There are at least three big threats to your institution’s funding: overspending, underspending, and spending outside of award conditions. All three sound like something your accounting software should prevent, right?
In theory, yes. But in reality, award funding management falls outside the scope of general accounting software. Sure, it can track purchases, but it isn’t designed for more complex tasks, such as:
- Showing granular spending details in real time
- Creating projections and what-if scenarios
- Ensuring spending is allowable, allocable, reasonable, and consistent
Accounting software doesn’t show real-time data
Software like Banner and PeopleSoft don’t track research spending in a granular way, which can lead to overspending and underspending. If researchers want to know how much funding they have left, they have to rely on monthly reports, which are quickly outdated, or ask an already-overloaded research administrator to pull a special report for them.
Often, this seems like more hassle than it’s worth, so researchers often make purchases without knowing the latest award balance and trust that the post-award office will figure the math out later. Unfortunately, this can lead to overspending, which means the institution has to come up with the extra funds.
On the flip side, researchers might not spend all of their award in time, which means they have to return the unused funds to the sponsor. This has the added consequence of making it look like they asked for too much money, potentially casting doubt on future proposal budgets.
Accounting software doesn’t help you plan
Creating projections and what-if scenarios would go a long way toward preventing overspending and underspending, but that’s another feature beyond the scope of accounting software. Principal investigators and research administrators should be able to create accurate spending forecasts for every research project.
For example, a projection could identify how much it would cost to hire research staff (whether hourly or salaried, and for how long), in order to make sure the grant could cover those hiring costs and then make adjustments if necessary. It can also answer questions like, if a grad student is hired half-time for the year, how much would their salary be monthly and total? Planning ahead is a critical function that accounting software doesn’t support.
Accounting software doesn’t help you stay compliant
ERPs also don’t alert you to spending outside of grant conditions. Ideally, if someone makes a purchase or hire that wasn’t accounted for in the grant proposal, the post-award research administrators should automatically get notified. You’ve probably seen the news stories about researchers incurring millions of dollars in noncompliance fines for their institutions due to ill-advised purchases. If there was an easier way to review and verify transactions on a regular basis, administrators could hold researchers accountable for their spending, and any purchases in question could be caught sooner rather than later, mitigating risk for the institution.
Pick up where your accounting software leaves off
Fund Manager is the tool you need, providing real-time visibility into remaining award funds, plus powerful projections and reporting. With Cayuse, research teams can achieve on-target spending more easily, and administrators can identify potential overspending and risks or violations sooner. Ultimately, it helps protect research institution integrity.
Your finance department will also be excited to have fewer phone calls from researchers asking for award balances and spending reports. Investigators and administrators can self-serve and get accurate, up-to-date answers whenever they want without bothering the finance team. Meanwhile, finance staff have more time freed up to focus on other areas of their job.
Fund Manager’s key features include:
- Making projections and what-if scenarios to visualize potential impact of spending
- Tracking encumbrances with associated and indirect costs
- Reviewing transactions to ensure costs are allowable, reasonable, and allocable
- Seeing detailed balances and transactions for any project year, set of projects, and spending category
- Attaching documents to transactions, such as approval letters for a specific purchase, which makes audits easier
To learn more, download our free whitepaper, Proper research fund management: what every finance leader needs to know.