The Importance of Project Cost Management

Project-based businesses need more than basic accounting. The income statement has a section for revenue and a section for costs. This is great for preparing the tax return or reporting to shareholders. If you want to know how much you’re making or losing on projects, you won’t find it in the income statement. You’ll need specialized project accounting software.

Acumatica Cloud ERP can help. It includes Project Accounting Software that integrates with General Ledger, Accounts Payable, Accounts Receivable, Sales Order Management and other business management modules. Project accounting management enables project cost tracking (covering materials, services, labor and inventory items), budget reporting and billing based on specific project, task progress or completion percentage. Users can compare project costs with original and revised budgets while considering all project costs.

Project accounting figured prominently in Acumatica:

Split the budget into Revenue Budget, which can be defined by task or task and item, and Cost Budget, which can be linked to a revenue budget line to enable more flexible analyses of project balances and profitability.
View and track budget commitments for large projects lasting longer than a couple of weeks. With this functionality, you can monitor potential cost overruns, connected purchase orders, negotiated rates and other information from one location.
Bill for time, material and fixed price and manage the billing workflow without configuring the allocator, which makes it easier to bill for simple projects. Users outside the accounting department can review and edit invoices.

Relevant Project Accounting Applications in Acumatica 2019 R2

Acumatica 2019 R2 carries forward a full set of project accounting features. It incorporates useful applications to help businesses analyze and monitor the cost of projects, including:

Project Cost Accounting: View all project-related costs and use formulas to allocate shared costs and overhead expenses to specific projects. This is a benefit for marketing, construction, engineering and other project-based businesses.
Advanced Billing: Cost plus, fixed price, contract-specific pricing, milestone and time and materials billing can be managed. Resource billing rates can be modified as needed and labor and materials can be billed based on the type of work, the customer or project contract.
Time and Expense Management: Timesheets can be entered by employees, contractors and partners from any device or web browser. This improves accuracy and adds convenience to the Project Accounting Software.

Other Benefits of Project Cost Management

Cost tracking, budget reporting and flexible, accurate billing are just a few advantages of using Acumatica for project accounting. Other beneficial functions include:

Change Order Control: Make changes to the scope of a project, using all relevant documentation such as revenue/cost budget, class and commitments while defining workflows and approval processes. Audit trails and full visibility ease the release of change orders.
Project Quote Management: Improved control and management help simplify project sales and pricing while Acumatica provides support for more complex quote processes. Quotes can be created, updated and linked to CRM within the system.
Company-Specific Financial Periods: For organizations that have different fiscal year-end dates, financial periods can be defined at the branch level, especially if related business entities share vendors, employees and stock items.

Acumatica also supports multi-currency project accounting. Project managers and accountants can see actual revenues and costs and calculate profitability using the project currency, while customers can see costs in their native currency. With revenue recognition, billing rules can be defined to identify revenue from completed tasks or a percentage of project completion.

To learn more about Acumatica Project Accounting, contact us for a free product tour or software demo.