Modern finance systems are already transforming the work of charity accountants and solving time-consuming internal challenges for charities. The increased integration of artificial intelligence (AI) provides an exciting outlook for finance professionals who want to focus on value-adding activities.
In a recent Charity Community webinar, Grant Gevers, Senior Solutions Consultant at Sage, and Daniel Keig, Financial Controller at Nesta, discussed what changes we can expect to see in charity finance functions in the next five years. In this article, we focus on three key developments to help you plan for your charity’s finance evolution.
1. Eliminating time-consuming, manual processes
Most finance professionals prefer to spend time on value-adding activities and minimise manual admin processes, and technology has already come a long way to help, lifting the admin burden and improving speed, accuracy and efficiency of workflows. Many AI-powered services are already built into modern finance systems, for example Accounts Payable (AP) automation can read information from supplier invoices and AI can learn to post the transaction to the correct department code. AP automation can also be used to check the line items of an invoice with the line items of purchase orders. Other services using AI technology include anomaly detection, where transactions posted in the general ledger are automatically reviewed and anomalies are flagged up for human review. Growing in importance are services such as carbon accounting classification, which estimates the carbon footprint by analysing purchase transactions.
2030 outlook: Increased speed and accuracy of information will enhance business performance as insights can be used in real-time to inform business decisions.
2. Creating a connected digital landscape
Many charities are using various systems that best suit their different business needs and don’t want to rely on a single supplier to deliver all the functionality required. Organisations can now use the most suitable applications for their needs and then connect them using Application Programming Interface (API). This is akin to a language that allows different applications and programs to communicate with each other. Modern cloud-based systems allow applications to connect with ease and AI can support by detecting anomalies or potential fraudulent transactions. To connect different applications, charities can use pre-built connectors if they exist. This is usually a quick and cost-effective way to get started. However, if a system (such as a CRM) is heavily customised, a pre-built connector might not work. Keig mentioned different options that charities can explore. For example, using an iPaaS solution can offer a compromise of customisation, cost-effectiveness and skills requirements. Think of iPaaS (Integration Platform as a Service) as a visual way to build workflows so that a non-specialist can set up their own custom integrations. Keig described how iPaaS solutions have saved Nesta a significant amount of time spent on manual data-entry and reconciliation tasks.
2030 outlook: Improved workflows are achieved by connecting various best of breed systems, enabling a free flow of data and improved efficiency and accuracy.
3. Enabling data-driven decision-making
A modern finance system can help structure financial data in a flexible and efficient way, making it ideal for charities that regularly report to a variety of stakeholders. A multi-dimensional ledger allows charities to tag financial transactions to entities, departments, projects and more. If an organisation has multiple entities, these can all sit in the same environment to create inter-company transactions with ease. Apart from financial data, non-financial data allows organisations to capture mission critical data for reporting and combine it with financial data to show meaningful metrics (e.g. cost per member). Organisations can also incorporate validation rules, for example to check VAT codes on purchase invoices so that input VAT is recovered correctly. This provides a foundation from which organisations can start to produce meaningful reporting, which can also include data extracted from other systems, such as a customer-relationship system (CRM) or a billing system.
2030 outlook: Finance will be the central information hub for financial and non-financial metrics, providing decision-makers with real-time access to business-critical information.
Getting started: Preparation is key
Without structured data, AI will struggle to produce accurate information. Many charities need to start with improving the quality of their data in their existing systems. This includes aligning charts of accounts between entities, ensuring that transactions are tagged consistently and building in validation rules. This will provide a solid foundation for embracing evolving technologies and will enable AI to provide meaningful insights.
You don’t need to be an IT expert
Keig encouraged listeners to use the skills learned in their accountancy training and to tackle challenges by breaking them into bite-sized chunks. As a chartered accountant, Keig had no formal IT qualification but has transformed Nesta’s finance function with his ability to troubleshoot issues using logic and learning about systems through research and by trial and error. According to Keig, there is plenty of help available on the learning journey, e.g. YouTube videos and community websites that foster peer-to-peer learning. In addition, many platforms offer interactive online training courses. There is likely someone in your charity’s finance team who would relish the opportunity to develop new skills while helping the finance team to work more effectively!
