What is project accounting?

Project accounting enables precise monitoring of the project strategy, expenses, implementation, and budgeting, facilitating efficient resource management, and ensuring accurate invoicing and accounting. All this integrated with finance, inventory and accounts receivable.

Defining project accounting

The most general definition of “project accounting” is the processing of financial transactions specific to a project, covering costs, billings, and revenue. However, the scope of project accounting extends beyond this conventional definition because of several elements such as the company type, the number of projects in progress, and the overall size of the company.

Project-centric vs. non project-centric companies

Organisations that are not externally focused on projects may employ project accounting to monitor internal initiatives, such as a marketing campaign or capital improvement projects. On the other hand, for project-driven entities like IT consulting firms, architectural and engineering firms, or any other professional services, the concept of project accounting assumes a significantly different meaning.

Obviously, in these companies, project accounting constitutes an element among several operational mechanisms. The goal is to control projects, optimise project profitability, and guarantee customer satisfaction.

The basic General Ledger (GL) alone doesn’t have the necessary features for these project management tasks. Companies attempting this method often encounter frustration due to the multitude of spreadsheets needed to capture the information. This information is required to generate accurate reports, accurate project analysis, and correct project invoicing.

What’s a project ledger?

Similarly to subsidiary ledgers such as Accounts Receivable or Accounts Payable, a project ledger contains information linked to all projects undertaken for clients within the firm. It tracks activities attributed to each project, regardless of whether they are billable to the client or not. In other words, a project ledger contains cost postings that occur within projects.

It also keeps track of expenses associated to the project, and categorises them based on the project’s billing method (time and materials, fixed price, percentage of completion, etc.). For example, if a project is billed based on the Time and Materials method, the ledger would record the hours worked by employees (time) and the cost of materials used (materials) for that project.

Another important aspect is the ability to review charges that have not yet been invoiced to the client, ensuring that all project-related expenses and revenues are accurately captured and accounted for.

Using separate spreadsheets not connected to the General Ledger (GL) leads to project information being stored in various isolated databases, raising the chances of reporting errors. This also requires creating project reports outside of the ERP solution.

Moreover, the time spent reconciling spreadsheets with both the GL and project reporting hampers efficiency, which can jeopardise profits.

Which features should a total solution for project-based organisations have

ERP solutions such as Microsoft Dynamics 365 Business Central seamlessly integrates sales, service, finance, and operations, providing enhanced efficiency and performance. However, while Dynamics 365 Business Central offers robust features, it may not fully meet the specific needs of project-based organisations. That’s why a project accounting software like Advanced Projects, providing project and resource management atop Business Central Projects, helps project-centric businesses ensure profitability in every project.

While there are numerous project and resource management tools available in the software landscape, none are seamlessly integrated within Business Central, making Advanced Projects a unique offering tailored specifically for project-centric businesses.

Four main focus areas to successfully control and execute projects

project accounting

Project accounting

Project accounting is an integral part of the overall project management process, and empowers project-based businesses to manage project finances effectively. With Advanced Projects, you can:

  1. Automate accounting tasks specific to project management.
  2. Gain real-time visibility into project costs.
  3. Easily manage billing and revenue recognition.

project accounting workflow

Begin by creating a project using the Advanced Projects wizard, that seamlessly accomodates both simple and complex projec structures, enhancing consistency.

Project and resource management on Business Central Jobs

With advanced billing options, you can ensure accurate customer billing and invoicing. Various methods such as milestone-based, percentage completion, fixed pricing, and time and materials are supported, providing flexibility to meet diverse customer billing requirements and reducing manual billing efforts and discrepancies.

Project and resource management on Business Central Jobs

Time and expense entry on the go allows users to integrate timesheet and expense sheet management effortlessly into Outlook, enhancing convenience and reducing the learning curve. This also streamlines the billing and invoicing processes.

Project and resource management on Business Central Jobs

Lastly, Microsoft’s Power BI enables thorough project analysis, from project profitability to individual performance metrics, empowering informed decision-making.

Project management

With Advanced Projects’ capabilities on project management, you gain the ability to create comprehensive project plans, outlining project scope, objectives, tasks, and milestones. It’s essential to recognise that the project plan serves as the project’s roadmap, thus.

Undoubtedly, a poorly designed plan can lead to confusion among the team members, challenges in aligning resources, and difficulties in completing tasks on schedule and in the correct sequence. Utilising a well-crafted project plan thus serves as a clear blueprint for successful project execution.

In these terms, Advanced Projects enables you to:

  1. Manage project details effortlessly, regardless of the project level.
  2. Create tasks and subtasks within projects, establishing task dependencies as needed.
  3. Assign task responsibilities accurately, ensuring all project resources are aligned and avoiding over-booking.

Advanced Projects enhances visibility and simplifies task tracking with its functionality on task tracking and completion reporting.

Precise capture of project resource time and expenses, along with accurate allocation to projects, plays a crucial role in customer project billing. Advanced Projects offers time and expense functionality, facilitating the tracking of employee timesheets and expense reports. This ensures the precise recording of billable hours, labour costs, and project-related expenses.

Integration with Outlook enables users to seamlessly perform these tasks, contributing to comprehensive and accurate billing.

As an integral step in the project sales process, the project budget is confirmed and incorporated into the contract’s statement of work. At the project kick-off meeting, both the project plan and budget undergo thorough review. Resource allocation to the project needs to align with the budget.

Project and resource management on Business Central Jobs

Ongoing project management involves the project manager diligently and regularly monitoring the budget against actual costs. Advanced Projects facilitates real-time project monitoring, empowering the project manager to swiftly pinpoint any issues and proactively make necessary adjustments to ensure project adherence to schedule and budget.

Resource management

With Advanced Projects, concerns regarding resource allocation are alleviated. The project manager can efficiently identify suitable team members based on their skills and availability. Moreover, gain valuable insights into team utilsation and project profitability, ultimately boosting productivity and profitability by highlighting lucrative opportunities.

Resource management enables you to:

  1. Enhance resource allocation by utilising real-time data insights to adjust project resources.
  2. Efortlessly monitor task completion progress, staff assignments, and all project resources via a resource board.
  3. Accomplish accurate project aligment by filtering the resource board according to department, skill, or essential qualifications.
  4. Enhance project accuracy by assigning project resources to tailored resource groups according to your business requirements.
  5. Foster workload balance with the “split assign” function to evenly distribute your team’s workload.
  6. Efficiently plan for future resource requirements using the available monthly calendar view.

Equipping project team members with individual resource boards enables them to access assigned tasks and prioritise them according to significance.

Project and resource management on Business Central Jobs
Efficient resource allocation is vital for project success. With Advanced Projects you can allocate team members and other assets to projects seamlessly. Refine allocations by considering team members’ availability and skills.

Overallocation of project resources can lead to disappointing outcomes, with resources being demanded by multiple customers simultaneously. This often results in rushed completion of tasks or delivery beyond project deadlines. Advanced Projects provides visibility into resource utilisation and capacity through its reporting features, effectively eliminating such issues.

Project reporting

Project-based organisations require project-focused reporting features and capabilities in order to:

  1. Access actionable insights instantly.
  2. Personalise both your and your team member’s dashboards.
  3. Leverage 100 pre-configured data points across 13 categories.
  4. Make informed decisions on the fly to maintain project alignment.

Customised reports tailored to your company’s unique requirements can help you enhance project control and performance. Specify report criteria, choose data sources, and format reports to match your preferences.

Creating custom reports can be a time-consuming endeavor. That’s why Advanced Projects offers pre-built report templates, including common project reports such as project status updates, financial summaries, and resource utilisation analyses.

Project and resource management on Business Central Jobs

Project reporting also helps you track project milestone status and task completion, as well as monitor project progress. Areas needing attention can also e quickly identified. Additionally, you can delve into resource distribution, workload equilibrium, and utilization for efficient team allocation and planning.

In addition, you can also delve into resource distribution, utilisation, and workload for efficient allocation and planning.

Whereas internal project management reporting represents just a fraction of a company’s reporting needs, with Advanced Projects reporting tools, you can produce accounting-compliant detailed financial breakdowns, spanning from budgets to profitability.

Your way to projects on time and within budget

With Advanced Projects, your project team enjoys a familiar Microsoft-like interface, simplifying project planning and management while providing essential data for timely and budget-friendly project completion.

Manual task automation through an integrated end-to-end solution built by professional services’ industry experts.

Successfully delivering projects relies on smartly allocating projects and tasks to match the skills, availability, and capacity of your resources, ensuring true resource efficiency. Consistently delivering successful projects boosts your company’s reputation, attracting new business opportunities and fostering repeat business.

Unveil long-term success with a solution designed by industry experts.

Looking for further inspiration to streamline your project accounting ? Read case studies from your industry.👇

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