Fund Accounting Software Rules

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Not-for-profit specialists target government entities

by Carly Lombardo

Consider this scenario: There are 15 separate government agencies using 15 different formats to prepare their financial reports, all of which need to be sent to the U.S. Department of Labor. The agencies want to standardize the fiscal procedures and reporting structures.

Partner Insights

Impossible? Of course not. In fact, last March this scenario turned out to be the largest government agency deal recorded to date by Irvine, Calif.-based Best Software’s Nonprofit Solutions unit.

The implementation involves the Human Resources and Occupational Development Council of Puerto Rico, (Consejo De Desarrollo Ocupacional y Recursos Humanos), which is implementing MIP Government Series Advantage, fund accounting, and FAS Gov Suite, a government-specific fixed asset management, in 16 of its facilities.

Government Software Vendors

Accufund
Needham, Mass.
(877) 872-2228
www.accufund.com

Best Software FAS Gov Suite
Herndon, Va.
(800) 368-2405
www.bestsoftware.com

Best Software MIP Products
Austin, Texas
(800) 647-3863
www.bestsoftware.com

Blackbaud
Charleston, S.C.
(800) 443-9441
www.blackbaud.com

Executive Data Systems
Marietta, Ga.
(770) 955-3374
www.execdata.com

Intuit Public Sector Solutions
Denver, Colo.
(800) 551-4458
www.intuitfundware.com

Serenic Software
Lakewood, Colo.
(877) 737-3642
www.serenic.com

Two resellers of Best’s MIP not-for-profit accounting software, John Francis of Tarpon Springs, Fla.-based NFP Consultants, and Pat Lavine of Brownsville, Texas-based Lavine BMC Technologies, cooperated to get the CDORH bid and are working together to implement the systems.

Eleven CDORH locations were already using MIP fund accounting products to consolidate information electronically and prepare reports for the U.S. Department of Labor. Now, the agency is upgrading to MIP’s Government Series Advantage, and also implementing the FAS Gov Suite, as part of its effort to standardize fiscal procedures and reporting structures for all its local agencies.

CDORH decided to extend the use of Best’s software after an internal review showed the facilities with the most efficient reporting processes were the ones using the MIP fund accounting products.

Kent Hollrah, senior vice president and general manager of Best Nonprofit Solutions, believes there are several reasons this install succeeded. “The project was a joint effort with our sister company, the FAS Gov product line, and this was a tipping point in getting the deal,” says Hollrah. It included $1.3 million in software, multiple locations, two partners working together, and working with federal-oriented government entities when the unit usually focuses on states and municipalities.

He points out that CDORH was the first customer to use the new consolidation module, which allows each location to run individual financials but shoot them off to a central site and have consolidated financial statments for all entities.

According to not-for-profit vendors, growth in the government market has been consistently accelerating within the last few years. Government organizations and nonprofits are similar-both require fund accounting, and have complex financial reporting requirements that are unlike what is needed in commercial accounting.

However, the NFP and government sectors also differ. Government agencies, ranging from the local water utility to a sprawling federal division, are funded by tax revenue, grants, and service revenues. Also, the type of audience to which governments report consist of regulatory authorities and tax payers.

Now, not-for-profit software publishers as varied as Best, Accufund, Serenic, Intuit Fundware, and Blackbaud, as well as their VARs, are tapping into the government markets.

Entering the Market

George Fincel, president of Axiom Consulting Group, a Cape Coral, Fla.-based software reseller, has seen the number of government clients he serves continue to grow each year-he gets a least one inquiry a day about the government products he sells.

Fincel, who sells both Serenic and MIP, finds one of the main reasons for his continued growth is that software vendors are making a bigger push through their business partners. Moreover, a generational change at governmental agencies makes them more technology friendly.

“We have found when a government agency is looking at software to buy, there is a new breed of finance directors and they’re younger and less intimidated by technology-they want to go beyond just cutting a check.”

Francis agrees about the growth in the market, and says that it has been fueled by Best’s ability to field a broader product line aimed at the government market, a relatively new development. The MIP Government Series Pro and Government Series Advantage were introduced just over a year ago.

“Our growth is due primarily to our ability to provide a solid solution. MIP Government Series supports GASB 34, and integrates with FAS Gov, Abra (Payroll and HR), and with utility billing systems,” he says.

Obviously, this helped Francis and Lavine land the CDORH deal. Francis says, “Because CDORH was familiar with the MIP solution, they recognized the benefits of all the applications working together. However, the decision to standardize was a two-year process that required our involvement and support throughout, as they thought through the feasibility, process, and ultimate design of the solution.”

Lavine adds, “Some of the agencies had worked with us before and some had worked with NFP Consultants. By working with another Best partner, the agencies were able to work with the partner they preferred and it was a better utilization of resources.”

Lakewood, Colo.-based Serenic Software, which makes third-party products for Navision, is making a push to increase its government business. The company started by hiring Mark Waldschmidt, now vice president of government solutions, who hopes to capture at least 10 new government resellers by year-end.

Expanding their reach includes releasing in-house developed revenue-generating products such as a utility billing system and a licensing product. These products will join Serenic’s Navigator, which includes fund accounting and business management applications such as sales orders, job cost, inventory, fixed assets, and donor management for larger organizations, and for smaller organizations Serenic Fundamentals, completes Serenic’s vertical offering for the government sector. According to Waldschmidt, the new products will be released by year’s end. “Our government customers and resellers need these systems, and by having a full suite, they will only look to us for the answers,” he says.

Revenue Generation

Both software vendors and their VARs feel being successful in the market often means being able to provide customers with revenue-generating software such as utility billing packages.

The Importance of Encumbrance Accounting

Encumbrance accounting is a budgetary tool that gives governments better control to make sure they are within their approved budget.
When a government issues a purchase order for a product or service, it become legally bound to pay the vendor the agreed upon price when the service/products are delivered.
In turn, because they are legally "bound," they need to encumber the funds to pay for these services/products so that the funds are available when the invoice is received. "When funds are encumbered, the amount of budget available to spend is reduced and this lets the government know what is 'spent' before the money actually leaves the account to prevent overspending," says Jan Groth, director of strategy for Mountain View, Calif.-based Intuit's Public Sector.
She provides this example: A police department has a budget of $150,000 for new cars. They order two of the cars via a purchase order. The accounting goes budget of $150,000 less purchase order amount (two at an estimated 50,000 = 100,000) = $50,000 budget still available for the purchase of cars. The $100,000 is encumbered and reserved so it cannot be spent. When the cars are received and the invoice is approved, the actual amount of the cars ($95,000) is expensed in the general ledger and the $5,000 that was not needed is relieved of the encumbrance, and so the budget now has $55,000 for cars.

While some vendors provide the packages themselves, it is more common for the VARs to provide the revenue-generating packages. Yet, they turn to their vendors for integration with fund accounting software. One vendor that offers both an accounting suite and an integrated utility billing package is Needham, Mass.-based Accufund.

The Accufund Accounting Suite has a core system that includes general ledger, budgeting, accounts payable, a financial report designer, cash receipting, and a user security system. But there’s also a utility billing component, which is available as an integrated part of the suite or stand-alone, starting at $2,000.

The system tracks billing by service location to facilitate customer changes. An unlimited number of meters, charges, and location notes can be attached to any service location. When used with meters, the meter readings are entered for all service locations, and can be entered by route and used to generate automatic charges.

It is integrated with Report/Forms Designer and all utility billing reports and forms are created through the Designer, giving users control over layout as well as adding additional fields and text specific to their organizations’ requirements. Also, it allows for an interface with third-party meter reading devices for upload and download of information.

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