Growing Trend: New Budgeting and Forecasting Software is Redefining Finance Roles for NFPs

Posted in Not-for-Profit on March 2, 2017

Finance Quickly Becoming a Strategic Partner to Organizations

For decades, Excel has been the primary tool for organizations looking to create and manage budgets in conjunction with strategic plans.  While Excel is a reliable asset for incorporating data, many financial arms to organizations are discovering more diverse options for how they can strategically “use” that data, and ultimately, affect their strategic course.  With the vast amounts of data being collected by Not-for-Profits, spreadsheets are not efficient when collaborating with multiple team leads or performing financial forecasting, organization projection and budgeting.

A shift is happening now where NFPs are moving toward Corporate Performance Management (CPM) solutions because they can deliver easy, powerful, and fast solutions which enable them to collaborate continuously on budgeting, reporting, and forecasting challenges in a comprehensive manner.  This allows for an elevated performance level and creates more strategic thought leadership from a financial perspective.
Transforming the Finance Function
Many NFPs are unfamiliar with the term Corporate Performance Management (CPM), but once explained, they realize they are familiar with the concept.  Namely, CPM is an area of financial strategy involved with monitoring and managing an organization’s performance according to key performance indicators (KPIs).  These KPIs are specific to your organization and your mission.  These are those numbers – whether financial or non-financial – that your executive leadership team checks at the beginning of each day.

For instance, if you are a social services organization, you may track the number of foster homes available.  If you serve a more recreational purpose, such as zoos or arboretums, you may track daily attendance.  And of course, many NFPs keep a close eye on donor contributions compared to budget.  How easily can you get at that information today with your current tools?  With the implementation of more robust tools, NFPs can access this information in seconds on dashboards available to all levels of the organization.

Real-time Financial Data
A growing number of NFPs are investing in CPM tools, which strive to holistically meet reporting and budgeting needs.  These are tools designed by finance, for finance, and require no IT assistance.  Imagine if you had a tool where your team leads could log in from any browser or on any mobile device and enter their estimated operating expenses, planned employee hires and requested capital purchases.  As information is entered, allocations take place in real-time so that you can run reports at any point during your budgeting cycle to evaluate how your budget is trending.  There is no linking or aggregating Excel spreadsheets required.

Many NFPs include global drivers, such as raise percentage or staff appreciation amount per employee, as part of their budgeting process.  A CPM solution allows you to define these global drivers specific to your needs such that you could go into strategy planning meetings, make real-time changes in front of your peers to these global drivers, and immediately show your peers the impact on a pro-forma set of financial statements. 

Multifaceted Budget Reporting
Once a budget is board approved, the next question many of your team leads will likely ask is, “How do I stand compared to budget?”  With the right CPM tool, users can log into that same tool they used to enter their budget to run budget vs. actual reports specific to their areas of responsibility.  There is no need to learn an additional tool.  Many NFPs can fulfill their mission with small staffs.  The more successful NFPs empower their users to access their own information and drill down into the details to better understand why they are/are not on budget.

Efficient Reforecasting
Upon the moment the budget is board approved, it is outdated.  The world keeps moving after the budget is blessed.  This is the reason why a growing number of NFPs want to reforecast on a quarterly basis.  However, that can be a daunting and time-consuming task without a CPM tool.  By utilizing a favorable CPM tool for your needs, your team leads could spend as little as 30 minutes logging into the website, reviewing the past 12 months of actuals and what they budgeted for the next three months, and adjusting those numbers accordingly. 

NFPs are investing in CPM solutions, which are redefining the modern finance team as a forward-looking, strategic partner to the organization, rather than just a backward-looking, data provider.  When all team members can more closely focus on the organization’s mission and what matters most, everyone wins.


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Disclaimer: This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax, or other professional advice. Please refer to your advisors for specific advice.