Sometimes two things come together to form an exceptional combination. In food, there is wine and cheese. In music, we have the songwriting duo of Paul McCartney and John Lennon. In association financial management, it’s the integration of an organization’s association management software (AMS) and its accounting system — but only when done right.
In essence, AMS software serves as your association’s accounts receivable (AR) subsidiary ledger. It contains all the association’s revenue transactions and their corresponding AR and/or payment information. Integrating this information with your accounting system, which contains the accounts payable transactions and all adjusting journal entries, gives you a complete view of the financial well-being of your association’s general ledger.
However, if there are inaccuracies and inconsistencies in the data from either the AMS or the accounting system, then the general ledger won’t balance. This forces the accounting staff to investigate individual transactions to find the problem. As a result, efficiency suffers and staff members lose trust in the integrity of the data. But there’s hope! Association managers can take the following measures to ensure data integrity so your staff has confidence in your Trial Balance numbers.
Start With Good Data
You may have heard the adage, “garbage in, garbage out.” This is especially true for data migrations during association management software implementations. To maintain data integrity, associations need to make sure the data they migrate into the new system is clean from the start. Some organizations that are transitioning to a new AMS come from a system where data integrity was weak. If they move that bad data over to the new database, it causes issues when balancing the AMS beginning balances against the general ledger. The best strategy is to clean up the data in the legacy system before migration, paying particular attention to what will still be relevant in the new environment such as duplicate records or outdated information. Having clean, accurate data when the system goes live establishes a strong foundation to maintain data integrity going forward, allowing staff members to trust the data.
Keep the Data Clean
Following go live, organizations must also maintain the data to prevent quality degeneration. To do this, accounting departments should conduct periodic checks (daily, weekly, monthly and yearly processes for various types of records) to assess and maintain the integrity of their financial data. For instance, at the end of each month, financial personnel should create an accounts receivable trial balance and compare it to the balance in the general ledger. Do they match? If they don’t, then corrective actions are necessary. Posting transactions at the batch level – rather than a lump sum each month – can help streamline troubleshooting by creating a detailed audit trail of information between the two systems.
The frequency and types of processes required to verify data integrity will vary from association to association. For example, if your association deals with a lot of refunds, it would be best not to wait until the end of each month to review the refund data. You may want to conduct weekly reviews instead to catch any issues in a timely manner. If you are unsure about the frequency and types of processes that would best suit your organization, you can turn to your association management software vendor for guidance. They should have a resource available that is intimately familiar with association financial management.
By following the steps described above, accounting teams will know for certain that their financial data is accurate and clean. Staff can take advantage of an integrated financial management system that provides a holistic view of the organization’s financial health to ensure a successfully balanced general ledger.
About Ann Eichel
Ann is a CPA with 20+ years of association management and IT experience. She is currently a senior project manager for Protech Associates, Inc., where she enjoys helping associations successfully implement new AMS software.