Outdated accounting tech can be a risk for your nonprofit.
Your nonprofit may have outgrown its accounting software when staff increasingly rely on manual workarounds, reporting takes too long, the system struggles with organizational growth, or the technology creates security and support concerns.
Dated technology isn’t necessarily technology that is “old.” Sometimes age does matter, but just as often, technology becomes dated because it no longer fits the organization you’ve become.
Here are five signs that your current tech stack is dated and you may need to reassess:
Manual workarounds have become part of your accounting process.
Spreadsheets and manual processes aren’t automatically a problem; they can often be a useful tool. The concern is when they become necessary to make your accounting system work.
If your team is doing the same work in more than one place or maintaining separate Excel schedules to supplement your systems, take a closer look at why. Those manual workarounds may signal that your technology no longer fits how your organization operates.
Manual workarounds can also increase the risk of human error and create a key-person dependency. Think about the complex Excel workbook that one person built over the years and understands perfectly, while the next person opens it and has no idea how it works. When a process works only because one person knows all the formulas, tabs, and unwritten steps, it becomes a risk to the organization.
Your financial reporting takes too much time.
Nonprofit reporting often requires much more than a standard income statement and balance sheet. Leadership, boards, funders, and program managers may need to see the information in different ways. A well-designed dashboard can help surface the financial metrics that matter most for decision-making.
If your accounting system cannot produce those reports directly, staff may need to track certain information outside of the accounting system and then consolidate it with the accounting data to create a meaningful report. That adds time to the reporting process and can delay getting useful information to decision-makers.
When meaningful financial information takes too long to produce, important business decisions may be delayed because the information is not available when it is needed.
Your accounting system should help you understand your data; not make you work harder.
Your accounting system can't keep up with growth.
A system that worked well when your nonprofit was smaller may become harder to manage as the organization grows and operations become more complex.
New programs, grants, entities, locations, employees, or approval levels can all place greater demands on your accounting system. As transaction volume increases, limitations that once seemed minor may start creating extra work, slowing down reporting, or making it harder to maintain consistent processes.
Your accounting technology should be able to support the organization you are becoming, not just the organization you were when the system was first implemented. If growth consistently requires more workarounds, manual processes, or added complexity, it may be a sign that your current system is no longer scaling with you.
Your software costs more than the subscription price.
Older or simpler technology can sometimes seem like the less expensive option because the software subscription costs less. But the subscription is only one part of the cost.
Consider how much staff time you spend compensating for the system’s limitations. If your team spends extra hours entering, reconciling, or preparing information for reporting, that time has a cost too.
Those costs are harder to see because they don’t appear on a software invoice, but they are still real costs to the organization.
Security and software support are falling behind.
This is one area where the technology’s actual age matters.
Software that is no longer actively supported can become a risk over time. Security updates may stop, and the system may no longer keep up with current technology or security expectations. Older systems may also lack protections now considered standard, like multi-factor authentication or stronger user access controls.
Whether your system is on-premises or cloud-based, it is important to understand who is responsible for maintaining it and keeping it secure. With on-premises systems, more of that responsibility may fall on your organization or IT provider. Cloud-based systems can reduce some of that burden, but they still need active support and proper management.
The longer outdated technology stays in place, the more likely it is to create problems for your organization.
It may be time to reassess—not necessarily replace.
Dated technology does not always mean you need to replace your entire accounting system. It may simply be time to step back and ask whether your current technology and level of accounting support are still helping your organization operate the way it needs to today.
If the answer is no, that is usually a good sign it is time to reassess what is working, what is not, and where a better solution may be needed.
A good first step is to look at how your current system, surrounding tools, manual processes, and reporting needs work together.
From there, you can identify where the biggest gaps are, what can be improved within the systems you already have, and where a change may better support your organization’s future needs.
If your nonprofit is spending more time working around its accounting systems than using them to support decision-making, our outsourced accounting advisors can help evaluate your current processes, reporting needs, and technology to identify practical opportunities for improvement.
