As higher education institutions begin planning for a move to the cloud, many find that redesigning the chart of accounts – the basic structure used to record financial transactions – is a critical first step to fully realizing the benefits of the move. This fundamental financial principle serves not only as a means for organizing revenues, assets and liabilities but also as the basis for tracking and managing the finances of the institution's many funds, programs, activities and projects. Ultimately, a strong chart of accounts helps generate a clear financial picture across all levels of a university.
Realizing the benefits of a new cloud system starts with setting a solid foundation. Since the chart of accounts is the underpinning of an institution's accounting and financial management structure, a comprehensive foundation provides a basis for establishing a robust financial structure. This foundation sets the university up for success with greater transparency and visibility across all departmental financial activities.
Think of this process in the way an architect would when designing a new building on campus. The architect assesses every detail to create a building that is fully functional for its occupants. From determining access road locations to how many floors, labs, elevators, classrooms and windows are needed, a blueprint helps engineers and contractors bring the design to life. During the process, campus administration and departments make tradeoffs that lead to a new building as its campus "home." The discussion and collaboration involved in the planning process result in a new building that is safe, durable and useful. A similar level of detail and collaboration is required to design an effective and successful chart of accounts, enabling a university system to thrive in today's competitive higher education landscape.
Follow these steps to begin redesigning your chart of accounts:
- Develop guiding principles to inform the overall design of the chart of accounts. Describe the high-level goals and objectives, and fundamental principles that must be met in order for the final chart of accounts structure to be successful.
- Create an inventory of what departments are tracking in the current accounting system and in shadow systems. In your inventory, identify details in the chart and how best to capture that information.
- Develop and share a proof of concept with stakeholders. Discuss this initial proof of concept with a broad group of people across campus to collect feedback. This exercise helps ensure that the new financial system addresses stakeholders' needs.
- Implement a change management strategy. Implementing a new chart of accounts requires buy-in and input from faculty and staff. This input is paramount to ensuring the new chart of accounts addresses the broad needs of accounting and financial management. Develop a communication strategy to inform campus constituents of the changes and their benefits to encourage adoption and acceptance.
Moving to the cloud will modernize your campus and benefit your stakeholders in many ways. As you begin your cloud transformation, understand the benefits of having the right accounting framework and take the time to plan a new chart of accounts. This foundation will set your institution up for success as our look to reap the benefits of your cloud investment.