Three Ways Small Business Government Contractors Can Cut Compliance Complexity and Thrive in 2021
We all associate government with red tape, and rightfully so. There are 2,017 pages, not counting supplements, which comprise the Federal Acquisition Regulation (FAR) rule book. These pages detail the policies and procedures for executive agencies of the federal government on how to make acquisitions. And, these FAR policies and procedures can change. Yes, this means the rules can change in the middle of the game. For example, GovWin IQ states, “The U.S. Department of Defense’s information technology landscape is changing on multiple levels and contractors need to adjust accordingly.”
If you are a small business that is considering bidding on a government contract, or perhaps have been awarded one – congratulations!
Taking on a government contract is a game changer for your business in many ways. This blog will focus on the accounting compliance changes and requirements. Please note, there are a ton of resources covering many topics in the Federal Contracting section of the U.S. Small Business Administration (SBA) website among others.
So back to accounting – what is so different about accounting processes when working on a government contract? Why would you need to change anything?
A good way to look at it is through the progression of your business. When you started your business, you may have had a relative or friend helping with sales or marketing, and spreadsheets or a simple accounting system to help with payroll and closing the books each month. Perhaps, while not ideal with regard to your family get-togethers, your dining room table provided the working-space needed to manage your business. You used the correct tax rules and expense rules and successfully kept track of your business finances. Easy right – the software was there to keep you in line.
As your business grew, you hired a couple more employees, moved into an office and took on a few more government rules like minimum wage and the Affordable Care Act. You upgraded your software, or created workarounds, to accommodate this growth and again, confidently adhered to Cost Accounting Standards (CAS) and Generally Accepted Accounting Principles (GAAP).
Upon registering on the System for Award Management (SAM) and successfully winning a contract, you were confident your business and your employees could take on the new project. Things were great and really progressing.
Now though, you have contract requirements that fall outside of your software’s capabilities. You are required to set up a Defense Contract Audit Agency (DCAA) compliant accounting system. Your simple accounting system now needs to handle more complex items such as direct and indirect costs, allowable and unallowable costs, and project specific time–entry, among many other requirements. Now you need to reconcile contract or project ledgers to your general ledger. Supporting documentation must also be managed. You need to be able to demonstrate compliance with a number of contractual clauses at what feels like every last detail of your project.
You need reports for data calls and contract officers that go above and beyond what you are used to putting together. And, you worry that your status-report, and KPI data is not necessarily accurate, as it may be stale or not 100% complete due to the calculations performed outside of your simple accounting system. While you may not be audited, you have a constant feeling of worry in case you are. You know that the DCAA audit backlog has been eliminated. You’ve heard that the government's remote audits are actually working very efficiently and that the DCAA is resuming “performing its full portfolio of audits.”
You’re thinking there has to be an easier way to handle all of the compliance issues. You want to focus on getting more contracts, growing your business and developing a healthy pipeline and agency network. Instead, you are bogged down with tracking and reporting on an unprecedented amount of data, and scrambling to ensure its accuracy. Yes, you are bogged down by the red tape of compliance requirements.
Make 2021 the year you tame the compliance beast and bring control and confidence to your financial processes. Innovative companies that take on government contracts utilize an accounting solution that is built to handle the complexities of government contracting. They simply do not have the time to chase data, search through emails for an invoice, or deal with paper versions of supporting documentation. They leverage Costpoint to help manage the work for them.
Here are three ways innovative small business government contractors are using Costpoint to cut compliance complexity and thrive in 2021:
1. Shorten Cycle Times and Accelerate Cash Flow
Costpoint helps small businesses transition from simple accounting systems that cannot handle complex reporting and accounting requirements to a powerful, and consolidated accounting and project management solution that helps small businesses more easily manage the complex project accounting requirements associated with government contracts. It has built-in government electronic invoicing capabilities such as (iRAPT/ACRN) billing functionality to help you get paid quicker. Costpoint positions innovative project-based businesses to successfully deliver on the contracts they win, and can even help them improve their win rates with its customer relationship (CRM) capabilities that help track each and every agency engagement and interaction for business development efficiency and pipeline growth.
2. Reduce Accounting and Government Contract Compliance Complexity
Costpoint’s accounting solution is made specifically to empower government contractors. It has built-in compliance functionality and data security throughout every project level and at every stage of the project lifecycle. It helps you meet DCAA timekeeping requirements, among many others, and with configurable workflow automation, it helps you bill out and collect quicker, to improve your cash-flow. Visibility and agility are key to thriving in today's economy, Costpoint provides both. For example, if you are eyeing a new agency and a new type of contract, Costpoint is there with built-in compliance support meant to handle all types of government contract vehicles and associated compliance requirements. The integrated CRM capabilities help you focus on opportunities with the highest win potential to maximize your business development efforts and operate on a level similar to your larger competitors.
Just because there are complex contract requirements, the processes to meet them do not have to be complex. Watch this quick video highlighting navigation banners to see how easy it is to establish best practices and ensure the same method is used each time for a process, for consistency and efficiency.
3. Use Data for Continuous Business Improvement
There are numerous, industry-specific, canned reports to help you manage projects, forecast budgets and meet contractual reporting requirements in a timely manner and in a matter of clicks. You can use integrated business intelligence to make data-driven decisions quicker and have a worry-free level of audit readiness. Costpoint’s Content Management Integration helps you organize and store supporting documents to help you stay organized and keep everything in one place. Costpoint accommodates your unique business structure with configuration options, API connectivity options, as well as user-defined fields and workflow options. It helps you establish the financial architecture you need to simplify the processes you must have in place to meet your awarded contract’s compliance requirements. Set up your project once and reuse this project structure with each repeat win.
Going from closing the books and making payroll each month to taking on a government contract and meeting the associated accounting and other compliance requirements, involves growth. Growth into new opportunities and tried and true best practices. This transition is possible and painless with the right solution and the right team. For three decades and counting, Costpoint continues to earn the trust of government contractors and the agencies they serve by providing a time-tested and purposefully-innovative accounting solution. We partner in our customers’ success and are proud to count so many 8A, HUBZone, Women-Owned Small Business and Service-Disabled Veteran-Owned as growing and successful customers.
Discover how the industry’s leading accounting solution cuts compliance complexity, from bid to invoice, for small business government contractors, by registering for this Small Business Government Contractor Webinar today.
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