One of the most crucial aspects of public administration is financial management. To ensure proper use of public funds across all sectors, government organizations must follow a set of rules, policies, and processes, from revenue collection and debt management to monitoring public expenditures. As part of core public sector software solutions, the best public financial management systems help ensure efficient allocation of resources, fiscal responsibility, sound operational planning, and the timely implementation of projects.
Without proper financial management, government organizations run the risk of succumbing to frequent budget failures, cost overruns, and lengthy delays in the deployment of public services. According to a report by the United States Government Accountability Office, government-wide improper payments alone reached $175 billion in the fiscal year 2019.
Ultimately, the goal of public financial management systems is to address these issues and provide accurate and reliable information that can be used by policymakers and government employees. Through the widespread adoption of public financial management systems, government organizations can easily make informed decisions and improve the efficiency and effectiveness of their financial operations. In this article, we’ll share with you some of the best public financial management systems available in the marketplace today.
All over the world, government organizations are constantly struggling with increasing constraints on their financial resources. On top of that, there is the ever-present concern about mismanagement of funds, lack of financial transparency from the government, and prevalence of corruption.
According to the U.S. Government Accountability Office, serious financial management weaknesses have been identified in various government sectors. In the fiscal year 2020, improper payments from individual agencies totaled $206 billion, up from $175 billion in the previous year (U.S. Government Accountability Office, 2020). As such, efforts to improve the transparency and efficiency of government-wide accounting and federal financial management are underway to resolve these issues.
To best understand the state of financial management in various government departments, let’s take a look at some of the latest reports and statistics from credible sources on government finances.
Ideally, government organizations aim for a balanced budget, where government spending and taxes are on an equal footing. A budget deficit usually occurs when the government spends more money than it receives in taxes for a given year. On the other hand, if the government underspends the money it receives in taxes, a budget surplus takes place.
In 2009, the U.S. government experienced its largest budget deficit, with the federal government spending $1.4 trillion more than what it had in tax dollars (Pressbooks, 2020). This was due to the economic crisis in 2008 that was shortly followed by the Great Recession. As a result of the global economic downturn, world financial markets, banking, and real estate industries were devastated, leading to millions of people losing their life savings, their jobs, and their homes.
Since then, a new period of financial regulation in the United States transpired, with the federal government assuming greater control of state-wide finances and implementing various consumer protection measures designed to safeguard investments. With stronger financial regulations in place, stable prices and economic growth became more feasible. This also enabled the U.S. government to monitor the operations of holding companies and protect banking, financial markets, and consumers from all sorts of financial fraud.
Let’s take a look at some key statistics surrounding government budgets and financial regulations:
Government spending typically covers a wide range of services provided by the state, local, and federal governments. In 2022, current affairs and international events, such as the continuing effort to fight the COVID-19 pandemic and the Russia–Ukraine war, are offering a glimpse at how the administration expects to spend money for the current year and in the following years to come. Here are some of the latest statistics on government spending in 2022:
Source: USA Spending (2022)
Since the enactment of the Chief Financial Officers Act in 1990, which gave the United States Office of Management and Budget the authority and responsibility for modernizing the government’s financial management systems and improving the overall federal financial performance, government organizations have made significant progress in reforming and improving their financial management.
Challenges remain, however, when it comes to achieving the overall effectiveness of government-wide financial management. Take a look below at some of the most relevant reports and statistics on the effectiveness of financial management in government organizations.
In 2020, taxes represented the largest source of general revenue, which totaled $1.1 trillion and accounting for 45.8% of the state government’s general revenue sources (Census.gov, 2021). Thus, it has become more imperative for government organizations to efficiently manage their finances and allocate tax funds to the essential services and infrastructure for public services and the welfare of the citizens.
To tackle public financial management challenges, government organizations are widely adopting modern tools and systems to ensure accountability and efficiency in the use of public financial resources. With a well-functioning public financial management system, government agencies can effectively manage their cash flows and maximize returns on existing investments. Public financial management systems are particularly relevant to local government units as they need to allocate public funds to reinforce wider societal shifts, stronger states, and balanced economical growth.
Source: Census.gov (2021)
In this sense, government organizations are taking advantage of disruptive technologies and innovations in public financial management systems. Today, there are tremendous opportunities to implementing such tools, including more accurate financial documentation and improved visibility of financial transactions. The following sections outline some examples of the best public financial management systems available today.
Freebalance Accountability Suite is a government resource planning platform designed exclusively to help government organizations manage expenditures and critical government fiscal systems. It supports public financial management reform and modernization by providing government organizations with the essential tools they need to manage tax dollars more effectively. The solution is also built with modules for core government accounting functions, as well as budget controls, fixed asset management, cash books, and inventory management.
Oracle Government Cloud is a comprehensive government platform that helps government organizations to streamline financial management and deliver online services to their constituents more efficiently. It provides federal civilian agencies, the intelligence community, and the U.S. Department of Defense with the complete tools they need to efficiently migrate and manage financial management tasks in the cloud.
Additionally, Oracle Government Cloud is known for its world-class security and compliance and consistently high performance, making it one of the most reliable public financial management systems in the marketplace.
Specifically built for government and non-profit agencies worldwide, SAP for Public Sector is one of the leading platforms for cloud computing, enterprise mobility, and analytics. It helps government agencies around the world to improve their performance, services, and accountability. It also offers a wide range of budgeting and planning tools for public sectors, enabling government agencies to implement the best practices for budget and financial excellence.
Designed exclusively to meet the needs of the public sector, OneGovERP is a cloud-based ERP platform that offers a variety of tools to help government agencies accomplish projects on time and on budget. It is built with an accounting tool that allows government organizations to streamline their core accounting, budgeting, financial planning, payroll, and human resource services. The solution is highly configurable and user-friendly, enabling governments and municipalities to maximize their time and resources while staying compliant with the U.S. and Latin American accounting laws.
Open Window is a financial management software that allows government organizations to manage their financial and accounting data more effectively. It provides a plethora of tools to help local governments follow industry standards and remain compliant with state and local legislation. It is also built with a number of accounting functionalities, such as general ledger, AP management, invoicing, and bank reconciliation.
New World ERP is a public administration platform that provides tools for core government functions, including tax collections, utility billing, asset maintenance, appraisal, and financial management. It enables government organizations to streamline financial-related processes, eliminate departmental data silos, and reduce errors due to manual data entry. It integrates core financial applications with revenue management, human resources, and tax billing. With its multi-fund accounting system, the solution allows local governments to simplify accounting operations and gain insights into core operational functions.
Blackbaud Financial Edge NXT is a cloud accounting solution purposely built to meet the unique needs of nonprofits and government entities. With its robust set of features and capabilities, the solution enables organizations to manage financial reporting, support fundraising efforts, monitor program performance and success, and ensure overall integrity and accountability. Blackbaud Financial Edge NXT also offers managerial accounting tools that provide actionable insights and help decision-makers make data-driven decisions for their organization.
CenterPoint Fund Accounting is an accounting solution built specifically for municipals with small to medium size populations that need to streamline financial management processes. It offers a variety of accounting features and allows organizations to simplify complex budgeting and financial reporting process. It also has a purchase order module that enables local municipalities to manage purchases and requisitions, from monitoring orders to managing accounts payable transactions.
Pro Fund Accounting is an accounting software built to improve financial transparency and efficiency in government organizations. It provides all the essential tools that state and local governments need to become more efficient and more financially transparent. It is equipped with budgeting tools that allow government organizations to keep track of monthly or annual spending updates and achieve a higher level of transparency in their budget process.
AccuFund Accounting Suite is a powerful financial management system that offers a wide assortment of modules to help nonprofits and government organizations modernize and simplify financial-related processes. From utility billing, grants management, fees, and taxes and licenses to human resource and payroll management, the solution brings together all the essential tools that local governments need to demonstrate financial prudence and local accountability. It also comes with robust reporting features to help organizations to meet internal and external requirements in various formats.
CentralSquare Finance is a cloud-based financial software with complete tools for managing every aspect of public financial management. It streamlines financial-related processes and automates routine transactions, such as purchase orders and requisitions. The solution is also equipped with revenue and expense tracking tools, enabling government organizations to manage the financial health of their organizations and improve their cash flows.
Accounting +Plus is a fund accounting software built for government organizations. It is loaded with financial management features and capabilities that enable public sectors to have more control and a better understanding of their financial health. The solution also has a wide range of budgetary and planning tools that provide organizations with accurate revenue and expenditure forecasts to increase their efficiency and accountability.
Edmunds Local Government Finance is a municipal financial management system that helps organizations to automate routine processes, unify financial data across functional areas, and gain access to meaningful insights. It is a highly capable accounting solution purposely built to handle the specialized accounting needs of municipalities. It also provides customizable visualization tools such as charts of accounts, unlimited funds, and single-source entry, enabling government organizations to optimize and efficiently manage their fund accounting.
With a clear goal to help local governments streamline their annual budgeting processes, ClearGov is a leading budget cycle management software used by members of the public sector in all aspects of their budgeting processes. The software enables department heads to collaborate more efficiently by providing powerful visualizations and keeping all conversations well documented. In addition, it provides operational budgeting tools that allow government units to create and manage their operational budgets more efficiently.
Localgov is a tax collection and accountability software built to boost taxpayer confidence and the local revenue of government organizations. It is an innovative, simple, and streamlined system that allows local governments to automate tax collections, manage expenses, and provide financial reports and forecasts. It also offers a self-service portal that lets taxpayers log in and manage their taxes online.
Municipal Finance Systems is an all-in-one public financial management software that provides a plethora of tools to help municipalities become more efficient and organized in their finances. From AP and AR management to interest allocation, project accounting, cash receipting, and more, the software offers user-friendly features and a standardized interface across all of its modules, which result in a shorter learning curve for organizations adopting the system. The software also offers utility management, payroll and HR, licensing, permitting, and tax management tools that allow municipalities to improve their operations and achieve higher reporting standards.
MAGICQ Cloud Platform is a public administration platform built to reduce complexities surrounding public financial management. Used by government organizations, the software offers a suite of banking, accounting, billing, and government procurement tools designed to meet financial and statutory compliance requirements. It also comes with service management features that help government agencies support a high level of responsiveness to internal and external requests.
e-PBT is a modern and responsive financial software that brings a range of reporting, performance, and productivity benefits to local authorities and their constituents. The solution offers unique features and capabilities specifically designed for local governments, such as infringements and inspections, utilities and waste billing, planning and development, and so much more. Built on a corporate enterprise information system approach, e-PBT unifies financial data, eliminates errors, and drives efficiencies for local governments.
Light4 is an end-to-end accounting solution ideal for government-contracted projects and commercial enterprises. It ensures the financial health of organizations with its built-in bank reconciliation capabilities, real-time reports, and up-to-date financial statements. The solution also offers numerous cost accounting functionalities, allowing local governments to access and manage key financial data. It also helps department units to calculate overhead, administrative, and material costs to ensure the profitability of their organization.
Pulse is a sophisticated business process management platform ideal for government agencies that need to streamline many aspects of their day-to-day operations, including public financial management. The platform comes with an audit module designed to meet audit plan management requirements. It provides a range of tools to help government agencies implement checks and balances across your organization, improve accountability, and comply with law enforcement and legislative and statutory requirements.
As the list demonstrates, there are plenty of public financial management systems that public organizations can choose from, each one offering unique capabilities that can improve accountability, transparency, and financial reporting for your organization. In choosing from among the best public financial management systems for your agency, consider the needs of your organization and make sure that your chosen system can easily meet your specific demands and requirements.
Public financial management plays a vital role in managing public expenditures, so it is equally important to implement an accountable system that can help your organization deliver services more effectively and equitably. To know more about other government software products that can help your organization streamline day-to-day tasks, you can also check out our guide to the top government solutions today.
Beyond public financial handling, governments also have to deal with the nitty-gritty affairs on the streets and community neighborhoods. For those, governments rely on the best code enforcement software to keep the peace.