Best Fund Accounting Software

What is Fund Accounting Software?

Fund accounting system is a technical type of accounting program designed for handling different financial operations of nonprofits, charities, and other businesses that use a fund-based funding system.

Unlike standard for-profit business accounting systems, fund accounting emphasizes accountability and proper stewardship of funds. Fund accounting differs from standard for-profit business accounting systems that track money on one ledger.

On the other hand, fund accounting isolates funds so that donors or external sources can report and monitor them accurately.

Benefits of Fund Accounting Software

Fund accounting software offers companies several advantages, including:

1. Lower Costs

   As automating fund accounting eliminates the need for staff members to manually enter data into spreadsheets and organize documents, it reduces labor costs. The financial management of a nonprofit organization requires fewer people, which allows other staff members to focus on more valuable activities like grant writing and fundraising.

2. Enhanced Precision

   In government and non-profit organizations, mutual fund accounting software provides a fast and efficient way of tracking and managing financial data. As a result, financial records are kept up-to-date and accurate at all times, eliminating the potential for errors in data entry and calculations.

3. Improved Reporting

   Detailed reports generated by mutual fund accounting software can be used to analyze an organization's funds, which can be used to identify areas of opportunity or challenges and take appropriate steps in a timely manner. A variety of reports are available, including a budget summary, a balance sheet, an income statement, a cash flow analysis, a grant tracking report, etc.

4. Simplified Record System

   Keeping track of accounts and transactions is simplified with fund accounting software. There is no need for manual records or paper filing systems. The information can be accessed and updated easily in a centralized location where authorized personnel can easily access it.

5. A Better View of Operations

   The use of fund accounting software allows organizations to comply with a variety of regulations such as state laws governing non-profits and donor requirements that require transparency when it comes to the use of funds. By delivering clear financial statements regularly, institutions remain compliant with various regulations. 

   As a result, board members have greater oversight capabilities over management decisions relating to finances within an organization because they can review grant expenditures at any time.

What Type of Fund Accounting Software Does Your Organization Need?

There are several types of accounting solutions, including ones that manage funds and grants and those that include back-end accounting features like accounts payable and general ledgers.

1. Current Users Preferring Extended Functionality

   As fund accounting solutions grow in popularity, users may look to expand on existing features. You'll need strong IT support and security as you handle more funds, something that's not available with a basic package. All these are great reasons to take a closer look at your software solution and determine if it meets your needs now and in the future.

2. Small Businesses & Prospective Buyers

   The fund accounting functionality of complete accounting software may be sufficient for very small organizations, but for growing nonprofits, separate software may be necessary.

3. Large Corporations

   Last but not least, larger organizations may have a few legal entities they record within their systems, or even dozens of programs, projects, locations, etc., each with its funds for a variety of causes. Those organizations with a large number of funds are likely to have even more funds as they continue to operate, so they'll need a scalable solution.

Key Features of Fund Accounting Software

Below are the most prominent features of fund accounting software:

1. Cloud-Based Platform

   There are many fund accounting solutions available as cloud-based platforms that allow fund managers to access financial data and generate reports from anywhere with an internet connection.

2. Portfolio Management

   The use of fund accounting software can help managers manage a wide range of investments, including tracking performance metrics such as total return, risk-adjusted returns, and portfolio diversification. Furthermore, it can provide insight into industry trends and asset allocation.

3. General Ledger

   In addition to tracking and documenting all financial trades associated with a fund, General ledger lets users develop financial reports, such as balance sheets and revenue statements, quickly and easily.

4. Compliance Reporting

   The ability to meet regulatory requirements accurately and in a timely fashion is a crucial part of fund management, and this feature provides the tools necessary to achieve this. The system allows users to prepare and submit periodic compliance reports to state agencies.

5. Multi-Currency Support

   As a result of this feature, users are able to record and track financial transactions in multiple currencies, making sure that funds are converted correctly into local currencies for reporting or taxation requirements.

6. Investor Management

   An investor management module is typically included in fund accounting software, which allows investors to track current investors, process new applications, schedule contributions, and more. In addition, this investment fund accounting software gives investors access to detailed information about their investment portfolios through secure portals.

7. Budgeting & Forecasting

   In this feature, users can compare real-time financial data with their desired goals or projections, allowing fund managers to identify additional opportunities for revenue growth or cost optimization.

How to Select the Right Fund Accounting Software?

Keep in mind the following points to pick the suitable fund accounting software for your business:

1. Consider your business requirements and budget.

2. Firstly, assess your organization's current financial processes and how they will need to change if you switch to new software, and take into account any additional features or integrations you may need to comply with industry standards or regulations.

3. Make sure to pay special attention to the features that are included as well as any optional add-ons that may be available in the fund accounting software you're considering.

4. Several factors should be considered, including ease of use, scalability, reporting capabilities, security measures, and customer support.

5. In addition, you should compare the costs associated with each option. For example, comparing the price of individual licenses vs. enterprise licenses for multiple users, analyzing the costs associated with installation and maintenance, evaluating the potential savings associated with automating manual processes, and calculating the return on investment (ROI) from using the software.

5 Best Fund Accounting Software

A fund accounting software program enables organizations to keep track of project funding and expenditures in order to create valid reports. Here are the top five fund accounting software programs.

1. QuickBooks Online

Cloud-based accounting solution QuickBooks Online helps small businesses manage their financial records, income, expenses, payroll, and more. Using QuickBooks Online, multiple users can view detailed reports and accounts of company finances from one single dashboard that automatically syncs a complete business finance profile. All trade, profit, and loss sheets, as well as invoices and billing solutions, are mobile-friendly and print-friendly on the platform.

Key Features

• Online Banking
• Accounting Reports
• Cash Flow Management
• Time Tracking
• Accounting Reports

Pros

• It is effortless to send invoices
• QuickBooks online is fairly easy to use and user-friendly
• Easy to use reports for taxes at the end of the year
• Transparency is ensured by enabling accountants and auditors to access the data at any time

Cons

• QuickBooks online is slow to resolve tech issues
• Customer service needs improvement
• While the premise of bookkeeping cleanup is excellent, the implementation is terrible

Pricing

• Self-Employed - $15 per month
• Simple Start - $25 per month
• Plus - $75 per month

2. Fast Fund Software Suite

An all-in-one solution for all your management needs, Fast Fund Online provides nonprofit fund accounting, donor management, automatic fund accounting, and payroll all under one system. In addition to helping you work more efficiently, Fast Fund provides you with more detailed information needed to manage programs, be prepared for audits, and provide management with better and more accurate information.

Key Features

• General Ledger
• Accounting
• Expense Tracking
• Financial Reporting
• Recurring/Subscription Billing

Pros

• Fast Fund allows you to save a lot of time in accounting
• Track particular donations allocated to specific programs
• The customer service delivered is outstanding
• Excellent webinars are available for tutoring online

Cons

• The implementation of the software was rough
• The reports aren't super intuitive
• Some elements are not user-friendly (report generators)

Pricing

• Starting from $42 - $94 /month.

3. Xero

The Xero accounting system has been specifically designed for not-for-profit organizations and growing businesses. A web-based tool, Xero provides business owners with instant insight into their financial position.

It is available from any device with a web connection and connects small businesses with trusted advisors. Accounting software such as Xero lets small businesses monitor their cash flows, transactions, and account details from anywhere, automatically importing and coding bank transactions.

Key Features

• Send invoices
• Bank reconciliation
• Accept payments
• Track projects
• GST returns

Pros

• Xero has an easy and simple UI
• It has an effortless flow and terminologies
• Xero stores all payslips and leaves information in an easily accessible way
• Seamless transactions and translate financials into various currencies

Cons

• Constant disconnection of bank feeds
• The reporting function can be improved
• No integration and visibility to different payroll platforms

Pricing

• Early - $11 per month
• Growing - $32 per month
• Established - $62 per month

4. FUND EZ

The Fund EZ accounting software allows you to create and track budgets across fiscal years by giving you complete visibility into your organization's finances. Fund EZ gives you all the information you need to make informed decisions, regardless of whether you are managing multiple projects, grants, or different funding sources.

Key Features

• Built-in accounting
• Expense tracking
• Accounts payable
• Accounts receivable
• Bank reconciliation

Pros

• The reporting capabilities make it easy to provide reports
• FUND EZ is a great & all-in-one solution with a user-friendly interface
• You can customize your chart of accounts and reports completely 
• You can also easily and quickly generate financial reports

Cons 

• Financial report customization is time-consuming and labor-intensive
• The budgeting module is difficult to navigate
• The customer service needs improvement

Pricing

• Starts from $170.00 /month

5. Sage Intacct

Sage Intacct is one of the best fund accounting software and is a top choice for growing and midsize businesses. For businesses to scale, Sage Intacct offers innovative technology, powerful automation, and integrated cloud architecture.

Sage Intacct covers a wide range of accounting applications, such as general ledgers, payables, receivables, private equity funds, cash management, and order management. Sage Intacct has built-in reporting and dashboards, project accounting, revenue administration, time and payment management, and more.

Key Features

• Accounts payable and receivable
• Cash management
• Built-In reporting
• Dashboards
• Collaboration tools

Pros

• Sage Intacct is easy to navigate & user-friendly
• Creating customized reports for specific viewers
• Seamless integration with other systems
• The capacity to attach EHRs, tickets, and other documents

Cons

• The UI needs improvement
• Too many system updates
• There are glitches in data at times

Pricing

• Custom pricing

Who Uses Fund Accounting Software?

Fund accounting software is used mostly by the following - 

1. Charitable Foundations

   Fund accounts software program is heavily used by foundations to keep track of donations received from individuals and grants given by corporations and government agencies. This software aims to provide comprehensive oversight over these types of transactions while ensuring accountability for the funds distributed.

2. Government Agencies

   The use of a fund accounting system encourages compliance with rigid financial reporting requirements set by regulatory bodies for public sector entities such as local municipalities and government departments. Using it, different users can easily access budgets and gain visibility into how tax dollars are used.

3. Healthcare Facilities

   Hospitals, nursing houses, labs, and other healthcare providers need fund accounting software to facilitate financial processes and ensure industry regulations compliance. Grant management capabilities are particularly helpful in this field.

4. Nonprofit Organization

   Keeping track of donations, grants, and other funding sources requires special software, as does managing complex accounting processes. The software will help nonprofit organizations keep accurate records of donations, grants, and other funding sources.

5. Educational Institutions

   Fund accounting software helps schools and colleges to manage tuition and student aid payments, endowments, research funds, and capital project funding.

Trends Related to Fund Accounting Software

Here are the trends related to investment fund accounting software:

1. Improved Automation

   With more sophisticated features in fund accounting software, tracking financials and making transactions can be streamlined more quickly and efficiently. By lowering errors, users can finish their tasks effortlessly and efficiently.

2. Enhanced Protection

   A key benefit of technology advancements is that fund accounting solutions are much more secure than they used to be. As a result, fund accounting software now offers the highest level of security, ensuring users' financial data is protected from potential threats such as hackers or cyberpunks.

3. Increased Flexibility

   In terms of managing their finances, fund accounting software allows users to customize the program to suit their needs, allowing them to tailor the system to meet specific requirements.

4. Detailed Reporting

   Using this private equity fund accounting software, users can easily identify trends and make informed decisions about their finances by being able to see their finances in a comprehensive manner. Users can also use powerful reporting tools to predict future spending patterns more accurately

Pricing for Fund Accounting Software

The fund accounting process costs may vary greatly depending on the type and scale of fund accounting software. For example, an entry-level software package for records and reporting may cost only a few hundred dollars annually.

On the other hand, a more complex system with advanced features can cost tens or hundreds of thousands of dollars to install and sustain, plus extra annual fees for maintenance and updating. Therefore, when evaluating fund accounting software pricing, you need to consider your specific needs since there are no one-size-fits-all solutions.

A budget for this private equity fund accounting software purchase should be based on factors such as complexity and several users, reporting requirements, asset types tracked, and integration capabilities. In addition, using third-party services, such as cloud-hosted solutions, supplies accounting firms with advanced protection and scalability without needing large upfront investments.

Conclusion

Through improved visibility into finances, fund accounting software allows organizations to maximize their resources while staying compliant with applicable regulations. By doing so, they can decide the most effective way to allocate funds towards their mission.

For instance, with the help of a fund accounting module, churches can track their member contributions with a church governance suite. Fund accounting packages deliver a self-contained, self-balancing ledger precisely designed for a particular project or donation.