What is Project-Based Accounting and When is it Useful?
Project accounting is accounting performed on a project-by-project basis, tracking various individual components of the project. This ensures that your project stays on budget, tells you what you should be billing, and informs the project’s overall profitability. It can be used in a wide range of fields and businesses, including construction, government contract work and medical services to name a few.
Compared to standard accounting, project accounting is much more focused and gives you a closer look at day-to-day finances, including budgets, costs, estimates, bookings, billings, and more. From there, you can determine trouble areas that could negatively impact margins and can find ways to optimize cash.
Here are some good examples of project-based accounting:
· Financial audit preparation
· GAAP/SEC technical resource
· IPOs, including S1 filing and SEC comments
· M&A services, including due diligence, acquisition analysis, post-merger integration
· Financial modeling
· Forensic and fraud evaluations
· Document and test internal controls
· Business process & technology improvement
A big benefit of project-based accounting is it can allow businesses to track budgets, costs, and revenue at each stage of a project. This gives you access to a wide range of information—invoices, expenses, project hours, milestones—and more information means more power and control over the project. The reports produced for each project can assist you in determining trouble areas that could negatively impact your margins. Project-based reports also help you identify ways to optimize finances for your project.
By comparison, standard accounting will look at the finances of a company often over the course of a set period of time, such as annually or quarterly.
Project Accounting Can Help You Avoid Cutting It Close and Avoid Costly Errors
Accounting, financial reports, and other finance deadlines can easily get lost in the shuffle of working with customers, pushing out products, streamlining daily operations, and all the other minutia associated with running a successful business. These tight deadlines can come as a result of demanding lenders, banks, and investors, but many times, it’s just a matter of needing more resources and manpower.
Missing deadlines happens at every company. The best way to avoid it is to be prepared. Prepare balance sheet account reconciliations for each monthly accounting cycle. This ensures that your business’s account records and reconciliations are always current and can help you identify problems early in the month end close process.
Much of it comes down to maintaining good accounting practices. Sloppiness and errors take time to correct and can lead to significant negative impacts on profit and earnings.
Thankfully, you can find businesses to provide you with outsourced accounting, human resources management, and project-based accounting services to bolster your team to meet your deadlines.
If you’re struggling with your financial deadlines for your major proejcts, outsourced project-based accounting is your best bet, and Pro Back Office can give you exactly what you need. With project-based consulting, accounting services, and HR management services, Pro Back Office can help you increase your business value, drive earnings, and manage risk.
We are here when you need us. Our team is your team and we would love to offer a second set of eyes or a helping hand. To learn more, feel free to contact Jennifer Barnes or Mike Ford, co-founders of PBO, with any questions or inquiries you might have at firstname.lastname@example.org or 858.622.1681.