Project accounting plays a significant role in maintaining budget control and resources, generating accurate billing, and ensuring the profitability of all projects. It’s a huge necessity for project-centric industries like construction as it requires a comprehensive solution to get cost estimates, manage resources and time, and ensure productivity.
Still, many contractors aren’t using project accounting systems to manage their projects. Look at the following statistics:
- According to Capterra, contractors see managing time and costs against projects as a big difficulty.
- ConTech Report 2019 reveals almost 40% of contractors aren’t using project management solutions.
- As per Project Management Institute, nearly 52% of projects face scope creep.
In this guide, we will discuss project accounting and highlight the best practices for contractors to ensure profitability by implementing Acumatica cloud ERP software.
Why Choose Acumatica ERP Software?
Introduction to Project Accounting
While companies mainly focus on financial performance and stability, project accounting is a crucial aspect to maintain the performance of individual projects. Each project has a particular schedule and you should be concerned about meeting financial contracts promptly.
The project accounting software is designed for estimating, cost accounting, forecasting, revenue recognition, and cash flow management of projects. Specific areas of interest include:
- Budget forecasting for all projects
- Determine start and end dates in regards to time, cost, and resources
- Establish adequate reserves in place for unforeseen risks and overruns
- Monitor costs and revenues against planned costs
- Identify role, task, or milestone to retain project profitability
Acumatica Cloud ERP Demo
5 Project Accounting Best Practices Making Contractors Work Easier than Ever
There are various pitfalls and opportunities in project accounting and during this case, Acumatica ERP proves to be very helpful. Here’s how contractors solve problems with five project accounting best practices:
1. Managing Scope Creep
Construction companies could run into issues with building code requirements, availability of building materials, and additional work to prevent hazardous situations. The best way to reduce scope creep is to discuss the project diligently with the client and comprehend their vision to accomplish project success.
How Acumatica ERP can Help?
Acumatica Construction Edition is a complete, cloud-based ERP software that involves powerful financials, project management, job costing, payroll, order management, and more. It works alongside project managers to keep the project budget up-to-date and present resource allocations with revised project team documents.
2. Reduce Project Risk
Neglected information and unanticipated events lead to project failure. Thus, project accountants and managers must create a plan for uncertainty and focus on crucial activities for necessary adjustments. Another feature of project accounting is that it can interact and collaborate with all levels of teams.
How Acumatica ERP can Help?
Acumatica Construction Edition allows you to monitor and handle all tasks for photos, change orders, and documents that affect project contracts and audit trails. Project managers and accountants will have accurate and up-to-date information on the status of every project.
3. Accurate Budgeting
You must know your actual costs, from materials to overhead expenses to manage your budgeting process and deliver profitable construction projects. Accurate budgets will help you determine areas of more cost and contracts that offer maximum revenue to the company.
How Acumatica ERP can Help?
Acumatica Construction Edition can help create accurate project budgets, revise those budgets while keeping a track of crucial information, and compare actual costs against estimated expenses.
4. Time Management
Tracking time against a project is necessary for invoicing, payroll, evaluating productivity, and recording costs. Thus, make sure to keep a track of time to determine where you stand against the project budget and respond quickly to business challenges.
How Acumatica ERP can Help?
Acumatica ERP comes with time, attendance, and payroll features that allow contractors to monitor labour, material costs, and contract status. The real-time data synchronisation allows the entire organisation to control costs and perform operations more effectively.
5. Manage the Project Close
Closing any project efficiently is highly imperative. However, in a hurry to take the project to the finish line, many elements could have been overlooked and further complicate the project closure. To make this process simpler, establish a plan to monitor all approvals, paperwork, emails, and documents linked with the project.
How Acumatica ERP can Help?
Acumatica Construction Edition tracks labour and materials costs, allowing users to measure actual costs and compare them against budget forecasts. Also, it keeps you informed with project documents, communications, and files related to the project within a single system via digital access.
Takeaway
Project accounting supports all aspects of business, from budgeting to billing, profitability, involving workforce, materials, and tasks. Acumatica Construction Edition is a scalable solution to manage core financials, inventory, purchase orders, job costing, and more. Project accountants and managers will have the right toolset in place to maintain accuracy and understanding in all project stages.