Knowing When to Leave QuickBooks and Where to Go

Report
Knowing When to Leave QuickBooks
and Where to Go
Presented by
Lee Bengston, CPA
Cynthia Wadle, CPA
Objective
Help nonprofit decision-makers recognize that
their organization is outgrowing QuickBooks,
why, and know what to do about it.
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
TYPICAL IN-HOUSE
MODEL
LIFE CYCLE STAGE
RESOURCES
STARTUP
GROWTH
MATURITY
Principal Financial
Manager
Executive Director
Finance Director,
Controller, Business
Manager (mid-level
capabilities)
Chief Financial Officer or
Controller
Finance Staff
Executive Director,
volunteer, relative
Accounting clerk or
bookkeeper, often main
financial manager
Specialized accounting
staff
Accounting System
Excel, entry-level software
(QuickBooks or like)
Entry-level software with a
growing awareness of
better tools
Mid-level software with
nonprofit focus
Board financial expert
None
One person with some
financial skills
2-3 qualified financial
professionals
When is QuickBooks a Good Solution for Nonprofits
 Financial management best practices in place
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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
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.
Best Practices for QB’s Use in Nonprofit Orgs (cont)
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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 2nd 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
Some leading indicators that QB is no longer
up for the job
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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
Some leading indicators that QB is no longer
up for the job (cont)
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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
Accounting requirements that challenge QB
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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
Alternative accounting solutions when leaving QB
 Commercial ERP systems
 Sage MAS or Pro, MS Dynamics GP, others
 Netsuite or Intacct
 Specialized nonprofit accounting systems
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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
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
Developing a transition plan (cont)
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Evaluate needs – what are the 3-4 main issues to solve
Consider organization and personnel
Appoint lead person for project
Frame acceptable alternatives
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In-house
Hosted
Web-based
Client-server
Outsourced or hybrid
 Find potential providers (Web, peers, published reviews)
 Hold preliminary conversations with vendor or VARs
Developing a transition plan (cont)
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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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