When it comes to choosing an accounting software for your church or charity, it’s important to recognise that there are key differences between charity accounting (also called fund accounting) and business accounting.
Differences between charity accounting and business accounting
Whilst they may sound similar, the principles of fund accounting and the reporting requirements for charities are very different to those of businesses.
In business accounting, there is no need to track income and expenditure by fund. Business accounting packages such as Sage, Xero and Quickbooks consequently don’t offer the ability to record transactions by fund, or to create SORP compliant fund accounting reports.
Businesses also don’t require features such as tracking donation income, viewing donation reports, claiming Gift Aid, etc. Therefore, other key features that churches and charities need are also absent from business accounting packages.
In this blog we cover various accounting packages which are available for churches and charities. We will consider what key questions you should consider when choosing a fund accounting package.
Why use fund accounting software for your charity?
There are many benefits to using a fund accounting package over spreadsheets.
Creating charity accounts from spreadsheets may work well enough if you are a smaller church or charity, with only one bank account and a small number of funds. However, as soon as you have multiple funds or bank accounts, a spreadsheet is likely to become more difficult to use, particularly if the person who created the spreadsheet steps down.
Spreadsheets are also prone to errors, they don’t work on a double entry basis like accounting packages, and they don’t come with standardised reporting built in. This means making changes such as adding funds, or deleting categories can be tedious, and there is little ability for others to have oversight or visibility of what the bookkeeper is doing.
On the other hand, a fund accounting package will provide you a streamlined way to manage your church or charity finances. A good fund accounting package should be easy to use, providing you with all the financial reports you will need. It will also enable you to automate and complete tasks such as bank reconciliation and claiming Gift Aid in a fraction of the time.
8 Key Factors to consider when choosing an accounting package
1) Is it a Fund Accounting Package?
Sage, Quickbooks and Xero are brilliant business accounting packages, but they are not suitable for churches and charities, since they are not fund accounting packages.
2) What features does the software offer?
All fund accounting packages will enable you to create accounts, and most will be cloud-based. However, it’s important to note that the features offered by each package will vary.
What features do you need for your charity? Have a think about it. You might want automated bank feeds, expense processing and approvals, donor management, Gift Aid management, customer invoicing, etc.
Also, don’t forget to consider which reports the package offers. Get an overview of what finance and donation reports are available, whether you can customise user access for viewing reports, and whether or not they are drilliable, downloadable and user friendly.
3) Is the system easy to use?
Whilst fund accounting can be complex, the software shouldn’t be.
A good fund accounting package should offer a clear workflow and shouldn’t require you to spend hours reading a user manual to know how to use it.
If you trial a fund accounting package and it’s not intuitive, consider trialling other options before committing.
Most fund accounting packages offer both free training and support, but not all fund accounting packages are user friendly and intuitive.
4) Is the accounting package customisable?
The majority of fund accounting packages will offer some degree of customisation. However, whether the software will be suitable for your church or charity is an important factor to consider upfront.
It is unlikely that there will be limitations on setting up your desired fund and category structure. However, how easy the software is to set up and how much you can customise the process flow will vary between packages.
As part of trialling any accounting package, it’s worth testing out some of the basic process flows such as entering an expense claim, creating an invoice, uploading a bank statement, etc. You can then think about what customisation you might need.
Some example customisation questions include:
- Can you require dual approvals for purchases?
- Can you hide donor names when entering bank deposits?
- Can the accounting basis be set to either ‘receipts and payments’ or ‘accruals’?
- Can you set up multiple mileage rates?
- How much can you customise user permissions?
5) What are the benefits?
As well as considering the features each package offers, it’s also important to understand the benefits and drawbacks.
As you look at each option, consider what the finance process flow will look like. Test if the process flow is intuitive and how much manual input is required.
For example:
- A fund accounting package with a digital expenses and payments process flow that allows staff and volunteers to submit expenses will remove the need to print and file paper expense claims and receipts and will remove the need key in data to create accounts.
- A fund accounting package which enables budget holders to approve purchases digitally and view drillable financial reports for their budget areas will remove the need for all queries to come via the bookkeeper and may also enable better budget ownership and management.
- A fund accounting package that has in-built Gift Aid management and HMRC integration will remove the manual work needed to create Gift Aid claims etc.
Choosing a fund accounting package that enables you to simplify and streamline your finance processes is typically a key factor in finding the best option for your church or charity. This is key when deciding which option provides the most cost-effective solution.
6) What are the costs of the software?
For most churches and charities, price is an important factor. Paying more doesn’t necessarily provide you with a better solution. Equally, not all fund accounting packages are the same. So, going for the cheapest option may not be the best choice either.
As most fund accounting software is cloud-based, typically all work on a monthly subscription. As with all subscriptions, it’s worth checking out upfront whether the prices quoted are all inclusive and whether there are any limits on the number of users or the features/modules that can be used. Some packages have ‘per user’ charge which will limit how you are able to use the software and who you set up with access.
It’s also worth checking whether prices are fixed and whether there is a contract or notice period. Some companies also have a discounted initial period, and then increase this price after 12 months, knowing that the effort of switching at that point is too much work for most organisations.
You should be wary of any companies that don’t publish their pricing clearly on their website.
7) What training and support is included in the software?
All fund accounting packages offer some free training and support. Potentially a better question to ask is how much support and training you are likely to need.
If the fund accounting package you choose is simple and easy to use, then beyond an initial training session, you hopefully shouldn’t have too many questions. And beyond a short introductory video, users with limited permissions shouldn’t require any training at all.
Most fund accounting packages offer an online help guide with videos and answers to frequently asked questions. So, it’s worth checking this out as part of trialling a fund accounting package.
Similarly, it’s worth sending a support request to see how responsive and helpful the support on offer really is.
8) What about user reviews?
Whilst you can do as much due diligence upfront to find the best fund accounting package available, it’s really hard to know what a software package is really going to be like until you actually use it. This is where user reviews can be super helpful.
One of the best ways to narrow down which fund accounting package to choose is to search on Google for customer reviews.
If an accounting package has either very few reviews or has low ratings, you may wish to discount that option.
If you find a fund accounting package you like the look of, try searching online for reviews. This is typically more reliable than reading reviews displayed on the website of the company.
Further resources
You can find out more about different fund accounting packages in this blog by Stewardship.
About ExpensePlus
ExpensePlus is a cloud-based fund accounting package used by hundreds of churches and charities. It’s rated 4.8 out of 5 stars on Google with over 800 user reviews, and it will enable your charity to manage finances more easily. It will also provide you with a simple and easy way to keep track of funds and many other useful and time-saving features such as online expense management, Gift Aid management and integration, donation reporting, and much more.
ExpensePlus is fully customisable, and it comes with free training and brilliant help and support. Visit expenseplus.co.uk to find out more or to request a free trial.
