Six Indicators to Catch Before They Become Finance, Accounting Red Flags

Posted by Deltek on July 2, 2021

Spotting the Red Flags with Generic Finance Accounting

Raise your hand if your government contracting firm currently uses an out-of-the-box finance, accounting solution like QuickBooks® AND have experienced any of the following situations.

  1. Your organization is managing multiple government contracts, and multiple phases within a contract, and your employees are outnumbered or struggling to keep pace.
  2. Manual process still dominate much of your back office and finance, accounting work.
  3. Fast-track growth for your organization has expanded your employee count at a pulse-pounding rate.
  4. Timekeeping needs have become more meticulous.
  5. Revenue recognition needs have heightened.
  6. You are met with shrugs from finance, accounting, information technology (IT) and compliance when you ask whether certain systems will meet contractual regulation standards and mandates, like Cybersecurity Maturity Model Certification (CMMC).

In the realm of government contracting, it happens to everyone. A missing capability here, a capacity limit there, a new universal compliance wrinkle to contend with… eventually they all add up to some pretty big red flags for a generic finance, accounting system. Some struggle to see the indicators before they are faced with a knock on the door for a Defense Contract Audit Agency (DCAA) review and a completely overwhelmed finance, accounting team.

The white paper Spotting the Red Flags You’ve Outgrown QuickBooks® or a Homegrown ERP details a handful of the warning signs that it may be time for a business to seek out a comprehensive, fully functional enterprise resource planning (ERP) system, like Deltek Costpoint.

Contract Complexity – Limited contractual reporting with out-of-the-box solutions can quickly become problematic. Narrow or nonexistent calculation types likely will lead to a need for large, elaborate spreadsheets to track general and administrative expenses, overhead, account classification reference numbers (ACRN) and straight line item number (SLIN). Further complicating matters, segregating and calculating direct and indirect costs. Access the white paper to learn more.

Manual versus Automatic – The time will come when manual processes necessary for some out-of-the-box solutions will become a true capacity issue for finance, accounting staff. Not identifying opportunities for automation, nor the solution to implement them, is an open invitation for data errors and likely will require multiple hours per week for verification purposes. Take a closer look at the manual processes that plague contractors the most.

Compliance Brick Walls – A lack of fully realized insight into internal controls and project reporting can be a huge hurtle for government contractors using out-of-the-box solutions. The depth and nuance needed to reach the level of meticulous many contracts require simply isn’t baked into generic finance, accounting software. For instance, only allowing a limited number of leave types to classify paid time off has the potential to lead to inexact data when reporting on project hours. Learn why designations is an important word for government agencies.

Time to Seek an Alternative to Out-of-the-Box

Though red flags are not exactly a red line, each encounter with a limitation from an out-of-the-box solution like QuickBooks should be considered as you plan for the future of your government business. Spotting the Red Flags You’ve Outgrown QuickBooks® or a Homegrown ERP lists the important considerations to take into account when the time comes to investigate a more dedicated enterprise resource planning alternative, such as Costpoint.