Project accounting management is an essential component of any business, especially those that provide professional services. If you’re looking to stand out from the crowd, investing time into fine-tuning your project accounting practices will pay dividends quickly. We’ve gathered our five best tips to get you started.
40% of project-based businesses do not use project management software and 52% of projects experience scope creep.
Let us look closer at 5 project accounting best practices and how, with the right project accounting tools, you can ensure profitability for your projects, regardless of size or complexity.
- 1. Managing Scope Creep
This is a frequent problem in project accounting and can be mitigated by having a clear discovery and pre-project engagement that covers understanding the client’s vision.
How we can help!
- Acumatica is a cloud-based accounting software that provides powerful financials, job cost accounting, project management, payroll, inventory, order management, service management, CRM (Customer Relationship Management) and mobile.
- Acumatica helps control changes to the project scope by creating change requests that can be converted to change orders with electronic copies of all necessary documents.
- Automated workflows can be set up to route change requests to the appropriate people for approval.
- Tracking requests and their associated documentation within Acumatica helps ensure that the budget is always up to date and accurately reflects resource allocations.
- 2. Reducing Project Risk
Reducing project risk is essential to a successful project plan, as unforeseen and overlooked details can easily derail a project. Contingencies should be built into the schedule to account for any unexpected events impacting the project.
How we can help!
- Acumatica helps teams proactively track activities, documents, change orders, alerts, access to mobile devices, assignments of staff and resources – ensuring projects stay on track.
- Acumatica can help provide proactive alerts and mobile access to track and manage activities, documentation, change orders, etc.
- Time sheets and resource allocations can be linked to specific projects for better tracking of progress and status updates.
- 3. Accurate Budgeting
Before cloud project accounting software became available, the typical budgeting process relied on guesstimating costs from labor to materials.
How we can help!
- Acumatica Construction Edition helps businesses accurately budget for projects, including tracking budgets, payroll, invoices, and billing.
- Overhead and shared expenses can be allocated to individual projects.
- Project budgets can include inventory items, labor, and more which then can be compared with actual project costs and incomes by period.
- Reports allow users to track budget forecasts against revised budgets and actual project costs.
- Additionally, users can enter and modify project budget forecasts and compare these with actual costs over financial periods.
- 4. Time Keeping Management
Knowing how much time was allocated to a project is vital in determining how profitable the project was.
How we can help!
- Acumatica provides effective tools to accurately record time against projects, essential for payroll, invoicing, productivity, and cost tracking.
- Features include tools to track labor and material costs, manage certified payrolls and union wages plus automated processes for field supervisors and finance.
- Timecards can generate customer invoice and update contract status as well as reports to control labor costs.
- Cloud-based mobile software allows real-time synchronization so the business can respond quickly and efficiently.
- 5. Managing the Project Close
Overlooked or rushed to push to get the project across the finish line.
How we can help!
- Establish a process to track all related project paperwork, approvals, emails, etc.
- Obtain formal delivery acceptance of the finished project from customer.
- Update all costs related to the project.
- Release personnel and resources from the project for use in other projects.
- Utilize Acumatica to keep all documentation in one place, track labor/material costs & close tasks as they are completed, tie seamlessly with Accounts Payable & Purchase Orders.
Effective project accounting management involves proper resource allocation and management, regular review of financial reports, task, and time management, proper invoicing and billing management, and consistent project monitoring and reporting. Following the best practices of project accounting will enable organizations to remain profitable and deliver successful projects that meet and exceed client expectations.
Employing technology that aids project accounting workflows is essential in ensuring that organizations keep up with the best practices and deliver efficient project accounting management practices.
Learn more about Project Accounting at OPUS Global Data Solutions.
