Figures released last year show that the number of charities listed on the Charity Commission’s register rose to a 10 year high of more than 168,000, as reported by Third Sector. What’s more, the collective annual income of charities in England and Wales passed £75 billion for the first time in history.
Whilst large charities with an annual income of over £10 million account for 62.4% of the overall figure, charities of all sizes must consider how they track their finances.
Trustees of all charities need access to precise and up-to-date financial information to enable them to make effective decisions and ensure that all expenditure is within the budget. What’s more, they must adhere to charity law and regulations, which are often in relation to funds and how they are used, as well as the accuracy of data that is submitted to The Charity Commission.
Maintaining accounting records is required by Part 8 of the Charities Act or, for charities registered under the Companies Acts, section 386 of the Companies Act 2006. These requirements include producing a trustee’s report, set of accounts and annual return, with accounting recordings required to be kept for six years.
By combining accurate accounting, finance and budgeting information, organisations can deliver on these requirements and run their charity effectively.
One of the hallmarks of a successful charity, as identified by The Charity Commission, is having the financial resources and relevant controls in place to be able to deliver on its purposes and mission. Whilst the framework of accounting differs, depending on size, accountancy best practice can be achieved across the charity by maintaining accurate financial data and obtaining detailed budgeting analysis, as a result.
A financial management system helps to accurately record and report on financials and impact, demonstrating how charities support their objectives. The more accurate this data is, the more precise information for key stakeholders is. This type of system removes the high chance of error by eliminating the need for repetition of data entry, resulting in better quality reporting. The greater the certainty of income when reporting, both with regards to the amount and duration of funding, the more flexible trustees can be when planning and budgeting the charity’s future activities. This then feeds into the overall accuracy of accounting records and budgeting of a charity, whereby important planning can be executed on cost allocation, resulting in improved effectiveness.
PS Financials’ software complies with SORP 2015 and enables partial VAT reporting to enable smoother processes throughout organisations and meet complex reporting requirements. It also integrates with various systems including vital CRM systems for charities such as Care CRM, Salesforce and ThankQ. Providing a consolidated view through this integration, your operations can be streamlined whilst supporting specific charity needs and provide the financial tools to support decisions on meeting your charity’s purpose and mission.
To learn more about PS Financials’ sophisticated accounting solution for Charities and Not-for-Profit organisations, visit www.psfinancials.com/not-for-profit