Take the Complexity out of Professional Services Accounting
Let’s begin by stating the obvious. Project accounting is complicated. Project-based businesses need to satisfy a slew of accounting requirements while also meeting the needs of project managers and their customers.
Companies need tools that offer a high level of control from an accounting perspective plus the flexibility required to manage projects of all kinds while delivering critical insights to those who need them in real-time.
The right business management solution must, therefore, create a bridge for users across the following differences:
Project accounting is tied to the start and end dates of the project, which may cross fiscal years. Financial accounting is based on the company’s annual reporting periods.
Project reporting focuses on schedule, costs, and resources. In financial reporting, the focus is on the three bottom lines – net income, operating cash flow, and net assets return.
Project billing can be calculated in various ways (at the discretion of the project manager) using rules applied at the task level. The resulting bills are then fed back to the accounts receivable module for posting to the general ledger, which follows strict accounting rules.
BASIS OF COMPARISON
While individual projects can vary greatly, financial statements are designed for comparability across organizations based on a standard set of rules and financial measures. Individual projects may each have their own set of metrics, which makes meaningful comparisons harder to obtain.
Project managers are focused on managing project budgets and timelines while accountants are tasked with ensuring the business’s overall success in meeting their financial goals. Accountants must manage these goals while staying in compliance with various external regulatory and reporting requirements.
Clearly, it is a daunting task to select a Project Accounting solution that meets the needs of both accountants and project managers while also serving the business’ current and evolving needs.
We’ve provided a feature guide below to help you decide if your current Project Accounting solution fits the bill.