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Financial Health

How Are You at Accounting for Projects?

Managing resources, updating your financial reports and staying on top of everything needed when accounting for projects shouldn’t be difficult.

There's a lot that goes into the projects that accounting firms take on. From a project's conception to its completion, someone from your firm will be working on it every step of the way. During the life of the project, a lot can change. Things are reprioritized, a client may alter their request or you might need to reassign the accounting project to someone else in your firm.

Regardless of what happens, it's important to keep track of profits and losses, margins, utilization, earned value and other essentials when doing accounting for projects. Firms generally want to optimize their processes so that they can work as efficiently as possible. Cutting down on anything that wastes valuable resources like time and expense will help firms save.

If your invoicing process is too time-consuming or if there are frequent miscommunications between departments at your firms, software specifically for accounting for projects can help you see when it happens. Your firm may benefit from project accounting (Related: 4 Remarkable Benefits of Project Accounting).

Standard accounting v. project accounting

Standard accounting practices generally refer to how you handle the accounting for your entire firm. This type of accounting typically operates inside a fixed amount of time. Reports are usually filed quarterly or annually or as frequently as your firm decides. This is generally used to track the total expenditures, budgets and accounts payable across every project within a firm.

Project accounting is the tracking of the finances and work that goes into individual projects your firm tackles. Project accounting also works within a defined period of time. Often, the time frame for an accounting project is usually shortened to a period as short as a few days, weeks or months.

Budget your resources

When accounting for projects, it's important to manage your available resources. Many firms divide their budget for resources into three categories of labor, materials and time:

Labor: Labor is almost always the most costly resource in every project. This means it may also be the biggest challenge for your accounting projects.

Knowing how you usually bill clients can be helpful when accounting for projects in your firm. Some accounting firms bill clients by the hour. Different people in your firm may charge different rates or have a base or overtime rate they add. Using timecards could be especially helpful for hourly trade laborers. Some accountants may also set a standard fee for an accounting project as a whole. When accounting for projects, understanding how much you will have to bill your clients and pay your employees will set you up for success.

Time: Time is closely related to the labor category. In a perfect world, a worker would be able to deliver a project on-time while staying on-budget and turning a profit for your firm. The worker would also ideally track their time accurately so that they can easily mitigate issues as they arise and be better equipped to handle projects in the future. This doesn't always happen, however. It's easy to forget exactly how long you spent checking e-mails or entering data. Using time tracking software would also be helpful for accountants here.

Materials: While your accounting projects may not require as many materials as a construction project, managing your materials efficiently is still essential. Materials will have an initial cost when you buy them. They may also have ancillary costs like delivery or installation fees included in the cost and can be immediately factored into your accounting for projects budget or added at the end.

Optimizing your next accounting project

Maybe your firm is still writing timecards by hand or documenting how long you spending at work each day on excel sheets. Or, maybe your firm has taken some small steps towards optimizing the processes you use for accounting for projects. Some firms simply switch to utilizing ePayments or they start using a basic time tracking program to increase their efficiency.

Regardless of what your firm has done so far, there's still a good chance that your operations could benefit from software that helps with accounting for projects. Accounting project software enables firms to take charge and track all of their data from accounting for projects in one platform. It also gives them a chance to track budgets and revenue at every step along the way. Project managers can see how long is being spent on projects, view invoices, bills and expenditures as well as track progress and the completion of milestones. Having the ability to track your project's progress in real-time lets you adjust as your firm works.

Software like BQE CORE helps track every step you take towards finishing an accounting project. Firms can look into the nitty-gritty of their financials as projects near completion. This keeps you up to date on how your projects are coming along and shows you areas that have potential for optimization so your firm can run more efficiently. Specific data used for accounting for projects shows you the specifics of exactly what you're spending and on what so that you know precisely what to optimize (Related: Project Accounting Essentials: Getting the Data You Need).

Update your reports

Keeping your financial reports updated is another important component when accounting for projects.

Frequently reporting and analyzing can be difficult but it's essential for getting the data you need. Automating the way you track your financial information can help you see how efficiently your budget is working. This is especially important nearing project completion so that you can file your financial report at the same time you finish an accounting project.

In addition to giving you information as you work, the data collected from this can give you essential feedback that's up to date with how your firm is currently operating. Perhaps you just started using a new resource that's an essential part of your operations. Financial reports can lay out all the resources and show you if any of your expenses could cause trouble for your budget.

From tracking time and preparing invoices to managing projects and allocating resources, CORE is the single platform that does everything your firm needs. Click below to try it free today.

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