Should we computerise our accounts?
NGOs often keep their accounts on accounting software. This has important advantages and disadvantages compared to manual bookkeeping, including:
Every NGO has to make its own decision about whether to use specialist accounting software - and which software to buy. It is a complex decision and you may need professional advice.
You should consider the advantages and disadvantages outlined above, and compare them to your specific circumstances. If your accounts are complicated, then it is likely that you will benefit from computerised accounting software (and employing experienced accountants to run it).
When deciding whether or not to computerise at all, it is useful to look at:
- How many transactions do you handle on average every month?
- How many different currencies or locations do you work in?
- How many different restricted projects do you have?
When choosing a package consider the following criteria:
- Is it used by other NGOs in your area?
- Is it supported in your area?
- Can it do multi-currency?
- Can departments or cost centres be used to track funds?
- Can budgets be entered for each cost centre seperately?
- Can it take enough digits (9 are usually enough for local currencies)
- Can the same transaction be coded according to more than one coding system (eg the NGOs own chart of accounts and ALSO a donor's chart of accounts)?
- What is the cost (package, set up, support, upgrades, annual fee?)
Good software can support good staff. But it does not replace the need for them, or transform poorly skilled or motivated staff into effective staff. It cannot solve all your accounting problems!
The correct package for you will depend on your requirements, what is commonly used in your area and your budget. If you are considering spending a lot of money on an accounting package, we recommend you get professional advice about which would be the best option for you.
In case you are not able to obtain professional advice, we hope the following recommendations will be useful, although we cannot promise that they will be suitable in all cases!
Small NGOs or field offices may find it easier to keep their accounts on Excel and consider using Mango's accounting pack which is free.
Medium-sized NGOs: We recommend you consider using QuickBooks accounting software. QuickBooks is cheap, flexible and has a number of specific advantages for NGOs.
- It is a proven product that has been tried and tested by thousands of other organisations.
- It is cheap to buy, and there are networks of suppliers and advisors available to help you use it in many countries.
- It is simple and intuitive to use, with extensive help features. The software is easy for non-accountants to understand.
- It provides two categories for analysing transactions: accounts codes and 'classes', which are suitable for tracking restricted funds.
- The accounts codes can be easily edited and changed to meet your organisation's specific needs.
- It produces many different reports and exports them to Excel for further work. It is easy to drill down into reports and see specific transactions.
- Be aware that there are UK, US and Canadian versions that are all different and not compatible with each other. As at May 2010, both UK and US latest versions can handle multi-currency.
A free introductory version of QuickBooks is available for very small organisations on the QuickBooks website
Quickbooks manual - this explains how to set up Quickbooks so that it can be used by an NGO to track donor funds.
For Larger NGOs, there are a number of suitable packages, including Dynamics, PS Financials, SUN and others.