Three Indicators It's Time to Retire a Generic Accounting & Management Solution
Government businesses on a growth fast-track often don’t have time to think about how their internal systems are handling the increased workload until it is too late. Sure, contracting firms can limp along with mass-market, generic solutions like QuickBooks® for a time, but name one owner or CEO who wants their business to just get by rather than thrive. So, how can a business avoid the crash and burn of hitting the wall with generic solutions? With three questions.
- How long can a business operate without receiving contract payments?
- What happens when an invoice cannot be generated because a business’ timekeeping solution is noncompliant?
- Is making payroll possible if a payment suspension freezes a business’ line of credit?
If the answer to any of these questions raises some red flags, there’s no time like the present to heed the warning signs and start considering a more specialized solution.
Why Switch from Generic to Specialized?
Unlike commercial firms, cost and compliance are a government business’ primary accounting concerns. Accounting in government contracting is specialized and can be difficult. It is imperative to be able 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).
Many government contractors start off using simple, generic accounting solutions and spreadsheets, as well as costing and scheduling systems to manage finances, projects and compliance. Since these solutions are not designed specifically to meet government requirements, contractors put themselves at a huge disadvantage by risking system disapproval, ineligibility for new awards, costly and time-consuming audits and a suspension of payments until deficiencies are corrected. Alternatively, contractors can face unpredictable costs for supplemental services to achieve compliance. What are the benefits of being open to an all-in-one, specialized solution like Deltek Costpoint as a contractor considers current and future growth to better invest in a business’ next phase? Consider three points.
Skip the Risk, Go Straight to the Reward
1. Reduce Risk
The financial implications of operating a business on an inadequate system can put that firm at risk if there is uncertainty whether it will meet contractual regulation standards and mandates. For instance, QuickBooks and similar solutions have their strengths when it comes to functions like timekeeping, billing and benefit calculations. However, they fall short in the eyes of government agencies, like the Defense Contract Audit Agency (DCAA), where depth, layers and nuances are needed to reach the level of precise requirements that many contracts require.
Costpoint helps ensure total DCAA compliance and keeps businesses in sync with Defense Federal Acquisition Regulation Supplement (DFARS) and Sarbanes-Oxley Act (SOX) compliance.
2. Better Manage Complex Contracts
Firm-Fixed-Price (FFP) and Cost-Plus-Fixed-Fee contracts are common contracts encountered by small to medium-sized businesses in the government contracting space, each having its tracking challenges and needs. Complex contracts require robust child-and-parent functionality necessary for accuracy, and often, these types of contracts require multiple types of child-and –parent accounts at different levels. When using an out-of-the-box solution, like QuickBooks, complicated reporting requires hours of manual set up, and invites a higher margin of error due to the manual processing required.
Costpoint as a project accounting system has a variety of reports for complex contracts like FPP and Cost-Plus-Fixed-Fee in its large library of standard reports. It also features multiple dashboards and the ability to create custom reports and dashboards.
3. Increase Efficiency
For government contractors just starting out, QuickBooks is an attractive solution as it’s affordable, malleable and robust enough to be a significant first step for managing a small to medium-sized back office. However, as a firm wins more complex contracts, there will be a time when limits are reached in terms of capability and, more importantly for accounting, manual processes become a true capacity issue. Businesses running on QuickBooks spend numerous hours a week pulling multiple manual and customized spreadsheets that are required by government agencies.
Costpoint sets businesses up for success with built-in automated reports, freeing up accounting teams to work on other projects.
See how Costpoint compares to QuickBooks:
- Business Development
- Business Infrastructure
- Contract Management
- Cost Management
- Costs and Expenses
- Deltek Clarity
- Deltek Costpoint
- Deltek Insight
- Earned Value Management
- Enterprise Resource Planning
- Financial Management
- Firm Management
- Government Contracting
- Human Capital Management
- KPIs and Analytics
- Project and Portfolio Management
- Project Management
- Resource Planning
- Risk Analysis
- Scheduling and Planning
- Small Business
- Talent Management
- Time and Expense Management