If you’re using QuickBooks or other generic accounting software, your business is at significant risk. There’s a reason why those products are shrink-wrapped. It’s the only thing that’s holding them together.
A few questions to ask yourself:
- How long could your business operate without receiving contract payments?
- What if you couldn’t generate an invoice because your timekeeping solution is noncompliant?
- Could you make payroll if a payment suspension froze your line of credit?
When you’re using QuickBooks, these are more than hypothetical questions—they are real risks that government contractors face today.
The Challenges of Accounting in Government Contracting
The federal government has unique requirements for compliance, as well as accounting for project
costs. Most generic systems, like QuickBooks, can’t meet those federal regulations. QuickBooks
doesn’t provide the level of control required or the level of reporting needed to adequately document and cost your projects.
A project-based system is absolutely essential for any sort of project- or service-based business.
If the project itself is the core of your business, you need a system that is built just for projects.
But a generic system, even one that’s project based, isn’t enough in a federal contracting environment. You need a system that’s purpose built for the government contracting environment. Accounting in government contracting is unique and frequently difficult. Unlike commercial firms, cost is your primary accounting concern. It’s essential to manage how costs are classified, segregated and reported.
Other critical elements of contractor accounting include:
- Classifying costs as either direct or indirect
- Classifying costs as allowable or unallowable
- Accounting for costs by project AND at the
- lowest work breakdown structure (WBS) level
- Managing and pooling indirect costs
- Supporting government-mandated billing
- formats (e.g., DD250, 1034, 1035)
Learn more about why you should consider switching to Deltek Costpoint for your project based ERP solution, contact us today.
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