Take time to find the right software for you

There's a lot of accountancy software out there, but what do you need to know to select a product that's appropriate for your organisation? Patrick McCurry canvasses opinion

Accountancy software
Accountancy software

The charity accountancy software market is crowded. From cheaper, generic off-the-shelf products to expensive tailor-made solutions, there's a whole host of packages to choose from. Selecting a product that's right for your organisation can be a difficult task, but it's one that's worth taking time to get right or else it can cost time and money for your organisation in the long term.

Roger Chester, finance director at the chartered surveyors' benevolent fund LionHeart, says: "When charities research the market, they need to be clear about which software is really suitable for voluntary organisations, because some products are designed primarily for commercial companies."

Core to the search is identifying precisely what they want the accountancy software to do and if they have any other systems they want it to integrate with. The minimum requirement for many charities will be the capacity to process financial transactions and produce financial statements in line with the Sorp charity accounting framework. Some might also want their software to handle other tasks, such as Gift Aid transactions or, for those with shops, stock control.

But the most common desire is probably to have accounting software that can 'talk' to fundraising systems. "In many charities the two systems aren't integrated, which means there are arguments about reconciling the numbers," says Chester.

Off-the-shelf packages marketed to the sector, such as Sage software, are extremely popular among smaller charities, says Chester, but they're not always appropriate because they've been designed for commercial organisations. Prices for such products usually start at about £100 for charities, depending on the number of user licences required.

More specialist charity accountancy packages are available from firms including DK Software, Harlequin and PS Financials. Charges for a licence for these packages start from about £200. But costs can run into several thousands of pounds, depending on the size of the charity and the tasks that need to be carried out.

Jane Crumpton-Taylor, corporate services director at the charity Dyslexia Action, says that it's important to be cost-conscious, but it can be a mistake to turn down certain functions because of the extra cost involved.

"A charity with one or more shops might really benefit from software that offers a stock control system, even if it costs a bit more," she says. "That's why it's important for the charity to identify its core needs from the start."

On the need to integrate accountancy software with other IT systems, Crumpton-Taylor says each organisation must work out how important this is. "Integrating systems will be less important for a charity that is primarily involved in service provision - where fundraising is not a big part of its work - than it is for a charity that relies heavily on it" she says.

Charities also need to consider the overall costs before deciding on an accountancy software package. In addition to the software itself, there is the cost of implementation, which might include consultancy fees and in-house staff time. Software providers charge about 10 per cent of the software cost to provide continuing support as well. Anna Guthrie, media and PR manager at the Royal Society of Wildlife Trusts, says: "Charities might not consider these costs, but the purchasing process should give them these details before they sign a contract."

The software needs of larger charities are often more complex and multi-faceted. For example, when the disability charity RNIB decided to replace its core financial system in 2003, it hoped to find a single package that met most of its needs. Instead, it opted for several packages that best suited the requirements of particular tasks, such as its new HR and payroll software. Because of the complexity of reporting requirements, RNIB also makes use of a third party to handle data and enable it to improve budgeting and forecasting.

An RNIB spokeswoman says that niche developers that stitch together the main packages have entered the market, but it remains a challenge to find products that are flexible enough to support changes in accounting standards or the organisation's structure.

Guthrie says the existing products are frustratingly poor at VAT or reporting tasks and their links to Excel are inadequate.

To minimise such problems, Crumpton-Taylor says charities should do as much research as possible before committing to a new package. She says the Institute of Chartered Accountants and the Charity Finance Directors' Group provide useful sources of information, but she also highlights the importance of talking to other charities about their recommendations.

But Chester says that there is always an element of risk when purchasing software. "You can do all the things you're supposed to do, such as setting up committees to draw up a shortlist, putting it out to tender and so on," he says. "Ultimately, however, you never know how successful a new package is going to be until you turn it on."

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