What is fund accounting – 5 questions to keep in mind for choosing the best solution

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Nettie Reynolds

April 19, 2021

    Fund accounting software is a powerful tool for managing all your complex processes and finances across your organization. By using a fund accounting software program, you can easily input, track and report on each funding source’s unique conditions as well as in real-time see your organization’s financial picture.

    Fund accounting programs are used by associations, nonprofits, and government financial professionals who need an accounting system to effectively manage complex processes and finances across the organization.

    Choosing the right fund accounting program that will work for your needs also includes being able to choose a system that will grow with you long-term. While there are many different fund accounting systems to choose from, here are five good questions to keep in mind:

    • Does the system have good integration with other programs?
    • Does the system have modules that can grow with you?
    • Does the system have a way to control user and privacy controls for access to data?
    • Does the system enable you to add new users with ease?
    • Is the least expensive system going to cost your more in the long-run?

    Keep in mind as well that your solution will need to have the ability to input, track and report on several different funding sources. Does the solution you’re looking at let subcategories of those funds be coded and tracked separately for the clearest picture of fund allocation and usage?

    It’s important to have a system that gives you a real-time view at any given time of the year to see how your funds are being allocated and used. For instance, we know that many grantors are asking for reporting on their grant funds at a monthly basis instead of a quarterly basis. Tracking funds also ensure your funds are being utilized for the purpose they were given.

    Any grant that you’re given has within it a need for reporting of every dollar expended. Having a robust fund accounting software program, can also give grantors a snapshot of year over year grant reporting (for those multi-year grants). Being able to tie the grants given and how the funds from those grants were utilized in your mission is vital to the grant funders. Having a system that will ensure accurate reporting for all those funders also ensures grant opportunities for the future as well.

    When you’re trying to decide on your fund accounting program – make a list of pros and cons for how it meets not only your current needs but your future needs. Another key thing to keep in mind is how you’re going to move to the new solution and if the prospective solution has a good support rating. Your data must be able to travel to the new system easily and with the utmost accuracy to avoid  losing data in transfer or simply having to do more work during the importing process.

    Being able to have detailed and accessible data for your board members, your funders, and your internal team to track mission and money is key to a successful budgetary year. Being able to plan in the future for what-if scenarios is a real need now more than ever.

    A final consideration for fund accounting software is to ensure that it offers security protection and different levels of access for different team members. You will also need to ensure you have a system that can provide a robust and clear audit trail. Fund accounting systems are there to help you create accountability for every piece of your funds.

    MIP Fund Accounting® software enables organizations to boost fiscal stability and manage ever-increasing financial complexities with ease and confidence. It delivers everything you need to track, report, and manage your finances according to your unique revenue sources. With MIP on your side, you have the flexibility to further your mission – today, tomorrow, and beyond.

    If you’re curious about what we can do for you, hit our solution page and let us walk you through our solution.

     

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