By Paul Skurpski, PVBS Vice President of Sales & Marketing
In my previous blog, I discussed why government contractors get stuck on manual…cost accounting processes. In this blog, we’ll discuss how they can get out of that manual trap.
There are two reasons why we see so many government contractors get stuck in the manual dilemma. In the first scenario, they win or they expect to win a cost-plus contract they bid on. They are using QuickBooks which they know doesn’t handle this type of contract out of the box, so they create a complex series of spreadsheets to manage it. This is not efficient and is risky in terms of accuracy. And depending on the volume of data, it’s a lot to try to manage offline. Many of the contractors we meet can foresee these issues and want to be better prepared for when they win larger contracts.
The second reason a lot of contractors get into trouble with manual systems is due to the expense of bringing on new staff to enter and manage the information manually. Big awards may be on the horizon and if they’re using manual systems they’d have to hire additional resources. You’re talking $70,000 per head, plus benefits, taxes and all the other costs associated with a new accounting employee. Plus, it’s very tough to find good people to handle this workload, let alone scale a business. Additional accounting personnel translate into extra expenses you should not need.
A simple cost benefits analysis will usually determine how much would be the net savings when comparing the investment in an automated system (including future maintenance and upgrades) versus adding accounting headcount. And don’t forget to include in your analysis that consultants’ fees might be higher to implement reactive solutions than proactive approaches.
Finally, the earlier a company migrates off QuickBooks and the abundant manual processes that come with it into an automated accounting system designed for growth, the fewer costs there will be. For example, costs will be saved because there will be less data to migrate, which saves on implementation consulting fees. Training costs will be saved because it will be easier for the employees to learn the system while the company is small and continues to grow. At this stage, there is less segregation of duties in the accounting team. Users of the system will more than likely have the opportunity to process transactions from the beginning to end in more modules of the accounting system than if they were at a larger organization where roles are more segmented.