Financial Advisory Blog

Armanino’s Financial Advisory blog is your source for thought leadership around cloud ERP and accounting solutions and integrations. Supported by the Cloud Accounting Institute and numerous experts in cloud, finance, reporting, integration, compliance, and technology, Armanino’s Financial Advisory blog features must-read content on what’s happening in the finance industry, case studies, white papers, and much more.

May 11, 2020

How Integrating ERP and CRM Benefits Nonprofit Organizations’ Missions

Posted by Brenda Kahler

Integrating ERP and CRM to give your nonprofit efficient processes and real-time data visibility

Nonprofit organizations working to serve their beneficiaries more effectively while improving efficiency and risk management are getting several benefits from integrating their enterprise resource planning (ERP) and customer relationship management (CRM) systems.

The common approach of tracking donor and fundraising information in a CRM platform and recording financial transactions in an ERP tool, for instance, creates many issues that start with a need to integrate data from one system to another. Having to download data from one system so it can be entered into another — and then reconciled with bank records — creates duplicate work that ultimately needs to be reconciled by the nonprofit’s accounting team.

This reliance on manual processes has several unwanted effects. Each stage of the financial close, for instance, takes longer than it should — extending the time and effort required to close a reporting period or to generate reports to management or contributors.

Similarly, the organization’s reporting processes often depend on manual workarounds that only one or two team members know how to perform. This introduces the risk of the organization relying on undocumented processes that may not comply with leading practices or are possibly unsustainable if a key employee leaves the nonprofit.

From an operational efficiency standpoint, eliminating the need to reconcile data manually helps finance leaders free up time to shift from a transactional focus to a forward-looking, more strategic role that enables them to provide more value to the nonprofit. The integration of data also allows finance leaders to conduct accurate, real-time data analytics to evaluate, predict and make informed decisions.

Aligning Key Units

Another critical benefit of aligning ERP and CRM on a single platform is creating a new alignment between the organization’s development and accounting teams. With both teams sharing the same system, the units can agree on how data and transactions are labeled within the system, as well as the workflows as revenue comes into the organization and its funds are spent.

The development team will, for instance, track metrics such as contributor information, donations, grants and marketing campaigns, while the accounting team will track financial information for revenue recognition purposes.

Using the agreed-upon terminology to describe the organization’s programs and initiatives eliminates the need to translate data as it’s shared between departments, as well as the duplicative work of matching transactions that are described with different terminology or characteristics.

The nonprofit benefits from having a single source for its data, instead of trying to track critical information in separate systems and organizational silos.

An integrated platform designed for nonprofits also increases the organization’s reporting capabilities and efficiency. Blending ERP and CRM data makes it easy to track nuanced transactions such as a gift that a donor wants to earmark proportionally for different programs, or a donation that’s divided over a number of payments in successive years. Having this data in one system makes reporting and revenue recognition dramatically easier for the development and accounting teams.

Process Improvements

The need for a technology upgrade provides a valuable opportunity to also examine your organization’s processes to make sure you’re not just trying to make an ineffective process run more rapidly.

For instance, a nonprofit may have a process that’s evolved and become far more complex than the people involved realize. The process of mapping workflows and approvals as part of an implementation often reveals steps that can be streamlined or perhaps eliminated.

A critical element in the success of this process is not placing the technology first, but instead inviting the development and accounting teams to sit together to better understand each other’s workflows and priorities to identify potential opportunities for improvement. A good sign that a process is less than ideal, for instance, is a reliance on multi-tab spreadsheets or other manual processes to generate important reports, or a need to reconcile a lot of data manually for different analysis or reporting processes.

The accounting team should play a key role in the design process. They’re the ones who will be working with the data most closely and will need to understand how data flows into the system so they can extract it efficiently to support the development management teams and external reporting and compliance needs.

Along with reducing duplicated effort, integrating the CRM and ERP will allow the accounting staff to generate a variety of reports more easily. For instance, different donors may be interested in varying metrics to assess the effectiveness of the programs they’re supporting. Being able to customize reports will make this process faster and more efficient, and potentially improve the development team’s relationships with key contributors.

Stronger Security

This integration, and the resulting process improvements, will also result in more effective data governance and controls. Eliminating manual reconciliations will enable a nonprofit to better understand who’s accessing their data and will prevent the manipulation of data after a period close.

Similarly, the fact that integrated ERP and CRM systems are cloud-based will likely mean the platforms offer stronger cybersecurity features than an on-premises legacy system that’s past its expected useful life.

The cost of a potential technology upgrade is often considered an inhibiting factor for many nonprofits. But the design of software packages for nonprofit use typically reflects this reality, with many software providers offering reduced pricing based on the size of the organization. And, in most instances, the improved efficiency and freeing up of valuable staff time often makes integrated ERP and CRM systems a worthwhile investment for nonprofits with an ROI many times the original investment.

Armanino has a dedicated nonprofit team if you have questions or want to learn more about integrating your nonprofit’s CRM and ERP solutions. Email info@armaninollp.com.

« | »