February 16, 2021
When Capturing the real costs in a services business, project activities need to be connected with company financials to ensure accurate accounting and billing throughout. However, retaining tight financial control across all projects can be time-consuming and challenging when the right tools and processes are not in place. What are some of the challenges that can arise when your project data isn’t integrated with your financial systems and how can they be addressed? Read on…
1) Process Controls
When organizations keep project financials and company financials separate, project revenue will not be accurately represented, which can hinder growth. When project managers and consultants input timesheet data, it goes through a lengthy approvals process, which can affect cash flow if the projects are not tied into core financial systems. Such an approach can make it harder to accurately forecast throughout the project cycle and connect key costs to revenue and the general ledger – thus determining the profitability of a project is very difficult.
2) Manual Billing and Invoicing
Often, companies rely on disorganized processes such as email or phone to communicate between project teams and finance about when billing needs to occur. This can create problems when tracking projects and company financial data and performance. It can also be a drag on time, creating inefficiencies like long approval processes, slower cash flow and greater days sales outstanding.
3) Recognizing Revenue
When the proper processes are not set up, recognizing revenue can become a manual process just as billing and invoicing is. This manual effort can lead to under-reported financials and compliance issues, which can then create risks like audit discrepancies, spreadsheet errors and even a need to restate earnings. When revenue isn’t accurately tracked or is out of compliance, fines can result.
4) Monitoring and Reporting
Projects demand frequent reporting to ensure that they are on track financially and meeting deliverables. However, it can be hard to track and report on what is happening with project financials by merely using spreadsheets alone. Without the right tools to help project budget variances or show KPIs through a project summary or profitability report, project invoicing can quickly become problematic.
However, Daston can help your company avoid these challenges by installing NetSuite’s Project Accounting product. By connecting project activity with company financials, services organizations like yours can use project accounting software to determine the status of direct costs, overhead costs, and any revenues that their specific projects are generating. Such software helps organizations control revenue leakage and achieve higher profitability by automating key project components of projects, connecting them to financials. This allows companies to:
Gain a complete view of a project’s financial health by capturing all project costs.
Maintain project profitability with reports on project budgets vs. actuals so that organizations can adjust forecasts and budgets when strategies shift.
Benefit from flexible and automated billing and invoicing with billing rules and practices to help provide better control of the process and generate invoices easier.
Manage revenue recognition easily, so that project communication is simplified to automate the creation of compliant journal entries
NetSuite’s project accounting solutions can integrate with your company’s general ledger, accounts payable, accounts receivable, purchase orders, and inventory management to empower visibility, productivity, and efficiency throughout.
To learn how Daston can implement a NetSuite solution that can easily automate your company’s project accounting and invoicing systems – contact us today!