Flashy accounting software may be visually appealing, but for government contractors it's far more important that your software be comprehensive and compliant. When it comes to managing your company's finances correctly and efficiently, your accounting software can make or break you. It can mean the difference between a painful DCAA audit, or one in which you have what you will need to stay within the regulations and win the contracts your company deserves. It can also be instrumental in staying on top of the status of your contracts rather than merely guessing.
However, many popular accounting software products offer more flash than functionality. For example, QuickBooks® is undeniably attractive and user friendly, but is it the best fit for your government contracting business? Don't let flash hide the real product underneath; you need to thoroughly assess the available feature set before deciding which one to trust with your company's future.
For government contractors, this point could not be more critical. Industry-specific software should not be judged by whether it has a spectacular user interface. The underlying data foundation is crucial, as this is what will generate the output you require to achieve your reporting objectives.
In the high-stakes regulatory environment in which government contractors operate, you can't just aim for pretty and "good enough." Here is a checklist government contractors can use as they shop for appropriate accounting software. Structurally, the system must support:
- Multi-layered indirect cost structures by business area
- Separate identifiers for HR and billing labor categories
- Reporting by business area, financial account, contracts, and the contracts work breakdown structure (WBS)
- Tracking purchase commitments by project, WBS, and project account
- Tracking of multi-year cumulative costs and revenue
How to Choose the Best Accounting Software
Before you start your search, it's important to do your homework so you'll have everything you need to make an informed decision. Here are some things to consider:
1. Understand it is an investment.
Many low-end software programs are very affordable. However, industry-specific accounting software, or vertical software, represents more of an investment. Before you jump on the cheap program, consider how much that "affordable" software could actually end up costing you. If it doesn't have the required capabilities listed above, your company could be at risk for costly accounting and reporting oversights. Work within the budget you have, but consider more than the price tag when calculating the true cost of accounting software ownership for your business. And remember, accounting related costs are generally considered allowable under FAR 31.205.
2. Scope out the competition.
Find out what your competitors are using while at networking events like business association meetings. Find out what people like and dislike about their current system. You can also ask your accountant since they probably have other clients in your industry. Then, contact vendors to determine how you can leverage their software in order to get a competitive edge, such as offering lower life-cycle costs that lead to lower general and administrative expenses.
3. Create your accounting software wish list.
Your wish list should include the capabilities mentioned above, but it should also include any personal requirements your company might have. What do you expect the software to do for you? Determine which capabilities are crucial and check out the top contenders' websites for demos and pricing.
A quality software provider will be glad to discuss your company's needs and then allow you make the decision that's right for you.
When you are shopping for something as serious as accounting software, don't make the mistake of letting flash blind your better judgment. For government contractors, it is absolutely critical to be comprehensive and reliable. And if you locate a glitzy system that can meet everything on your wish list, then you will have the best of both worlds.