The finance function is fundamental to the day-to-day operations of all organisations. Developing appropriate budgets, processing accounts and managing financial resources needs to be done efficiently and effectively. 

On average, organisations that we work with spend 1.3% of their total organisational expenditure on finance.  The largest proportion of this investment is in financial accounting, followed by management accounting.

What we have learnt

  • œ The level of automation used in the finance function systems varies– NFPs use a wide variety of finance software products, with varying levels of functionality, cost, useability and inter-operability. While it is not easy to change, picking the right finance system can significantly reduce administrative effort and improve the quality of finance services.

  • œ The extent to which basic administrative activities are centralised also varies– NFPs varied in the extent to which they balanced the cost and quality trade-offs between centralising or decentralising basic finance activities (such as accounts payable) to program areas. These variations typically reflected the size and complexity of each organisation – with larger organisations being more likely to decentralise.

  • œ Financial accounting costs vary significantly by type of organisation – These costs are affected by the volume and complexity of accounts payable and accounts receivable.  These in turn are influenced by the unique characteristics and requirements of the services that an NFP delivers.

How to deliver more efficient and effective finance services

  • œ Invest in a new finance system – While a significant investment, a new finance system can streamline budget and reporting processes and make business intelligence more accessible. This in turn facilitates prompt decision-making and enables the delivery of more accurate and consistent reporting to Boards and management.

  • œ Embed a customer service ethos in your finance team – Embedding a customer service ethos in your finance team takes effort, but generally results in higher levels of satisfaction from managers and staff, and can support more frequent discussions with line managers to help them understand and manage their program finances.

  • œ Simplify core financial systems and processes  - Simplifying systems and process allows the finance team to focus on more productive activities.

Selected finance KPIs