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Council Financial systems are Consolidating

Whether it be a work order associated with a council request, a payroll transaction, rating transactions, or the fees associated with a compliance issue, a Councils Financial system is the ultimate aggregator and final repository for most transactions occurring within a Council.

 

However, a Council will gain symbolic value from a financial system when it facilitates a solid budgeting process within a suitable governance framework. Equally important is the ability to produce the legislatively compliant reporting required of a Council. Increasingly significant is the capability to provide ad-hoc & self-service reporting, needed to support the diverse operations performed by Local Government, whilst meeting the requirements for transparency.

 

If we examine the market for Local Government financial solutions within Australia, it appears that some consolidation is occurring. The orphan solutions are shown under the “Others” category in the graph below and decrease to a point where it is almost irrelevant.  It is also clear there is a movement by Councils towards several solutions that are beginning to prove themselves in Local Government.

On numbers, TechnologyOne is the largest provider of financial solutions to Local Government. Their Financials Solution forms a core part of their overall ERP solution. Although most of their customers use the full ERP module suite, they have a significant customer base using alternative property and rating solutions such as Infor, Civica, and Open Office.


Civica is still a significant provider of Local Government Financial solutions, and Councils using the AuthoritySuite are keenly awaiting the new Altitude solution.


IT Vision has a significant user base and have fully re-developed their Financial Solution to become Altus. They have their first live Altus Financials Council with the Shire of Gin Gin. We would expect many of their Councils will move from SynergySoft Financials to Altus.


There have interestingly been moves towards specialist providers such as Microsoft, who have partnerships with many different solutions such as Open Office and CouncilWise. CouncilWise has also been successful in utilising Xero across multiple Councils, and this looks to have been successful as a low-cost solution for smaller Council budgets.


There are emerging New Zealand Solutions such as Magiq and Datacom, who appeal to some smaller Councils, whilst Oracle is re-emerging as a genuine solution after successful implementation at Wyndham City Council in Victoria, and implementations commencing at several Councils across Australia. They appear to have added specialty components that Councils require, such as rating.


Although the core functionality required of financial systems in Local Government has not changed dramatically over the years, some areas of interesting functionality are emerging as Councils strive to become more efficient and accountable.


The critical functionality required of a Council Financial System to meet operational and legislative requirements are;

  • A solid General Ledger.
  • Integration capability with rating, regulatory, assets, tender management, banking, payroll, document management, etc.
  • A procurement function that has controls that ensure council is only paying for authorised purchases.
  • Reporting that meets legislative reporting requirements but is flexible enough to provide reporting functionality across all levels of Council. It must also be able to report budget variances.
  • Budgeting functionality permits Councils to budget on either a centralised or decentralised basis and has various versions associated with each. It must also allow forecast versions.
  • Bank Reconciliation.
  • The ability to assign cost to either Work in progress (capital projects) or expense related projects. These should then disburse to relevant accounts in the general ledger.
  • Solid asset management functionality will allow the system to capitalise built assets and then depreciate assets.

Many Councils are now seeking additional functionality which will streamline the operational aspects of business areas, including:

  • Expense Management – Managing the expenses, including reimbursement of costs.
  • Purchase Card Management – Managing the credit cards that the council issue to staff.
  • Invoice Scanning – Scanning documents and then using Optical Character Recognition technology to automatically upload them into the Finance Solution and match them to purchase orders. There is also Peppol functionality available now, which manages the automatic loading of invoices by suppliers.
  • Grant Management Functionality – Managing the process of applying for grants and then working through the process to the acquittal of the grant.

A sound financial system should also have workflow capabilities that ensure transaction authorisation by relevant and approved staff.


The Financial Solution is a significant investment for Councils, and any moves should be researched thoroughly. It is essential to understand what you need from your system and the outputs you require.

Strategic Directions has significant research which will assist any Council or organisations either thinking about or underway in their transformtion journey. Reach out if you want to further understand considerations, options or next steps.

Speak to our Specialist Advisor