Automatic expense allocations is a basic feature found in most mid-market financial accounting software packages. This feature allows you to gain the flexibility and value of automating a potential time consuming task of allocating various revenues and expenses across different financial dimensions. You would think that such a simple feature would not be that big of a deal, but the truth is far from that. Time and time again, we see non-profits achieve tremendous benefits from this simple feature when they migrate from a low-end accounting software solutions like Quickbooks or Sage 50 (Peachtree) to a more robust solution like Intacct.
The way allocations work in Intacct, you can set up user-defined allocation tables that allow you to automatically allocate an expense or a revenue across any financial dimension based on percentages.
Example: You have a $1,000 utility bill and you want to allocate it across five grants based on the following percentages:
- Grant A – 20%
- Grant B – 10%
- Grant C – 15%
- Grant D – 30%
- Grant E – 25%
When the $1,000 Utility Bill is entered, the user can select the Grant allocation option and the system will then automatically allocate $200 to Grant A, $100 to Grant B, $150 to Grant C, $300 to Grant D and $250 to Grant E.
As you can probably imagine, the benefits of this are twofold. First of all, the time savings are huge. Instead of having to calculate the expense allocation by hand and then manually distribute the bill to the appropriate grants and accounts, the system does it for you automatically. Depending on how many automatic allocations you can take advantage of, this can free significant time that can be used for more mission critical endeavors. Secondly, the accuracy is better. When expenses are allocated manually, there is always room for human error. With automatic allocations, you never need to be concerned about mathematical errors. Hence, you can have confidence the reports to your funders are accurate.
If your system supports automatic allocations, but you are not using them, you’re probably missing out on a huge potential benefit. Check it out and give it a try. If you’re current accounting system doesn’t support automatic allocations it might be time to look at moving to a more robust, cloud based solution like Intacct. It’s a pretty easy transition and automatic allocations is just one of many benefits you will gain.
To learn more about Intacct, cloud computing or Maner Costerisan, please visit our website at www.manersolutions.com.
Maner Costerisan specializes in helping non-profit organizations move to the cloud with Office 365 and Intacct, the leading cloud-based financial accounting software solution for Associations and other Non-Profits. Vision, speed and accuracy are the keys to organizational success. Maner Costerisan understands these principles and has provided them to clients for over 100 years. As a CPA firm, we understand the importance of customer service. We are a professional services firm first and foremost and our focus is on the well-being and business success of our clients. With a highly satisfied client base of over 175 software clients, Maner Costerisan is the premiere mid-Michigan provider of financial accounting and ERP software solutions.
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