One of the largest operating inconveniences associations would like to change is the inability to track revenue and expenses within their financial software system and sync that information with the membership information stored in their association management software system.
Associations like having a picture of their membership’s actions that accurately reflects the state of their bank account. Membership actions tied to financial actions such as dues payments, event registrations, donations or online store purchases are a strong indicator of the health of an association. Reports about membership actions and the state of an association’s finances derived from financial or AMS databases quickly convey to staff and boards how well the association is performing, and what needs to be done to continue excellent performance or improve unsatisfactory trends going forward.
Unfortunately, transferring data between financial software and AMS systems is not a plug-and-play operation. Associations currently face three sets of obstacles tying up the lines of an easy transfer of data between AMS systems and financial software systems:
Three obstacles to association management software-financial software reconciliation:
The online-offline mismatch
First, associations hardly ever have a picture of their financial situation from their financial software that is 100 percent accurate because they almost always collect money in more than one place. Members who aren’t comfortable with web-based payments or for whom it’s easier to pay by cash or check often necessitate that associations accept payments that must be manually entered into an accounting software system. These payments must be manually deposited into a bank account as well, and later reconciled with an AMS, if at all. Many associations consider it too much work and an inefficient use of time to enter payments in two places, though some will so that members and staff can easily see a payment history for things like membership dues or event registrations. Entering this data twice also allows association staff members to accurately compare recorded revenues in an AMS with expenses in an accounting system and reconcile bank statements with internal records.
AMS/Financial Software limitations
Second, while AMS systems offer the capability to track all revenue coming in from dues, event or program fees, donations, e-store revenue or other income sources, they don’t simultaneously account for expenses like payroll, overhead and other vendor payments going out. This is the domain of specialized financial software such as QuickBooks or Intacct, which we estimate is used by 50 to 60 percent of associations. Because these popular financial software systems pre-date most current AMS systems, the market for AMS software did not demand that AMS systems include sophisticated financial functionality in their database software until about five years ago. Even now, it is difficult for associations already using a financial software system to break away from using that system due to concerns about slower productivity while learning a new AMS-based system, lost capabilities between financial software highly focused on accounting and AMS software that is more generalist in its information-organization capabilities, and data loss when switching between old and new systems.
(Note that data loss can be easily prevented by exporting all data in a format that is friendly to both old and new software systems, storing it offline/outside of either software and uploading it into the new system.)
Some AMS systems may offer complete, customized accounting functionality for a much higher price, but associations on a tech budget are stuck working with both an AMS and an accounting software system to cover their membership database and financial accounting needs.
There is the option of using a third-party app to sync accounting and AMS systems. Third-party apps like Workato or Scribe automatically (or upon manual sync) copy records created in one system into the other system. When choosing this patch, be aware if the app allows bi-directional or unidirectional sharing of information. Bi-directional sharing will allow your staff to create a record in either software system and copy it to the other; unidirectional sharing means you’ll be limited to creating records in one system only and sharing them one-way with the other system.
But even if an association wants to take the third-party app route, an API (application program interface; a tool that specifies how software components should interact), also called “middleware,” must be compatible with both their financial software and their AMS. This isn’t always the case – not every AMS system has APIs built to allow synchronization of data between the AMS and other software systems. Why? Partly because of the fact that any given API is custom-built to work between one specific pair of software systems. There are more than 300 accounting software packages on the market, and if your association uses one of the more obscure ones, chances are an API doesn’t yet exist to sync your AMS with that system because no one has asked for it. Having a developer create that custom API platform may be an expensive or difficult order because software developers are hesitant to invest time and money in the creation of a software component they cannot also sell to other customers.
Furthermore, if the API exists or is built, most financial software systems accept data in just one format. QuickBooks, for example, requires data to be in .iif (Intuit Interchange Format) form for import. Your AMS system might allow the option of creating exportable files in your financial software’s needed format. But again, because there are hundreds of financial software systems available and most of them use file types unique to them, most AMS systems are built to export data in more common formats that multiple customers will use – .xls, .odf, or .csv, for example. AMS developers circumvent this mismatch between exportable and importable file types by employing file converters as add-ons.
So even with the assistance of an API, it’s still an extra step to compile your financial data, put it into a format that is friendly with your financial software and your AMS and then sync the data.
Large information detail requirements
Third, associations wanting to sync data between an AMS and their financial software often want to communicate large amounts of data so detailed that maintaining the same level of granularity between the two systems becomes a burdensome step. Like their businesses counterparts, many associations use general ledger (GL) codes to identify types of expenses and revenues in their accounting system. GL codes can be associated with an individual product/expense, or a category of products/expenses. For example, your association might offer gold, silver and bronze-level memberships for individuals and corporations. You might offer these memberships for one year, a multi-year period or a lifetime. Each combination of membership types could have its own GL code. The benefit of having many codes is that your staff can see at a glance which membership types are the most popular, and which ones you might want to promote more.
This granular, line-item level of categorization is helpful when reviewing what works well for your association and what doesn’t. Knowing exactly which membership types your members are willing to pay for can help your marketing staff better position your association’s membership value. Seeing what types of event access attendees purchase, what add-ons or extra activities they purchase and what event-related merchandise they choose helps when estimating which parts of your events to carry over to next year and which ones to drop.
But when the number of permutations for purchases such as membership types or donation categories becomes large, detailing out every line item can become an onerous task. Bookkeepers spend a lot of time reconciling their accounting system with their bank account. What’s in the bank is what really matters, and your financial records should accurately reflect bank records. Requiring staff to spend even more time reconciling financial records from these two places with an AMS database may or may not be necessary, especially when your intended audience for the resulting reports may not even need or understand the increased amount of data your staff compiles.
Even with these three obstacles, the main challenge many associations want answered remains: how can associations accurately and easily manage, analyze, and report their financial and membership data?
Three recommendations for simplifying your data sync
First, if your association has the money for a high-end AMS system that offers custom accounting features comparable to the best financial software available – go for it. Your staff will appreciate the extra time they gain back by being able to conduct all accounting and membership reporting functions in one system, and will hopefully apply that extra time to other initiatives that further your mission.
If a highly custom AMS solution isn’t in your association’s budget, re-think the role of your current AMS solution in relation to your bank and your other financial tools. The purpose of an AMS system is to track membership actions and data. The purpose of financial software and a bank is to track your money. Leave tracking money to your bank and your financial tools, and focus on getting more membership analysis and reporting from your AMS. In other words, use each system for what it is best intended.
This isn’t to say you shouldn’t ask your AMS provider for improvements to their product. As technology and association business models evolve, there is always going to be room for improvement in the way we track and use information. However, every product, whether it’s a bank account, a financial software package or an AMS, will have its strengths and limitations in the general sense and in the way your association uniquely uses its information.
Finally, if your accountant or treasurer is complaining about the amount of time it takes to compile and reconcile financial and membership data between two systems (three if you count your bank), consider simplifying the amount of detail your association collects. While most AMS systems don’t offer simultaneous expense-revenue tracking, some, like Timberlake AMS Solutions, offer financial tracking tied to member actions – membership registration or renewal, donations, event registrations – and organization of these actions in the AMS database. Assign each action a GL code by category – not by line item – that gives your staff and board an idea of what’s going well without overwhelming them with information. For example, instead of breaking down membership types by monetary level, length of time, company and individual, consider having categories for just monetary level and length of time. Your association could also create an aggregate of transactions by category within your AMS that further break down intra-category within your financial software, so that you have a simple way of classifying data in your AMS. This would not only alleviate daily operations and information gathering, but also provide a more detailed record of revenues in your financial system.
If financial reporting at a granular level is necessary, leave it to your financial software. Consider not creating extra work by first creating detailed reports in your AMS and duplicating them in your financial software. Create a simpler check on revenues by aggregating the amounts collected under each general revenue category in your AMS and importing those numbers into your accounting system. You’ll have a high-level picture of revenue match while retaining revenue details within your financial software.
This categorization simplification may turn into an offline exercise that examines the amount and necessity of your association’s offerings. Don’t shy away from questioning “the way things have always been done” in the name of making staff and member life easier.
Another simplification option is to reduce the number of places where your association intakes money. If accepting manual payments is a time burden for your staff, consider requiring online payments – which can be seamlessly and automatically entered into your AMS and financial software via your website – for most, if not all, payment situations. If members balk at this change, start slow; require online payments just for events, and gradually expand this requirement to donations, membership dues, merchandise and whatever else your association offers. Over time, as new tech becomes more accessible and accepted, members will comply with your associations’ payment requirements.
Syncing data between financial software and association management software shouldn’t be a burdensome task that cripples your staff’s workflow and produces outdated report styles. Associations should be open to letting individual software systems do the job for which they were created while continuing to ask for improvements that will make using such systems easier and more responsive to association reporting needs. The numbers will remain the same; it’s up to you to ensure you’re using the most effective tools in the most efficient way to achieve your association’s goals.