After a seven-year growth spurt that saw staff numbers rise from 120 to 330, not-for-profit Social Futures was pushing its accounting software to its limits.
During that time, CFO Michael Carter ran a lean, four-person finance team, despite revenues rising from $18 million to $35 million.
The business by then was deeply complex, reporting monthly and quarterly on 29 grants. These grants supported a variety of different business activities and programs in many locations. These included youth and family services, mental health, disability support and housing across New South Wales and Queensland.
“We have moderate monthly reporting requirements and quite heavy quarterly reporting to funders, in a reasonably tight timeframe. We needed the ability to work with the data, quickly run reports, and then go back and troubleshoot through the details,” Carter says.
This cycle involved exporting data from MYOB AccountRight to a reporting tool, Calxa, and exporting it back to MYOB. It wasn’t a simple process and lacked the ability to make quick, cursory checks.
There could be a lot of back and forth requests from funders; often the smallest programs required the most attention. In some cases, the finance team was breaking down expenses to the individual transactions.
“Unfortunately, the more inexperienced and smaller funding bodies will ask for the most intricate level of detail for the smallest amounts of money,” Carter says. “We’re getting managed so tightly now by our funders, our overhead is continually scrutinised.”
The NFP sector is also at the beginning of a transition from block funding to fee for service. This change is forcing organisations to become more efficient with their accounting and reporting, as any delays will affect cashflow.
The board realised that the organisation needed a financial platform that could support it through the next phase of growth.
“The board was quite realistic and very supportive because they’d seen the incredible growth we had experienced,” Carter says. “We went from sub $18 million and we’re up over $35 million turnover every year now. They were very keen to see us move to a fit for purpose system.”
One goal was to find an easy-to-use system that didn’t require a full-time administrator to set up job codes and accounts and map them to reports. “We wanted to have finance people working in the system, rather than just maintaining it. Some of the larger packages were problematic in that respect,” Carter says.
Carter engaged Sage partner GiuntaBell to implement Sage Intacct and support the transition of Social Future’s finance team.
A System Built for Scale
Social Futures worked from April through June to implement the ERP, assisted by GiuntaBell. There was no need to hire project staff; the internal finance team managed to fit in the implementation alongside their daily tasks.
Reporting was faster and more powerful, particularly budget variance analysis required by the finance committee and management. A key requirement was for higher levels of detail for conversations between the finance team and managers.
For example, employment costs make up 80 percent of outgoings at Social Futures. The finance team needs to import employee-level payroll data into Sage Intacct. The managers can then view these numbers and understand what’s going on with wages.
“Making sure we get a level of detail in the system allows us to have good, in-depth conversations with the team leaders and managers. We can help them understand what’s going on with their program and where they need to take action to either decrease or increase expenditure,” Carter says.
Another major improvement was a more flexible reporting structure. Social Futures changed its program structure frequently as one grant ends and another begins. Sage Intacct used an internal ID for account codes. This made it easy for the finance team to rename accounts and programs as required.
“We need to change our structure quite frequently to have reasonable spans of control, have the right level of senior management involvement for starting up your programs. So the ability to easily do that in the system is essential for us,” Carter says.
Another critical feature was better access control. MYOB lacked granular permissions. This meant that managers in NSW could see all the expenses and revenue for programs run in Queensland. Using Sage, the finance team could lock down a manager’s access to the programs and associated expenses that they managed.
Looking Up Ahead, Not at the Ground In Front
Sage Intacct has transformed the speed of reporting within Social Futures. “It’s definitely faster,” Carter says. He estimates that the finance team saved five days of work when it produced the December quarterly reports. It also takes a day less for him to prepare the finance agenda pack.
The finance team spends the time savings on investigating the results of each report and providing analysis to managers. Carter also redesigned the reports to bring into focus the most relevant areas for managers to review. Now, all the expenses that program staff and managers have the most control over sit at the top of the report. Centrally managed items such as rent, cleaning and management fees are at the bottom.
“We are getting reports to people sooner. We are allowing the people who are producing reports time to be more critical and do extra analysis. Rather than looking down at what you’re doing, we can look ahead at where you need to be going,” Carter says.
Reconciling expenses is much faster. The finance team can import credit card records from expense management tool ProMaster into Sage Intacct. Small improvements in common processes accumulate into big time savings when spread across the organisation.
“Generally, we want to remove pain points because what we really want to do is retain people,” Carter says. “We want to make their jobs as focused on why they’re here rather than doing these process tasks.”
Carter is predicting a wave of consolidation in the NFP sector as it repositions itself for fee for service. Organisations which have moved to an ERP and implemented scalable finance processes will be in a better place, Carter says.
“That’s where we really, really need to have a good handle on our expenditures and cash flows,” Carter says. “It’s another big impetus for us to be in a position where our finance folk are not just spinning the wheel but actually doing that analysis. That’s where we’ll make a big difference going forward.”
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