Fund Accounting Software: Working, Features, Benefits

Fund accounting software is an account management tool. It can be used for managing specific funds like private equity, pension, real estate, and many more. Those are non-profit, government agencies, and educational organizations that use such software. Accounting software is mainly used whereas account management is involved. So, if you want to choose private equity accounting software or fund management software then you must give priority to your choice and choose the best accounting software.   

What Is Fund Accounting Software?

Fund accounting software is a financial management system. This software focuses on tracking, allocating, and reporting for funds separately. It also ensures legal, regulatory, and donor requirements by providing transparency and accountability in financial reporting. Many people ask whether the fund accounting system can be used for business growth. No, it is not designed for business growth.

It has been designed for fund tracking and management for a specific reason. So, why is funding software essential? It is useful for managing dozens of crucial tasks, such as increasing data accuracy, instant information, exact compliance, financial reporting, and many more. So, conveniently use the best funding software for your organization's fund management.

How does Fund Accounting Software work?

Fund accounting software works by tracking and managing different fund sources. Accounting software ensures the users' intended purposes. Most accounting software has been designed this way. It works like church management software. However, let’s see with a few simple steps how the fund accounting system works.

1. Business Fund Creation

Users are allowed to set up different funds in the software, such as donations, grants, or government allocations. Each fund is covered or categorized with its own rules and restrictions. Users will have access to customize it by themselves. This fund creation system may have different sub-categories for the dinners, or other persons.

2. Fund Allocation

Fund allocation allows organizations or users to allocate their valuable assets in their systems. A specific fund can be created for individual persons. By which data filtering systems become easier. However, when money is received, it is assigned to a specific fund based on its source and purpose. The software ensures the money is allocated correctly to match the donor or legal requirements.

3. Expense Tracking

The expense tracking system works systematically and conveniently. How much money has been spent, spending date, who has spent, and other expense-related tasks can be tracked. Indeed, as expenses are made, the software tracks which fund the money is coming from. Each transaction is linked to a specific fund to ensure proper use of the allocated resources.

4. Fund Balance Tracking

How much money a person expenses, how much balance is remaining. Every single thing can be known from the fund balancing section. The software regularly updates the balance of each fund. It shows how much money remains. It ensures that no fund is overspent and helps monitor cash flow as well. In that case, the investor has no need to get pressured for cash overflow.

5. Report generating

Reporting is a crucial thing for every software.  Whatever you do (expense, donation, remaining balance) everything is possible to know through a report-generating system.  The software generates reports that show the financial activities of each fund, ensuring transparency. These reports help organizations provide funds in invested areas, cash flow, remaining balance, etc.

6. Compliance Management

The compliance management system is another essential thing. The software ensures all spending and fund usage. It complies with donor restrictions, legal requirements, and organizational policies, helping avoid penalties or loss of funding. It is noted that compliance holds up any organization's business policy, rules, greetings, and some other things.

Which Software Is Used For Financial Accounting?

There are dozens of software to manage financial accounts. Some software is specially designed for fund management and other software is designed for account management but funds can be managed and optimized partially. However, there are some essential financial management accounting software that have been specially designed for finance management.  

Xero: It is a well-known SaaS-based accounting software used in business development and business management. It can be used for small, medium, and large-scale organizations with a small ratio. It is one of the best fund accounting software for small businesses.

QuickBooks: It is a pure accounting or account planning tool that can be used in many organizations or industries. It can be used for personal account management, Tax and payroll management, and entire business management.

NetSuite: NetSuite is a leading and complete cloud-based (SaaS) account management software. It can be used for financial account management, CRM systems, Inventory management, professional account services, etc.  

Single Intact: It is renowned and most of the merchants' best choice ERP and business management tool. It can be used for product distribution, retail management, and account management for any kind of business range.

FreshBooks: It is a world-class financial accounting software. FreshBooks can be used as an advanced business analytic tool to track and monitor business progress. People can see their business performance or business health.   

What Are the Three Types of Fund Accounting Systems?

According to the Generally Accepted Accounting Principles (GAAP) classification strategy, fund accounting can be divided into three main categories such as

• Governmental.
• Proprietary.
• Fiduciary.

Managing these three main fund accounting sectors requires software. Three types of fund accounting systems can be used for those things such as

• Enterprise Resource Planning (ERP System).
• Billing and Invoicing System.
• Payroll Management System.

It is noted that in most cases, for retail and wholesale management ERP systems are used. For billing and invoicing management billing software is used. For payroll management systems like taxes or tax computation, pay slips, manage leaves, etc. These three categories of management systems are called fund accounting software.

Discover the Features of Fund Accounting Software

Features or characteristics are ornaments of any software. Those software have more features and this software is more demandable. In that case, we will discuss here a few features that most software have for the specific operation. However, fund accounting system features of organizations that manage multiple funds, ensure compliance and maintain transparency.

• Fund tracking and management in a convenient way.
• A general ledger management system manages financial transactions in separate ledgers.
• Budgeting features help to create and manage budgets for individual funds.
• Multi-entity management supports organizations to keep track of each entity’s funds and financial activities individually.
• Financial reporting provides detailed financial reports on fund performance.
• Better Integration system with other payroll management systems.

Is There a Free Fund Accounting System?

Yes, there are some free or open-source fund accounting software. Indeed, most software providers offer open-source or free software for limited features. With these limited features, a small business can be managed. To get reliable, advanced features customers must choose their premium plan. However, let’s see some free accounting software for fund management.

MoneyMinder: It is free at all times with limited features like custom budget creation, subject goal, custom account chart, and scenarios and forecasting. On the other hand, if you want to get more features then you have to go for the premium package. They have a yearly pricing limit of around $199 per year. It can be used as real estate fund accounting software for real estate task management.

QuickBooks Online: It is available for 30 days. This is because QuickBooks offers a 30-day free trial. In that case, no charge is required. If a user feels better then he/she can go for a long run by purchasing a premium package. So, check their pricing, and show your requirements. If everything is good to go then you may select this software for your fund management.  

Aplos: It is an equity management platform and can be used for employee salary, investment, etc. They offer a free trial for a specific time but they have a charge that is not transparent. Their pricing is based on the number of interest holders. So, you have to decide the pricing through conversation.

Benefits of Fund Accounting System

Most accounting software is considered the best fund reporting software. All the software must have advantages and disadvantages. There are many software that offer outstanding performance but have some drawbacks on some features or technologies they have used to make a software.

A few software providers may have support issues, installation issues, hard management, etc. So, every single thing in the world is perfectly decorated. However, now we will not discuss the drawbacks of accounting software but let's see some crucial benefits of fund management software that you can use to conduct your financial activity.

• Accounting software gives appropriate calculations for financial investment.
• Enhance business performance and efficiency as well.
• Allows you to see all the business data that you are interested to see.
• Allow you to see the entire invested amount and have the facility to filter them.
• Users can see the total expense and net profit as well.
• It shows advanced analytics about financial reporting.
• It provides real-time business data. 

Pension Fund Accounting Software

The pension fund accounting system is a financial management tool. It can be used for tracking contributions, managing investments, calculating payouts, and ensuring compliance with regulatory requirements. The pension fund accounting system offers features like timely financial reporting, asset and liability management, and overall financial calculations.

It can be used for the best finance management and data-transfer systems. It helps organizations maintain accuracy, transparency, and efficiency. It makes sure that all transactions are properly recorded and monitored effectively.

Investment Fund Accounting Software

Investment Fund Accounting Software is a financial management tool. Investment accounting software helps in various ways to manage business investment. This type of software can be used to handle the accounting and investing fund reporting requirements such as mutual funds, hedge funds, and private equity funds.

This software provides appropriate reporting, asset allocation, fund performance, and expenses as well. It allows fund managers and administrators to maintain transparency, and reduce errors, and significant operations. This accounting software may be indispensable to improve decision-making and investor confidence. It also builds better relationships and it can be considered partnership accounting software for trusted investment.

Private Equity Fund Accounting Software

Fund accounting software for private equity is used to manage the complex financial and operational aspects of private equity funds. Private equity fund accounting software can be used for some key purposes such as capital calls, distributions, investment tracking, and calculation.

It may be the best accounting software for investors. The software also provides detailed reporting for investors and tracks fund performance. It ensures compliance with regulatory requirements as well. This tool helps fund managers streamline operations, maintain transparency, and accurately track financial activities.

Mutual Fund Accounting Software

Mutual Fund Accounting Software is useful and designed for expense and income. This is a financial software that handles the accounting, reporting, and compliance needs of mutual funds. It is used to make solutions for critical functions such as calculating the net asset value (NAV), processing shareholder transactions, and tracking income distributions.

The software ensures accurate and timely reporting of fund performance, regulatory filings, and investor statements. It reduces errors, improves efficiency, and supports regulatory compliance. This business tool helps fund administrators and managers maintain transparency, optimize fund performance, and meet investor needs.

Final Thought

Fund Accounting Software is an account management tool. It is used to manage different kinds of business responsibilities. Fund management, expense management, donation, remaining balance generating, and other things are possible to track using accounting software. Most software offers a free trial for a specific time and some others offer premium packages from the beginning. However, choose the best accounting software for your organization and make the calculation appropriate