Lucy Hammond FCA DChA
- Partner in Audit & Assurance
- +44 (0)330 124 1399
- Email Lucy[email protected]
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The introduction of Making Tax Digital and the need to have accurate real time information by a number of trustees has meant an increase in the adoption of cloud-based accounting packages.
Traditional accounting software packages are often used by charities even though they are not designed specifically for the sector. This has caused issues across the sector, such as:
However, cloud-based packages are now offering an alternative. Although they have been written with small businesses in mind, they have many features that charities can benefit from that will not only improve their reporting but also save the finance team time and provide accurate real time information to trustees.
In addition, the cloud is one of the most secure ways to store information. All information is stored safely offsite meaning access to your accounting records is via an online account that can be accessed on any device rather than only from your hard drive. This also means that your accounting data can be viewed by those that you give access to, and you can control that level of access. For example, a Trustee could be given a read only access meaning that they can review the accounting information at their convenience without being able to amend the data.
A charity client recently moved from Sage to Xero and the benefits of doing so have been great and include:
However, one of the real successes has been with the use of tracking categories which the charity is using to allow reporting on a project-by-project basis. Trustees receive an income and expenditure account for each project and can therefore review the activities of the charity from a more strategic viewpoint which enables better decision-making. These tracking categories could be used for a particular grant, for example, which would make reporting to the funder quicker internally. Or they could be used to reflect each restricted fund.
Xero also enables the user to customise reports to put each tracking category into a column to easily review the results of the project. Xero’s customised reports are easy to set up and can be tweaked to your charity’s requirements. Many of our charity clients use Excel to prepare the management accounts, some with a direct link from the accounting software. But studies have found that spreadsheets contain errors – in fact a study by the University of Hawaii found that 88% of spreadsheets contain errors! Plus, setting up spreadsheets that work and provide the information that you want takes time – planning, writing and implementing. But even something like setting up a new nominal code in your chart of accounts can mean a lot of work to update the management accounts if they are prepared in Excel.
If you would like a free demonstration for your Charity of Xero, or a different cloud-based package such as QuickBooks Online, please do contact your usual Kreston Reeves contact or email here.
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