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Knowing When to Leave QuickBooks and Where to Go Presented by Lee Bengston, CPA Cynthia Wadle, CPA.

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Presentation on theme: "Knowing When to Leave QuickBooks and Where to Go Presented by Lee Bengston, CPA Cynthia Wadle, CPA."— Presentation transcript:

1 Knowing When to Leave QuickBooks and Where to Go Presented by Lee Bengston, CPA Cynthia Wadle, CPA

2 Objective Help nonprofit decision-makers recognize that their organization is outgrowing QuickBooks, why, and know what to do about it.

3 Agenda:  Software and organizational growth  Reviewing where QBs is a good fit and getting the most out of it  Some leading indicators that QB is no longer up for the job  Accounting requirements that are challenging to QB  Alternative solutions when leaving QB  Developing a transition plan  Additional links and resources

4 TYPICAL IN-HOUSE MODEL LIFE CYCLE STAGE RESOURCESSTARTUPGROWTHMATURITY Principal Financial Manager Executive DirectorFinance Director, Controller, Business Manager (mid-level capabilities) Chief Financial Officer or Controller Finance StaffExecutive Director, volunteer, relative Accounting clerk or bookkeeper, often main financial manager Specialized accounting staff Accounting SystemExcel, entry-level software (QuickBooks or like) Entry-level software with a growing awareness of better tools Mid-level software with nonprofit focus Board financial expertNoneOne person with some financial skills 2-3 qualified financial professionals

5 When is QuickBooks a Good Solution for Nonprofits  Financial management best practices in place  Management values financial information and understands risks.  There is a qualified accounting person on-staff or available.  Accounting member is part of the management team.  There is a qualified Board member or other resource to provide oversight of the accounting function.  An early- to mid-growth organization  Annual operating budget not too much over $2M  A single main organizational entity  No more than a 2 or 3 main funding sources  Most funding is program generated or from unrestricted contributions

6 Best Practices for QB’s Use in Nonprofit Organizations  The basic account structure and use  GL account – the what? (assets, liabilities, net assets, revenue, expenditures)  Class – the purpose or why? (programs, fund raising, administration, restrictions)  Form 990 categories  Restrictions  Board designations  Job – available to track projects, grants, contracts, special events, etc.

7 Best Practices for QB’s Use in Nonprofit Orgs (cont)  Use numbered accounts and class codes.  Sub-accounts and sub-classes not more than two levels  Prompt to assign classes.  Code transactions at lowest account and class levels.  Periodically review coding structures, use tools to revise and reorganize.  Have a 2 nd knowledgeable person review financial statements.  Setup customer and job types for report filtering.  Memorize key recurring reports and assign to report sets.  Export report sets to consistently named Excel workbooks.  Reconcile donor software reports to pledges receivable and cash  Accountant’s edition and statement writer

8 Some leading indicators that QB is no longer up for the job  3 or more concurrent users  Fairly frequent slowdowns and freeze-ups  Multiple grants with different fiscal reporting periods and rules  Direct or indirect federal funding over $500k (OMB Circular A133 audit)  Manual interfaces with other systems  Distribution of labor and other costs to grants and programs burdensome  Need for indirect cost allocation  Budget inflexibility  Financial analysis all off-line

9 Some leading indicators that QB is no longer up for the job (cont)  Over-use of Excel for subsidiary records  Excel reporting more time-consuming and error-prone  Audit preparation and coordination are a big extra workload  Restricted funds growth  Fund accounting required or advisable  Need to track revenue/expenditures and budgets to multiple objects (departments, locations, projects, etc.)  Chart of accounts bastardized beyond repair  Internal control and security issues  Audit trail issues  More and more workarounds  Pressure from outside auditors and funders

10 Accounting requirements that challenge QB  Tracking beyond GL/Class/Job  Direct cost allocation (splits)  No indirect cost allocation capability  Grant budgeting and tracking for cross-FY reporting  User access security limited  No multiple budgets and forecasts  No built-in budget control tools  GAAP for nonprofit (FASB 117) and gov’t (GASB 34) not supported  No fund accounting  Reporting scope and flexibility

11 Alternative accounting solutions when leaving QB  Commercial ERP systems  Sage MAS or Pro, MS Dynamics GP, others  Netsuite or Intacct  Specialized nonprofit accounting systems  Sage Fund Accounting  Financial Edge (Blackbaud)  Serenic Navigator  AccuFund, Traverse, Fund E-Z, Cougar Mountain, CenterPoint  In-house or hosted  Client-server or web-based

12 Developing a transition plan  Get realistic; adjust attitude on price; usually dealing with organizational transition  Be prepared to justify the investment to board and get it in the budget:  Staff time spent on extra work outside the system that could be saved and re-deployed  Compliance with GAAP and following best practices  Opportunity cost of missed revenue opportunities  Audit and internal control issues  Risk of fraud or misallocation of assets  Frame in an organizational growth context  Value of better strategic decisions based on better information

13 Developing a transition plan (cont)  Evaluate needs – what are the 3-4 main issues to solve  Consider organization and personnel  Appoint lead person for project  Frame acceptable alternatives  In-house  Hosted  Web-based  Client-server  Outsourced or hybrid  Find potential providers (Web, peers, published reviews)  Hold preliminary conversations with vendor or VARs

14 Developing a transition plan (cont)  Attend overview demos  Get preliminary pricing  Ask for references of similar organizations  Narrow the field to one or two potential solution sources  Share time and information with providers  Have software demonstrated to address main issues  Select provider  Finalize agreement  Develop implementation plan

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