What is Project Accounting?
Project accounting is simply accounting on a project-by-project basis. Project accounting tracks all of the financial components of a project such as budgets, estimates, costs, bookings, billing and everything in between. It is an important aspect of project management software because it’s important to know whether a project is on budget, if it’s profitable and it also gives you insight on what to bill. Project accounting is included in Professional Services Automation (PSA) and Enterprise Resource Planning (ERP).
Project accounting monitors the financials of individual projects. It allows companies a closer look into their day-to-day financials, which in turn allows them to identify areas of their finances that can be optimized. It also allows them to identify trouble areas that could impact margins.
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How does project accounting differ from standard accounting?
Standard cloud accounting deals with the macrocosm of accounting for a company as a whole, usually within a fixed time period (i.e. quarterly or annually). Standard accounting tallies the total expenditures, budgets and accounts payable across all projects within an organization.
How does project accounting improve a project’s overall financial health?
There are a several key distinctions between cloud accounting and traditional, on-site accounting. For one, cloud accounting is more flexible. Accounting data can be accessed from anywhere on any device with an Internet connection, rather than on a few select on-premises computers. Secondly, unlike traditional accounting software, cloud accounting software updates financial information automatically and provides financial reporting in real-time. This means account balances are always accurate and fewer errors take place due to manual data entry. They are also better able to handle multi-currency and multi-company transactions more efficiently.
Project accounting is powerful because it deals in specifics. By using some form of project accounting software, professional services organizations can locate and eliminate workflow issues (i.e. time-consuming invoicing, miscommunications between departments, etc.) that consistently occur from project to project. It eliminates inaccurate revenue reporting, tracking profit margins and utilization.
Once a company has identified individual solutions for one project, it can use the same software to automate much of their project financials for all company projects. Not only does this help avoid errors and ensure accurate accounting, it also frees up time, which in turn allows companies to pursue more growth-oriented tasks with human resources.
What makes project accounting a useful business tool from an organizational standpoint?
One of the most touted benefits of project accounting is its ability to track the budgets and revenues across every stage of an individual project. This empowers project managers because they now have access to everything from project hours and total expenses to incoming invoices and milestones.
Having access to project accounting software ensures that an organization can collaborate on budgets and finances between departments. It also helps management monitor and, if necessary, reassess a project to ensure it meets the overall financial goals of their company.
What are the benefits of cloud project accounting software?
Project accounting can be offered as a cloud-based Software as a Service (SaaS), and like many other SaaS services, cloud-based project accounting is available from any internet-ready device, can be updated automatically and shows data in real time. Projects can be managed from anywhere, without the hassle of having to install updates or download new software.
What are the benefits of FinancialForce’s project accounting capabilities being on the Salesforce platform?
FinancialForce Professional Services Automation includes project accounting functionality and is built on the Salesforce Platform, – the same one that award-winning Salesforce CRM is built on. By having all of the project accounting information inside Salesforce CRM, users can review finances of projects at any stage, whether it’s at the opportunity level or in progress. Thousands of companies are already familiar with the Salesforce Platform, and as such, they can easily migrate their back-end processes and front-end processes into one, consolidated area shared by their entire company.