Prepare For The Cloud: Redesign Your Chart of Accounts
As higher education institutions begin the process of planning for a move to the cloud, many find redesigning their chart of accounts - the basic structure used to record financial transactions - is a critical first step to fully reaping 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, helping to generate a clear financial picture for the university.
Realizing the benefits of a new cloud system starts with setting a solid foundation. The chart of accounts is essentially the underpinning of an institution's accounting and financial management structure. A solid chart of accounts foundation provides a basis for establishing a robust financial structure setting 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 single detail to create a building that is fully functional for its occupants. From the garage and determining where there will be road access to how many floors, labs, elevators, classrooms and windows are needed, a blueprint helps engineers and builders bring the design to life. During the process, trade-offs are made with the campus administration and the department that will make the new building its campus "home." The discussion and collaboration involved in the planning process leads to 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 three steps to begin redesigning your chart of accounts:
- Create an inventory of what departments are tracking in the current accounting system and in shadow systems. In your inventory, include details that must be identified 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 stakeholders' needs are addressed in the new financial system.
- Implement a change management strategy. Implementing a new chart of account requires buy in and input from faculty and staff. This input is paramount to ensuring the new chart of accounts addresses the broad sweep of accounting and financial management needs. Develop a communication strategy to inform campus constituents of the changes being made 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 will set your institution up for success as you look to reap the benefits of your cloud investment.
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