The British Deaf
Association (BDA) is the UK's largest national organisation run by
Deaf people for Deaf people, representing roughly 70,000 Deaf sign
language users.
The BDA has successfully brought its
finance function back in-house from an outsourcing provider whilst
simultaneously changing its entire IT infrastructure, including
replacing its core financial systems. In the process the BDA has
saved time and money and dramatically improved its accountability
and the financial knowledge of its staff, placing the organisation
in a strong position to win more funding in the future against
stiff competition in the charity sector.
The BDA is the UK's largest national organisation run by deaf
people for deaf people, representing roughly 70,000 deaf sign
language users. Its mission is to build a strong and vibrant
community of deaf people so that they can benefit from mutual
support and gain the confidence and skills needed to contribute to
society as equal citizens.
The organisation employs around 50 staff operating from 6 UK
offices. One member of staff in the London head office oversees the
new in-house IT infrastructure, which consists of 8 networked
servers running Windows. However, the Senior Finance Officer
retains control over the new financial system, Exchequer, a
mid-range accounting system.
As a result of implementing Exchequer from IRIS Enterprise
Software, the BDA now has a far greater understanding of its
finances and has vastly improved its financial reporting
capabilities, reducing the time taken to generate reports by 10
days. Today, the BDA's trustees base their project funding
decisions on accurate financial information instead of 'best
guesstimate figurework', which has previously led to inaccuracies
when forecasting income.
The Business
Challenge
2 years ago, in addition to
the worry that increasingly inadequate financial controls might
scare off potential project funders, the BDA recognised the
importance of adhering to the Statement of Recommended Practice for
accounting by charities (SORP), as laid down by the Charity
Commission.
Whilst the innocent inaccuracies in the BDA's accounting
processes were not preventing the organisation from meeting its
commitments, they were, nevertheless, too substantial to ignore. In
April 2001, the BDA hired Andrew Machin as head of finance with the
brief to bring the financial systems back in-house and get them
under better control. "We had accountability within the BDA but it
was very weak," says Andrew. "There was no incompetence as such but
the ship could certainly have been run a lot tighter."
Andrew inherited three finance staff who were effectively just
paper pushers since they had to hand over all financial documents
to the outsourcing company to process. There was no internal
control over the detail of the information being processed so the
ability of the team to investigate any discrepancies was very
limited. In addition, the eventual reports were quite difficult to
change to make them more accessible to trustees unfamiliar with
business accounting presentation. The system was also expensive and
time-consuming in that it took roughly 25 days to get the
management accounts ready. "What was most worrying was that
although numbers were being generated, the accounts did not show
the true status of the BDA's finances since they did not reflect
any accruals or prepayments," says Andrew.
Andrew set about overhauling the BDA's approach to its finances,
starting with training the finance staff in basic accounting
practices and disciplines, before looking for a replacement
accounting system that could be run in-house.
Implementing
the Right Solution
A project team was
formed to evaluate the accounting software market and a shortlist
drawn up of Sage, SunSystems, Access Accounting and IRIS
Enterprise Software. The right system had to be reasonably
easy to operate, and flexible in how it structured information so
that the BDA could extract the accounting records it needed from
its other computer systems. "We asked each supplier to meet
stringent criteria and we visited all of the reference sites they
had of charities in the London area," says Andrew, who had roughly
£25,000 to spend.
Exchequer was chosen because of its broad functionality, ease
of use, and its ability to present data in graphical ways that
appealed to non-accounting executives. The BDA implemented the core
Exchequer modules (general, purchase and sales ledgers) producing
monthly reports in Excel via an OLE link.
After just a few months Andrew began to see an improvement in
the quality of the financial reporting and also in the acceptance
of the need for more financial rigour among the BDA's wider staff.
"Internally, staff gradually began to appreciate the role of the
finance department within the BDA, how finance operates, why they
must use the correct codes and the need for accurate budget
setting," says Andrew.
The Business
Benefits
Today, the BDA is in a position
to compile year-end figures successfully without the need for
outside help, which results in lower audit fees.
"The most dramatic business benefit we've seen from using
Exchequer is that we've been able to compile all of our financial
records ourselves. We have a much greater understanding of the
financial dynamics of our organisation," says Andrew. "We have
about £500,000 worth of restricted and unrestricted reserves which
went untouched before, because we didn't know what we were allowed
to use it for. We do now."
The finance team's responsibilities may have increased
dramatically but the payback has been worth it. "We've managed to
do all of our own processing with the same number of staff we had
prior to Exchequer but we've reduced costs because those staff are
now doing the jobs they were hired to do," says Andrew.
For example, the Senior Finance Officer now extracts,
manipulates, and corrects errors in financial data in areas such as
VAT returns and tax recovery, improving the BDA's overall financial
accountability. Instead of just sending bank statements to the
outsourcing company the sales ledger clerk now compiles daily bank
reconciliations and cash forecasts.
Andrew adds, "Using Exchequer it now takes us 15 days instead
of 25 to produce our management reports and I'm hoping we can
reduce that to 10 days by the next financial year. There's
also been some reduction in our overall expenditure but chiefly
we're getting better value for money."
Looking to the
Future
The BDA is currently in the
process of setting up a direct debit system so that income can be
recovered more promptly. It is implementing BACS software at
present and considering ways in which it can link this to
Exchequer, Excel and to the organisation's fundraising system,
Raisers Edge.
On a broader note, the BDA is now in a position to consider
providing accounting support to its 12 area councils around the UK
which are run by volunteers and whose accounts are included in the
BDA's year-end figures. Andrew says, "We're very pleased with
Exchequer and we want to develop it more, but we are currently
restricted by funding." Meanwhile, he is delighted with the new
financial culture within the BDA which Exchequer has helped to
foster.
Andrew concludes, "We have had two very tough financial years but
we've been able to regain the confidence staff have in the
financial reporting of the organisation and they now trust the
financial news that we give them. Exchequer has proven to be
a very good vehicle for us to do this because of its flexibility
and ease of operation. It has made us more accountable for our
finances and we're now able to deliver a better service to our
members and supporters as a result."
