Best Fund Accounting Software and System in India 2022

Software for fund accounting is a kind of accounting technology that has been developed expressly to meet the requirements of fund accounting. When it comes to identifying or recognizing your nonprofit's diverse sources of funding for its many different campaigns, it satisfies all of your organization's requirements in this regard. The software can be easily integrated with the non-profit CRM software. 

Accounting software for nonprofits maintains track of cash, costs, and transactions, with responsibility and governance as primary considerations. This mentality stands in stark contrast to the profit-maximizing motivations of many commercial enterprises. A fund accounting software is a self-contained, self-balancing ledger that is dedicated to a single project, grant, or contribution. (For example, churches may monitor member donations using a church management suite including a fund accounting module.) The bottom line is openness, accountability, and fiscal responsibility.

As previously indicated, fund accounting ideas vary greatly from those of general accounting. General accounting software, such as Quickbooks, does not account for the complications of a nonprofit's demands or the lack of focus on profit. Fund accounting software is designed specifically for organizations to address these challenges. Why wouldn't you choose a more specialized solution? This software provides effective information to investment management software.

In addition, nonprofit organizations are always evolving. Because of factors such as a high employee turnover rate, less predictable revenue, and changes to projects, nonprofit organizations need a customized software solution in order to regularly monitor and report on changes from year to year. Accounting software for funds guarantees that monetary matters and budgets are monitored and managed accurately despite all of these changes.

Fund accounting is often used by non-profit organizations. These groups often depend on a variety of financial sources. The primary premise of fund accounting is that it splits money into several resource streams for businesses that have greater control over their numerous revenue sources.

• Non profit organizations

Nonprofit organizations utilize fund accounting because they get several funding sources. Donations to nonprofits also benefit a cause. Who the organization reports to determines how the money is split. Fund accounting is especially important for big or planned charitable donations, which may be limited by donors. According to the 80-20 rule, large gifts make up 80% of charity earnings, making this vital. Using fund accounting software instead of off-the-shelf software simplifies accounting for organizations.

• Government authorities

Government finance is difficult. Legal and fiscal limits on finances hamper accounting for federal, state, and local governments. Government agencies must disclose how they use public money. Government fund accounting splits money into functional funds to manage community components. Government accounting requires meticulous planning, and bespoke software can help.

• School and colleges 

Many schools, particularly those in higher education, employ fund accounting fundamentals to categorize which aspects of the institution get funding. Some funding, for example, may be designated for education, research, admissions, outreach, or other uses. To help their student population, colleges often establish dedicated fund groups for scholarships and other similar services. Schools also utilize fund accounting in a different way than NGOs since they get more government funding than the typical charity. As a result, the limits imposed on their finances may be nationally or state-regulated rather than donor-restricted.

• Healthcare organizations

Tracking grants, donations, and government funds supplied to a healthcare institution is difficult in and of itself. On top of that, the administration is inundated with rules and regulations governing this money. Fund accounting enables healthcare companies to be structured and focused on their services rather than spending all of their time worrying about cash flow. Fund accounting is required by healthcare professionals in order to separate their money among programmes and monitor money in and out of the system.

Nearly half of the nonprofits surveyed in the 2022 Nonprofit Research Study rely on six different tools to complete their work, while 23 percent of professionals rely on eight different tools to get their jobs done. This information was obtained from a survey of 400 professionals working in nonprofits and educational institutions.

Time is wasted because of these ineffective solutions. Seventy-eight percent of professionals surveyed claimed that administering numerous systems took up one quarter of their working day. The amount of effort spent learning how to use many different systems is around 10 hours per week, or 520 hours per year. What would your school be able to do if it had an additional 520 hours a year to handle other administrative responsibilities?

Accounting software for funds, such as MIP Fund Accounting, can manage an unlimited number of different revenue streams while also simplifying the process of maintaining your financial records. The complicated financial process is managed by MIP using a method that is straightforward and easy to understand. If your school is still using workarounds or software that is not specifically designed for schools, it will cost your finance team both time and money.

A cloud-based fund accounting solution allows your finance team to easily examine planning goals, which in turn gives your team better control over the budget and boosts the efficiency of administrative processes. MIP makes it simple and transparent to communicate your school's financial story by providing more than 130 pre-built reports that can be accessed immediately.

Once you've decided to look, consult with your employees to create a list of the accounting and reporting challenges you're experiencing, as well as the main features you need. Where are the holes? Where would it aid in the creation of efficiencies or opportunities? Sort the desired qualities in order of importance. Define those that would be good to have but are not important, so that when the process is completed, actual challenges are dealt with actual answers. Review the list many times throughout the process to ensure that you are staying focused on the important requirements. 

Here is the consideration checklist that you need to see:

• Cloud connectivity

Modern work environments may now provide "anywhere, anytime, any device" access thanks to cloud computing, which also lowers the cost of IT management and provides superior built-in security. Think about how much time your IT staff spends maintaining mismatched systems or upgrading servers. Would switching to the cloud enable them to focus on other tasks? Keep in mind that your accounting problems won't be resolved by the cloud by itself. Make sure the cloud accounting solution you choose was created to adhere to nonprofit accounting standards (as outlined by the IRS).

• Improvement in security

Any new system should strengthen your internal controls while also improving technological security aspects. If you're hosting your accounting on a server in a utility closet, it's time to assess your security weaknesses. Moving to the cloud may improve security since most cloud hosting facilities feature physical and technological security layers, as well as system redundancy and uptime assurances. This gives you the assurance that your data is protected from natural catastrophes and other unanticipated events. Furthermore, some of the most widely used off-the-shelf accounting products have relatively limited audit trail features.

• Fund accounting

If your organization has to manage and report on several funding sources across various time periods or fiscal years and is presently managing everything in spreadsheets, you would be well served by real fund accounting that was created expressly to match your business requirements. Real fund accounting would be advantageous in this situation.

Similarly, if you need to monitor the success of several projects, departments, and functions individually, think about investing in a system that eliminates the need for error-prone spreadsheet upkeep. Many commercial software products may claim to be nonprofit-friendly by including workarounds or reporting overlays. It is up to you to assess if the workaround will be more trouble than it is worth.

• Scalability 

Will your new system bring you to your destination? What will you need in the next five years? Do you wish to accommodate any extended programmes, locations, or other software purchases? Buying a low-cost commercial system may be appealing, but if you outgrow it in two years, it may be more expensive in terms of time and cash expenditure than buying a scalable system in the first place.

• Integration with third party softwares

Consider the mission-critical systems that will need access to your accounting data, such as fundraising, customer billing, student monitoring, and so on. Ask your vendor candidates whether their system can connect with each essential tool in your system, especially if such integrations will result in significant efficiencies for your firm.

• Vendor stability 

Consider the history of the firms you are contemplating purchasing from. Are they owned privately by investors who may decide to sell the company?

There is a tendency of consolidation in technological businesses, and investor-backed enterprises are the most likely to be purchased and their products discarded.

Understand the vendor's status so you can determine the stability of the programme you're purchasing. You may look at their financials if they are publicly traded. Ascertain if the business is steady, expanding, and investing in the development of the solution under consideration.

• General ledger

Using a customizable, segmented chart of accounts, you may track financial information in the method that works best for your firm. The General Ledger module is the basic module that maintains cash receipts, cash disbursements, journal vouchers, and other financial activities directly inside the programme using an easy-to-use report writer. 

• Comprehensive reports

Create reports that depict the story of your institution's finances with ease using the over 130 out-of-the-box reports that make it easy to transmit essential financial information as well as the configurable dashboards that give information at a glance about your school's finances.

• Budgeting 

Create an infinite number of customizable budgets for any time period, including cross-year budgets; impose budget control with a simple click, and trigger alerts when you're about to overspend. To assure a good future financial position for your firm, forecast and construct "what if" scenarios.

As transactions are generated, a budget view is provided right inside transaction input, allowing you to see how they affect your outstanding budget in real-time.

• Easy to navigate controls

The presence of robust internal controls enables your institution to exercise complete control over the individuals who have access to its financial information. In the event that a cyber assault or natural disaster were to occur, our cloud-based system would use faraway servers to ensure the safety of any data that was stored there.

• Flexibility 

One of the most significant benefits of using a fund accounting system is the fact that it may grow with your organization. The capabilities of our add-on modules may be activated at your organization's discretion thanks to the adaptability of our modular system. Utilize the features that are necessary for you right now as you get ready for the components that you will need in the future.

• Financial reporting 

Prepare financial statements that will track all of the money that has been donated, pledged, and granted. Evaluate the effectiveness of your fundraising efforts and your efforts to retain donors. Keep an eye out for features such as record transmission that is automated and the ability to customize the experience.

• Donor management 

Donations may be solicited, collected, and managed in a secure manner across a variety of fundraising channels and campaigns. Control the flow of money from current donors and seek out new potential backers.

• Grant management 

The process of managing allocations, which includes keeping track of awards and bids, processing money, and correctly distributing them to beneficiaries, is called "allocation management."

• Multiple expenses management 

Offers a ledger that is self-contained and self-balancing, and it is designed specifically for a particular project, grant, or contribution. For the purpose of monitoring the financial donations made by institutional members, for instance, a local congregation could implement a church administration system that includes a fund accounting module.

• Customizable reports 

Your nonprofit organization can keep track of the fund accounting factors that are most relevant to your organization with the assistance of both standard and bespoke reports. In addition, it assists you in efficiently creating yearly reports that are accurate and simple to read for your supporters, which helps increase transparency.

• Operational needs

Streamlined budgeting that enables you to monitor campaigns, manage your yearly fund, and develop budgets (and adhere to them) is one method of ensuring that the operations of your organization are in order. In addition, when you can manage both your payroll and your human resources using the same piece of software, you can fulfill all of your company's financial requirements in a single area.

Software pricing is notoriously difficult. You could be shocked by the number of services needed in addition to the application itself. A guide to the common components of a new software acquisition contract is provided below. Make sure you grasp the meanings of each component, particularly as they apply to today's technological context.

• Software license 

This is the fee associated with making use of the programme. In most cases, this is a one-time payment for a permanent license or a recurring charge for a monthly or yearly subscription.

• Maintenance 

This is often a yearly cost that covers system enhancements throughout your ownership as well as adjustments required to accept and adapt to new requirements.

• Data conversion 

This is the expense associated with importing the accounting data from your previous system into your new initiative after it has been filtered and aligned. One of the variables is the number of years that you want imported.

• Consulting 

The cost of consultation includes professional advice from a consultant on how to best satisfy your requirements in the new system, including how to set up the chart of accounts to be most useful for your reporting requirements.

• Installation service 

These costs associated with the installation of your new system are often one-time charges. This proposal item might potentially include the creation of a chart of accounts and data conversion. Make sure to ask about the inclusions.

• Training 

Training can be provided in a number of formats, including in-person, live online, or through videos that have been previously recorded. Consider the related expenses of the chosen method of transportation. In general, the cost will be more if the service is more hands-on and if it is customized to the particular requirements of your firm.

• Technical support 

In order to better service their customers, many suppliers now provide a variety of delivery methods (phone, email, chat, and online knowledge bases). Make sure you are aware of the services each provider provides and any additional fees.

Costs vary per seller, making comparisons impossible. Compare each vendor's basic software configuration for your organization. Each solution has one-time costs for software license, hardware, supporting systems, installation, integration, and essential staff training. Each solution requires three years of ongoing costs. Maintenance, support, and license subscriptions are examples. Examine one-time and ongoing costs across numerous years to determine your company's total spending.

A fund accounting system should be able to help the government or nonprofit organization make sure that funds are spent responsibly and that there is enough money set aside for future goals. These solutions should also benefit grant makers by providing accurate information. 

Keep individual accounts separate: The establishment of each funding source as an independent amount is the most important aspect of fund accounting. In this manner, it will always be possible to track the expenditure of grants or gifts back to their original source. The sources of funding have a responsibility to be informed on the use of every gift and grant.

Increases the credibility of the organization: If a nonprofit organization cannot demonstrate to funding sources that grants and contributions are being utilized responsibly and productively, there is no reason to anticipate future financing. Using software to monitor these monies and provide data is thus critical to the operation of a nonprofit organization. Similarly, in order to keep people informed, government departments must maintain careful track on expenditures.

Deliver clever reports: A software system must be able to generate reports in order to create the accountability indicated above. Reporting is essential for demonstrating ethical expenditure. As a result, a system has an edge if it offers extensive flexibility and advanced reporting possibilities.

Association with various projects: Accounting systems for funds should, in addition to ensuring that individual funds are kept distinct from one another, provide users with the ability to quickly see costs in the context of individual projects. This is directly connected to the capability of the system to report how each fund has led to successful action, which in turn increases accountability and the possibility of further cash being allocated.

When deciding on a product, you have to choose with these market trends in mind. 

• Software as a service: SaaS solutions have recently gained a lot of popularity. Consideration of software as a service (SaaS) might be beneficial for a number of reasons, including increased convenience and accessibility, reduced or eliminated upfront expenses, and simplified and streamlined deployment. 
• Artificial and business intelligence: Reporting is one of the most essential capabilities; hence, businesses are always providing new customization choices to provide greater business information. This is because reporting is one of the most important capabilities. You should make it a point to check out the different reporting options that are available for each system.
• Increased specialization: The practice of value-added resellers (VARs) and consultants, in general, becoming more specialized in certain goods for particular sectors is becoming more common. A significant portion of this expertise has been drawn exclusively to the nonprofit sector. As a consequence of this, nonprofit organizations are expected to reap the benefits of the increased production of third-party add-ons and improved support services made available by consulting companies and independent software developers (ISVs).

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