As a service organization, you would have found tracking your profitability a bit tricky. Although your accounting professionals would surely help you understand the teeterboard of profits and losses, the real challenge comes when administrators demand a broader view to understand factors leading to those outcomes. Consequently, many service businesses like you find it difficult to drive the requisite strategic transformations that drive real profitability.
In the meantime, experts recommend connecting project activities of a service business with the organization’s financials. Not only it helps capture the real costs but ascertain accurate accounting and billing throughout a project as well.
Yet, holding fast to tight financial control across all projects can be challenging and time-consuming, particularly when the right tools and processes are disintegrated.
In this case, you would have come across the below-mentioned challenges due to fragmented project data and your company’s financial systems. Being among the certified NetSuite Implementation Partners, we can help you deal with such complexities.
Challenges of Managing Project Financials Manually:
- Process Controls
Generally, separating project financials and company financials affects the accuracy of project revenue, which obstructs overall growth.
For instance, a manual entry in assembling timely, accurate reports, timesheet entries goes through a length approval process. Eventually, it affects cash flow, particularly when the projects are not tied into core financial systems.
Furthermore, it gets even difficult and much harder to forecast throughout the project cycle accurately. Thereby, you would have found it challenging to connect key costs to revenue and the general ledger, which is as important as determining the profitability of a project.
- Manual Billing and Invoicing
Compared to an organized and centralized process, relying on disorganized ones, including email or phone to communicate between project teams and finance at the time of billing can create a larger issue. Moreover, it hinders project tracking and monitoring financial data & performance.
For instance, if you perform manually in spreadsheets, eventually triggering invoices can be a drag on time, creating inefficiencies like long approval processes and slower cash flow.
- Revenue Recognition
Additionally, when your project data and financials are disintegrated, revenue recognition will ultimately switch to a manual process. Usually, it leads to under-reported financials and compliance issues.
For example, as a service organization, if you want to prorogue your revenue and then recognize it later on once the project is complete, you need a clear set of rules regulated in the project and core financial systems. Eventually, it automates data reporting.
In short, companies risk spending time and resources reconciling the project financials with no automation set right from the beginning. Often, it invites audit discrepancies and spreadsheet errors. Moreover, if revenue is out of compliance, it may result in fines.
- Monitoring and Reporting
Next, Projects demand frequent reporting to ascertain the right financial track and guaranteed delivery.
For instance, your project managers and accountants would extract more report summaries while wrapping up projects to make sure they are meeting their KPIs.
In such a case, if the company’s financial systems are not properly set up while using spreadsheets, it can be extremely tedious.
For example, your reporting manager may want to compare Budgets vs. Actuals and view updated metrics. So then, they would find it difficult to do so with just those spreadsheets alone. Without the right tools, project invoicing can quickly escalate into larger, mission-critical issues. Here, connecting to a certified NetSuite Implementation Consultant can also make a difference.
Why Connect Project Activity with Financials?
Automating key components of project accounting and connecting them to financials can help organizations control revenue leakage and achieve higher profitability. Interestingly, you can avail of such services or capabilities at a standard NetSuite Implementation Cost that would help you drive automation optimally.
Moreover, when services organizations use project accounting to find direct costs status, overhead costs, and any project-specific revenues, they gain the capability of:
- Having a 360-degree view of a project’s financial health
- Capturing all project costs, including team wages and labor, costs of resources, billing rate, and time & revenue.
- Monitoring project profitability with reports
- Making required adjustments to forecasts and budgets
- Driving substantial benefits from flexible and automated billing and invoicing
- Managing revenue recognition and automating the creation of journal entries in compliance with ASC 606.
NetSuite Project Accounting and Invoicing
To summarize, NetSuite ERP Solutions holds inventive capabilities to connect project activates with company financials. In particular, you can ensure accurate accounting and billing throughout the project lifecycle and gain acclamation as an acclaimed service organization. Robust NetSuite Implementation offered by a certified partner can help you explore more opportunities to grow with this cloud-based business management software solution. Under NetSuite Implementation Services, project accounting is integrated with the general ledger, accounts payables, accounts receivables, purchase orders, and inventory management to empower you with greater operational visibility, higher productivity, and substantial efficiency throughout.
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