7 Signs Your Nonprofit May Need New Accounting Software

Prepare for tough times… You don’t need to be a gifted economist to know that next year will be extremely tough for charities and other nonprofits. Rising inflation is tightening everyone’s belt, whether we like it or not.

With the UK economy shrinking by 0.1% in the second quarter (and a long recession set to follow), there will be additional pressure on donations – just as more funding is needed to cover rising costs .

It’s a worrying double whammy. Now is the time to prepare, before the situation of stagflation worsens. As economist Jamie O’Halloran of Pro Bono Economics put it: “The luxury of not worrying about inflation in the UK has come to an abrupt end..”

A simple solution is to replace old on-premises software with a true cloud accounting system. It helps to reduce costs (although it is more powerful). Here are seven signs that it’s time to consider moving to the cloud…

1. Your server infrastructure is getting expensive

The server where your data is stored has a finite lifespan. From time to time, this server will need maintenance. And sooner or later you will have to replace it. It’s a significant capital cost to deal with in one fell swoop. This is not ideal for an organization’s cash flow, especially in the current financial climate.

Migration to a real cloud accounting system means you will no longer need an on-site server for your finance function. Your accounting data and the software you use to access it will instead be stored in a data center.

This provides added security and convenience – and the cost is broken down into monthly fees, making it much more manageable.

2. You face expensive software upgrades

Like the on-premises server, desktop software is also a large and less manageable upfront cost. But just because you pay upfront doesn’t mean the costs stop there.

Accounting software, like any other application, requires upgrades. Typically, these happen about two or four times a year. They can add around £1,500 to an organisation’s annual IT costs.

And if updates become more regular, longer, and more expensive, that’s a sign that the software is getting old.

This is all good for the on-premises software vendor making money fixing an outdated product. But it’s not so great for customers who have to pay for it. And that ties in pretty well with point three…

3. You are not using the latest version of the software

Even with the various security patches, you still might not be running the latest version of your desktop accounting software. These bug fixes may be enough to maintain the old version, but it does not guarantee that you will be on the latest version with all the features added.

For this you will have to pay – you guessed it – more money. And then the whole sad and sorry saga starts all over again… But cloud-based accounting software is a whole different matter: you are always using the latest version – new features, enhanced security, compliance with the latest new rules. Cloud-based software is updated at source and rolled out to everyone simultaneously. The old days of doing it desk by desk are long gone.

4. Disaster recovery is becoming a growing concern

On-premises servers can be vulnerable to a range of threats; Computer failure, fire, flood and burglary, all of which can lead to catastrophic data loss.

Yes, any responsible user will always have backups, but data centers do it so much better with multiple copies in disparate secure locations. There are far fewer risks. Your eggs will be in many well-guarded baskets. In our experience, if you have concerns about the disaster recovery capabilities of your on-premises system, it’s time to consider migrating your data to the cloud.

5. Your accounting software can’t keep up with modern flexible working

Even the most active charities, those rescuing people or caring for sick animals, will always have roles that can be played remotely. Finance is an obvious example. But desktop accounting software and fake cloud systems tend not to cope well with telecommuting or hybrid working.

It’s a shame because true cloud solutions make workplaces more flexible. They also reduce overhead, providing the ability to have smaller offices, reduce energy bills and travel fewer miles on the road.

6. Your accounting software struggles to integrate with your finance and membership system

Good software platforms are designed to integrate with each other smoothly and seamlessly. And usually they do…at first. But software evolves – and not always at the same speed. Maybe one app moved to the cloud while the other is still stuck on the desktop. It is therefore not uncommon for two systems to become separated, compromising the effectiveness and efficiency of one or both applications.

And that can be a real problem if the two applications involved happen to be your organization’s accounting software and its funding/membership database. True cloud accounting software is more likely to easily integrate with other cloud-based applications because it will have been designed specifically for this purpose.

But older on-premises systems find this much more difficult because cloud functionality has been grafted on as an afterthought. They’re fake clouds — they can’t do everything real cloud software can.

7. Your accounting software does not support partial VAT

Partial VAT is important for non-profit organizations. The possibility of recovering part of the input tax creates vital savings. But legacy desktop software doesn’t always handle this process as well as their cloud-based counterparts. At best, it can be a problem. At worst, there is the risk of paying more VAT than necessary. When do we need to move to the cloud? Some organizations may have a more immediate need for this technology than others (and that’s the tricky way to put it). A disturbing number of organizations still rely heavily on older desktop accounting systems that are heading towards obsolescence.

Worse still, some systems are already obsolete in the sense that – even if they still work – they are no longer supported. With no security updates or code fixes, it’s unclear how well they will continue to work on the desktop.

Access to Sage 50 accounts and Sage 50cloud v26.2 accounts will end on September 30, 2022. Support for QuickBooks Desktop will be discontinued in the UK from February 1, 2023. (And on June 1, 2022, QuickBooks terminated access to QuickBooks Desktop Payroll, Live Assistance, Online Backup, and Online Banking services.)

But let’s not be negative. On the contrary, it is a red flag that many users will be very happy to have received.

Indeed, in addition to all the benefits outlined above, new cloud-based accounting software also has the power to transform work practices and cultures for the better. This might just be the change you wish you had made eons ago.

About the Author: Paul Sparkes is the Commercial Director of iplicit – an award-winning software development company based in the UK.