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Finance and Technology

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Finance and Technology Invoice and Expense Management Automation How to Prepare for Implementation

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Preface Roberta Katz Too many nonprofits use paper documents and manual processes, such as Excel spreadsheets, to manage critical areas such as invoice and expense processing. Such a system becomes very time-consuming and is susceptible to manual input errors. Upgrading to automated systems serves to maximize productivity, increase transparency, facilitate document flow and approvals and improve accuracy and timeliness. It may be time consuming, costly and challenging but upgrading yields benefits and cost savings over time. My experience has been that finance departments operate more efficiently after putting this technology into service. Follow these preliminary steps, outlined in this eBook, to ensure a successful outcome:  Select the Right Software  Review Chart of Accounts & General Ledger  Define Workflow & Establish Approval Hierarchy  Assign User Access Rights  Test the New System  Launch & Rollout “I have successfully implemented automated systems for invoice and expense management while employed at several nonprofit organizations. In this eBook, I am sharing my experience and providing guidance on how nonprofits should prepare for implementation.”

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Select the Right Software As you plan for the implementation of an automated system, you should consider the following: Compatibility-When selecting an automated system, be sure that it is compatible with the format in which you process data.  Can the software accommodate all your general ledger account segments in processing the data?  Is customization of the software needed to properly record cost allocations?  Is the system compatible with your accounting system if separate systems are used? Financial Reporting- When selecting a system, review which standard financial reports are available. You might have reporting needs that are specific to your organization. Can the vendor modify the software to produce the reports you need? If so, what is the process and how much will it cost? Customer Support- Help Desk support is essential, especially during the early stages of implementation. Be cognizant of the time zone and hours in which the vendor operates. Training- Determine the type of training the vendor provides for the system administrator and for the end-users. If the standard training is not adequate for your specific system, can they provide customized training and at what cost? Timeline- Ask the vendor how much time they need to complete the project. If you have a deadline for implementation, can the vendor meet that deadline?

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Review the Chart of Accounts & General Ledger Before you implement the new system: Review your current Chart of Account for inactive accounts that should not be included in the new system. Map the remaining accounts from your current Chart of Accounts to the accounts set up in the new system. Distribute a new Chart of Accounts to all end-users with “used for” descriptions for commonly used accounts. This will ensure accurate and consistent account coding. Review the segments of your general ledger account structure (e.g., cost center, program code) and ensure they are being used uniformly by all end-users. .

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Define Workflow & Establish Approval Hierarchy Define the workflow of your current manual processes, including documents used and staff roles responsible for each step in the processes. Establish a formal approval hierarchy (i.e. the sequential approval of transactions) and determine the dollar threshold above which more than one approver is required. Determine the process for advising the system administrator of changes in approvers (e.g., terminations) so that a new approver can be assigned in a timely manner.

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Assign User Access Rights Assigning rights to employees to access, change or delete data in the system, and monitoring their access on a regular basis, minimizes the chance of improper and unauthorized activity.  Administrator-Designate one system administrator and one backup staff member who will exclusively have the rights to set up new users in the system, remove users when they are terminated and assign and change the rights of current users. The administrator should have a User ID and password that is not available to anyone else in the organization.  Staff Roles and Access - Identify the staff roles that will be using the system. Determine the functions that each will be able to perform in the system such as inputting data, modifying or deleting data or viewing the data only. The level of access rights often depends on the user’s position or supervisory role within the organization.

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Launching a system that has many glitches, diminishes the confidence that end-users have in the system’s benefit and reliability and you will waste a lot of time. To avoid this, test the system often and regularly at each step of implementation. Designate a test team Designate an internal team who will be responsible for testing the new system. Select team members who will have different roles in processing the data in order to effectively test the system. Set up a test system Set up a general ledger test system that will interface with the new automated system, if separate systems are used, to verify that the transactions processed in the automated system and uploaded to the general ledger are properly recorded. Test! Test! Test! Process transactions from beginning to end in the automated system to ensure proper workflow and approval routing. Upload test transactions into the general ledger test system to ensure they are accurately recorded. Verify that posting dates and descriptions of the transactions are accurate and complete in the general ledger. Test the New System Run Standard Reports Run standard reports available in the software to ensure they are reporting the data with the information and in the format needed by end-users. Test software customization If customizations were made to the automated system software, test the changes extensively to ensure that the data is being processed accurately.

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Launch and Rollout CommunicateEducateEnforceStep 1- Communicate Introduce the new system to all end-users by e-mail or other means of communication. Specify the date the system will be launched. If it will be rollout out by groups of users, specify the launch date for each group. Give a brief explanation as to why the system is being implemented and the benefit to the organization. Step 2- Educate Distribute a user manual with instructions specific to your organization’s system. If the standard manual provided by the vendor is insufficient, create your own with screenshots and narrative. Create your own online video to walk end-users through the step-by-step process for using the system. Require written acknowledgement from all end-users verifying that they have viewed the video. This will minimize questions after rollout. Offer one-on-one training to end-users who might not be computer savvy or are resistant to learning the new system. Step 3- Enforce Establish and strictly enforce due dates for submission and approvals in the system for all staff, even those at the highest levels. Require that all supporting documentation submitted in the system be complete and legible for review. Return for resubmission any documentation that is not. Require that all transactions be properly coded in accordance with the organization’s Chart of Accounts. Improperly coded transactions should be returned for correction and resubmission.

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Software Implementation Checklist  Evaluate and select the software  Review your current Chart of Accounts and General Ledger  Define the workflow for the new system  Establish the approval hierarchy in the new system  Determine user access rights  Designate a test team  Set up a test system  Test! Test! Test!  Test software customization  Run standard reports in the new system  Communicate  Educate  Enforce

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Roberta Katz Consulting Nonprofit Finance Consultant For more information | | (917) 359-1158