Fund Accounting – An Aplos Comparison


hey everyone today we’re gonna talk
about the differences between Aplos and QuickBooks and really fund
accounting software versus non fund accounting software my name is Alex
Acree and I’m the head of the services department with Aplos so today we’re
we’re gonna take a look at some of the workarounds that people will do in
QuickBooks in order to compensate for the lack of fund accounting in that
system in order to accomplish fund accounting in QuickBooks or any non fund
accounting software you have to put in multiple workarounds in order to get the
information you need on the reports just want to say up front that we are
not affiliated with QuickBooks at all in fact we’re Aplos and really
QuickBooks is a great program if you run a small business or a medium-sized
business QuickBooks is fantastic they have a ton of features very affordable
but really what we’re talking about here is if you are a non-profit Church or
government entity you have to do what’s called fund accounting and it’s just a
core difference in the way that accounting works some softwares are
built for it some are not we are they are not so what we’re gonna do today is
just go over some of those differences in some of the workarounds that you
might have seen or might have done to do in QuickBooks in order to compensate for
the lack of fund accounting so one of the main workarounds in QuickBooks that
people will do in lack of having fund accounting is to set up multiple sub
accounts to represent the different cash balances that they need to track so
let’s say you have a checking account in Aplos, that does fund accounting, you
would have one checking account in Aplos to represent your checking
account balance at the bank which is right in Aplos because we have
different funds you’ll be able to see that that total amount of money that you
have is then segregated or separated for the different fund cash balances that
you need to track with QuickBooks you can’t do the same thing you have to set
up multiple sub accounts underneath that checking to represent one account per
fund to cash balance so you’d have something like checking then a sub
account for general checking and then a sub account for missions checking sub
account for building checking all these sub accounts representing each cash
balance the sum of those is the total cash balance so you’ve got it and
somewhere but it’s split across all of these sub accounts that you then need to
track separately and reconcile separately or if you’re trying
reconcile them together it’s kind of a nightmare because that’s a lot of work
and that’s only for one account so that’s checking so then if you need to
have you know general missions and building money in also savings now
you’ve got even more sub accounts to deal with so that is one of the core
workarounds that people will end up doing to keep their cash separate but
again that’s only for the cash balance and that’s sub accounts per account so
it’s quite a lot of work to just get to how much money is in my bank right now
for this fund so some of the drawbacks about having this workaround for
multiple sub accounts to represent the different cash balances in QuickBooks is
it’s not a true kind of look at what cash balance you have in your checking
is overall so you might have a thousand dollars in there and you want to see
checking equals a thousand dollars but if you have that thousand dollars split
up across multiple sub accounts it’s hard to get to that core total another
one is it requires you to have the same workaround for every cash account that
you need to track different balances in so again you might have a checking and a
savings or multiple checking’s and you need to have multiple sub accounts for
each so now you’re looking at kind of a big grid just to see what your totals
are and kind of the last kind of downside into this is this is only for
cash this is not for accounts receivable any other kind of asset any other kind
of liability so really it’s just focused on your cash balances so it’s very
limited so not only is it pretty complicated to work with it’s also very
limited in what it actually covers so another workaround in QuickBooks to
compensate for the lack of fund accounting is to use classes to track
your funds activity so a class is a feature it’s it’s a parameter that you
set up in QuickBooks and then attach to transactions for income and expenses the
benefit is you can track how much has come in and come out for this thing this
class the downside is that only shows you the kind of the net you like the
income statement result it shows you what’s come in and what’s gone out which
is great but downsides it’s only for income and expense so it doesn’t track
any sort of liability payments any receipt or purchase of any kind of other
asset so it’s it’s limited to just your income statement and not your balance
sheet it also doesn’t carry any sort of
balance so if last year you had class setup for your missions fund and
you made $1,200 that $1,200 is not left in that class it’s just it’s just that
year’s report shows that you made 1200 so if you need to get to how much does my
fund have you’d have to run a report for all dates and then do the math to see
what you started with what was the activity and so what is my kind of
ending fund balance pair that with the other workaround that we talked about
which is the multiple cash account so work around the thing so now you’ve got
a class to track your activity so you can see how much just come in and gone
out but now you have to then match that or reconcile that to did that happen in
my missions fund checking account or my missions fund savings account
how much money did I have at the beginning of the year well I don’t know
it’s the sum of these cash accounts put together but then this activity affects
it and again that’s only for income and expense so never mind if you had to pay
off some sort of loan or accounts payable or receive an invoice none of
that counts either so the difference with Aplos and QuickBooks in this is
Aplos tracks all the income and expenses for the fund just like a class
does but with every transaction that you enter an Aplos you’re picking the
account that’s impacted but you’re also picking what fund that’s coming in there
out of so when you pick that you’re saying this expense came out of this
fund balance in this cash account so with every transaction that you’re
entering you’re not only tracking the activity on the fund but you’re also
impacting the current fund balance in whatever account you’re working in last
kind of Note too is Aplos does have an equivalent feature of a class and we
call a tag it’s essentially the same thing if you have some sort of event or
fundraiser or team or department or location one of these things that you
need to track in more detail if it’s not a fund it’s not an account but you want
to see how much is come in or out for it you can also use a tag in Aplos to add
some extra detail to it so another main workaround that people will do and this
is the last one pretty much is equity adjusting balances at the end of the
year so what I mean by that is let’s play out the other two examples let’s
say that you’ve got the cash accounts set up to represent the cash values that
you got for each fund so that’s one workaround in place and then you have a
class in there so that you can track the income and the expenses so that’s in
there so now you can get to how much cash to have at the beginning
and at currently I guess at the end what’s the activity in between but the
downside again is that’s only impacting cash and income and expense has nothing
to do with other assets and liabilities at all and that doesn’t result in an
ending equity balance that you need for each fund so what some people will do is
say we started with this much cash we had this much activity from the class
right so hypothetically our ending fund balance at the end of the year should be
the beginning – the activity or plus the activity so you do an adjusting entry
balance at the end of the year – then reclassify your equity into one of those
other buckets so the downside with this is for anyone that doesn’t have a CPA
license or an accounting degree what I just said it makes absolutely no sense
so to actually use this as a user is gonna be very very difficult unless you
want to pay for someone to do it for you which is an option the other downside to
this is it also still doesn’t get you to what is this funds balance let’s say
that I’ve got five different funds two of them restricted three are
unrestricted I want to get – how much does this fund have in it right now it’s
not necessarily cash only because there might be, again, receivables or fixed
assets or liabilities against it so let’s say I can let’s say I can finally
get – okay at the end of the year this is my ending fund balance I do the
adjustment I put it into some sort of unrestricted temporarily restricted or
unrestricted net assets category but that is also now just bucketing these
things into those three not necessarily your missions fund balance is this so
then you go to a separate spreadsheet most likely to say well on my balance
sheet we have this much restricted money and that’s actually these funds together
well I mean you can do that but again that’s just it’s almost like a fourth
workaround is Excel right so you not only have to make all of this work
around for the cash accounts which again is just cash you have two classes track
activity and then you do some sort of end-of-the-year roll up into an equity
account that doesn’t represent the balance that balance is actually the sum
of these things over here which hopefully that equals that because
I’ve seen spreadsheets that have way more fund money allocated to them than
the accounting actually does that’s because there’s multiple stop gaps you
have to do all kinds of workarounds for it and at the end of the day is just not
fund accounting so why is Aplos a good fit for this rather than QuickBooks
now for the record we’ve been using QuickBooks as kind of the term to
compare to but really what we’re meeting here is non fund accounting software we
use QuickBooks because that’s kind of synonymous with accounting software but
realistically we just mean non fund accounting software it could be anything
QuickBooks is actually an incredible program if you run a small business and
in fact we see a lot of comparisons about us and QuickBooks saying you know
this is great for small businesses but Aplos falls short for small businesses
which is right.That’s not what we’re made for. An equal comparison is “Aplos is
great for nonprofits QuickBooks isn’t” and that’s right because they weren’t
made for that so really at the end of the day our main kind of demographic
here is nonprofits which typically includes smaller organizations and
religious affiliated you know churches and stuff so the kind of the core
demographic of those users are not people that have a lot of experience in
accounting they also don’t have a ton of money to throw at hiring someone to
perform these things so it’s for this exact reason that we have wanted to
create Aplos and provide a simple and affordable fund accounting solution for
that demographic because QuickBooks or any non fund accounting software just
falls short in some areas and what you guys really need is a true core fund
accounting product that’s catered to the exact needs that you’ve got as an
organization so that’s why we’re here So, hopefully this content was helpful if you
have any questions feel free to use the comments box below or subscribe if you
want more videos from us we can also provide any answers to you from our
support email [email protected] be more than happy to go through any
questions with you

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