits need critical information for reporting internally on programs, projects, and budgets and externally for donors, grantors, and governmental agencies. We translated these needs into three key themes: Faced with the need to stay competitive, improve internal management, and answer the increased calls for accountability, our customers needed the information that would help them make solid management decisions. 1. Intelligence 2. Accountability 3. Flexibility With these themes as a guide, we then developed innovative features and functions in the software that would ultimately put information into a users hands to make key decisions. In addition, we focused on two other key areas: 4. Ease of use 5. Enhanced integration with The Raiser s Edge The result was The Financial Edge. Below is a summary of each of the three themes along with associated features.

2 Intelligence: transform information into decision-making power The Needs: 1. Measure the effectiveness of programs and initiatives: Although the board is ultimately responsible for the organization s ability to deliver on its mission, management must monitor the programs day-to-day. To do this, management needs information on the amount of services provided, the number of clients served, and the cost of providing those services. With this information, management Nonprofits need accounting software that is more than a mechanism for capturing transactions and preparing standard financial reports. can measure the effectiveness of programs, thus ensuring the organization makes good on its promise to use donations appropriately. 2. Use budgets as an effective monitoring and strategic-planning tool: Once the budget is finalized, it often remains as a static file as the year unfolds. However, budgets should be used as a monitoring and strategic planning tool. To facilitate this, nonprofits need a system that allows for multiple budget scenarios what if analyses, and the ability to track adjustments over the course of the fiscal year. 3. Monitor cash inflows and outflows to allocate resources effectively: Cash is vital to any organization. Obligations must be paid on time, and a slowdown in collection of revenues can be disastrous. The ability to reliably predict sources and uses of cash is critical to good management decisions. The Financial Edge features that support these needs: Project, grant, and endowment and account activity available on screen: Compare fiscal year, debit and credit, and actual-versus-budget Drill down from period balances to the batch or the source for on-screen research View actual or encumbered balances (or both) View net change or ending balance Filter transactions on screen by net asset class, project or transaction code View transactions by source or subsidiary ledger On the project activity screen, filter using a query, by account, account attribute, net asset class, sub-ledger or transaction code Drill down from project account category to accounts, to transactions within the accounts, or to the source of the transactions Drill down from query results to underlying records

3 Dashboard configure dashboards specific to job functions within the organization to monitor financial performance: Executive Director Monitor organization s revenue and expense, financial position and cash flow, fundraising expense and effectiveness, key performance ratios, and individual program service costs Department Heads Monitor actual-versus-budget across various departmental functions, performance ratios, and spend-out on particular grants The more verification an organization can provide to donors, grantors, and the general public about how funds were used, the more likely it is to attract new and increased contribution revenue. Budget Managers Monitor amounts spent with top vendors and actual-versus-budget using multiple budget scenarios Program Managers Monitor spend out on grants and restricted endowment funds. Analyze the cost of services provided by the program Project Managers Monitor activity and position of individual projects, analyze spend out rates, and configure the system to give warnings as a grant deadline approaches Accounts Payable Managers Monitor top vendors and amounts due on a weekly or monthly basis and whether term discounts are being taken fully utilized Fixed Asset Managers Monitor projected depreciation across multiple years, acquisition lists, and highest priced assets Embedded Microsoft Excel pivot-table functionality: Provides online analytical processing Allows you to easily look at relationships within your data a variety of different ways Chart results and produce reports Multiple budgeting scenarios and the ability to produce what if analyses: Combine budgets across budget managers or departments View budgets by project and account grids Track multiple budget adjustments Use budget tools for increasing/decreasing account and project budgets based on new information Direct and indirect cost allocation as well as investment income allocation: Use multiple types of allocations Allocate based on specific grantor rules or rates Use units, percentages or proportional balances for calculations Monitor grant spend down to avoid over-or-under spending on the grant or project

4 Cash management: Maintain a tight link between your check register balance and the General Ledger cash account Automatically mirror all transaction in that bank that affect cash (unless user indicates this should not be done) Perform on-screen reconciliation among the register balance, the bank balance, and the cash account balance With customization tools, organizations can automate the transfer of data between disparate systems, making the operations more efficient on all fronts. Accountability: demonstrate fiscal responsibility and stewardship The Needs: 1. Verify to donors that gifts were used for their intended purpose: Donors are increasingly concerned about ensuring their donations are used to provide the services in direct support of the organization s stated mission. The more verification an organization can provide to donors, grantors, and the general public about how funds were used, the more likely it is to attract new and increased contribution revenue. 2. Respond to auditors requests for supporting detail: An external audit often plays a key role in helping to show an organization has strong finances and management. However, when those conducting the audit cannot easily research or access transaction detail on screen, the resulting audit can be protracted and expensive. The more research that can easily be done and verified using the organization s accounting system, the more likely an auditor is to rely on information provided by management, making the process more efficient for both parties. 3. Satisfy both internal and external reporting requirements: The management of a nonprofit is accountable to its Board of Directors, which relies on timely and accurate financial reports on the organization s overall health as well as specific programs or initiatives. Individual program and budget managers also need more detailed reports to track their own progress. Grants, state, and federal agencies have very specific reporting requirements and formats of their own. In order to meet these varying reporting needs, nonprofits often extract data from a system and create reports in spreadsheet software, thus increasing the possibility of error. Being able to quickly and easily create a wide range of reports within the accounting system would save time, ensure accuracy, and provide increased access to key information. 4. Rely on strong system internal controls: Nonprofits are mission driven and seek to operate with as little administrative overhead as possible. Often working with limited staff responsible for multiple jobs, nonprofits need strong internal controls to provide some assurance that system entries are in balance and are posted to the proper accounting period.

5 The Financial Edge features that support these needs: Template-based reporting system: More than 100 flexible, pre-formatted reports Easy-to-use report writer with extensive filters and formats for customized financial statements Visual Chart Organizer that allows you to control the presentation of financial information Unlimited report templates in the Visual Chart Organizer that allow you to produce different views Nonprofits need critical information for reporting internally on programs, projects, and budgets and externally for donors, grantors, and governmental agencies. for people throughout your organization Queries and filters that help meet complex reporting requirements and formats Options to easily create separate reports by project or transaction code Advanced transaction tracking: Sort or group transactions within and across accounts and funds for multiple perspectives on financial data Track projects, grants, and endowments in more detail Use projects and up to 5 transaction codes to reduce the number of accounts necessary for even the most sophisticated organization Track transactions by net asset class Use transaction attributes for sorting and grouping on reports, queries, or allocations Link to grant agreements or contracts on the Project media tab Set up notifications such as reminders about contract expirations Annotate projects to ensure all staff is notified of the status of a vendor or project Mark an account or project inactive as of a certain date to prevent inadvertent, incorrect posting On-screen drill-down throughout the system: Drill down from an expense account in the General Ledger to the original invoice in Accounts Payable, a check in the check register to the original invoices, the batch in Journal entry, and the individual transaction Present financial information on-screen with drill-down to detail or source transactions Drill down from the Visual Chart Organizer to account records

6 Advanced account, project, and report security: Apply new security options to accounts, projects, and reports Limit access to information in searches, queries, or reports Notify users on screen that security is in effect Base security on group (users will only see options they can access) Create view-only users Nonprofits need critical information for reporting internally on programs, projects, and budgets and externally for donors, grantors, and governmental agencies. System internal controls: Ensure double-entry accounting Ensure entries balance by debit and credit, fiscal period, and fund Opt to balance by project or transaction code Configure the system to require transaction attributes, codes, or projects on specific or all accounts Establish unique business rules such as the ability to lock down automatic account creation Flexibility: tailor the system to meet your unique needs The Needs: 1. Increase organizational efficiency by integrating with other systems: Many nonprofits use a variety of databases within their organizations, capturing data that must be re-keyed into the accounting system. This process demands extra staff time and greatly increases the possibility of error. With customization tools, organizations can automate the transfer of data between disparate systems, making the operations more efficient on all fronts. 2. Create custom screens and business rules: Organizations often have crucial business processes that are unique to their operation and not handled by the feature set of an accounting system. For instance, a medical research foundation may have a program where new patients are matched with others who have received similar treatments in the past. Another example is the need to route approvals for purchase orders through a specific chain. Incorporating these needs into the accounting system through custom data entry screens or business rules helps an organization meet its unique needs within the existing software without having to develop a completely custom system. 3. Design custom reports to meet specific requirements: Although The Financial Edge offers a wide variety of report and formatting options, organizations sometimes require something very special. Having open, read-only access to the database is critical in ensuring the report that is developed is what the organization needs.

7 The Financial Edge features that support these needs: Customization (through Visual Basic for Applications and Application Programming interface): Customize the system without jeopardizing financial data Use the embedded version of Microsoft s Visual Basic for Applications to customize rules and screens Use the Application Programming Interface for read/write access to the database objects, to move information to and from your Web page, and to send financial or biographical information from thirdparty databases to eliminate duplicate entry Customize the interface between The Raiser s Edge and The Financial Edge, for example: Add vendors from Accounts Payable as constituents in The Raiser s Edge Send actual event expense information to The Raiser s Edge Pull information from both systems for donor-specific revenue and expense reporting Open read-only access to the database: Copy and paste SQL statements from queries Create custom reports that are automatically updated as new information is added to the database Ease of use Web look and feel makes navigation intuitive: Customize your home page with reminders and frequently used reports or records Set up favorites, folders, and task bars for quick navigation Access all modules from within the main system shell Switch between the General Ledger and Accounts Payable with one click Right click to export data to Excel Set up and configuration are easy: Use automatic account creation Store all account segment values in tables Use the on-screen configuration to set up your system Import historic data from legacy systems

8 And last, but not least... Enhanced integration with The Raiser s Edge : Push financial information directly from The Raiser s Edge to an open Financial Edge journal entry batch Approve or change the batch before it is posted to The Financial Edge Drill down on screen to the gift transaction in The Raiser s Edge after the batch is posted Ensure a detailed audit trail between the gift in The Raiser s Edge and the revenue line item in the General Ledger Access revenue and expense allocation information for a fund in The Raiser s Edge to tell you how donations have been spent To learn more about Blackbaud s The Financial Edge, visit or contact your Blackbaud account representative.