It’s important not to lose sight of what accounting software is for. Accounting is here to help users make smarter decisions based on gathered information. So when it comes to project accounting, it’s important to note that deep down, under all of the rules and oddities of your accounting system, resides information that will help your business make smarter decisions. Business managers would do well to keep this in mind when it comes time to buy project accounting software.
What does Project Software Do?
Well to understand this software better, you need to have a firm grasp of project accounting. To understand project accounting is both difficult and simple. The basic idea is that you want to identify all of the costs and revenues of a project. This way you will be able to determine if the project is successful or not. Determining the success of a project is extremely important for future decision-making reasons.
Sounds simple enough right? Well it can be more difficult than you think to track the costs of a certain project. For example, let’s say your company normally builds blue widgets. However, you are starting up a special project that will include red widgets. Let’s call it: Project Red Widgets. The cost for the red widgets would include the materials necessary to build the widgets (that’s easy enough to track). However, other costs include the labor of your employees, the cost to manage the employees that build the widgets, the cost of the building that houses this new project, the cost for lighting and heating the building. A good accountant could go on all day discussing the costs for this type of project (direct costs, indirect costs, overhead costs, etc.). So, in short understanding project accounting (also known as cost accounting or even managerial accounting) is not as simple as it seems. However, getting these costs correct can mean the difference between success and failure for a company.
Project accounting software attempts to keep track of all these costs and revenues for you. Of course, you will need an accountant to set up the project accounting system. In all likelihood you’ll need an accountant to run the software for you as well. For more information about accounting services, check this great outsource service here.
What do I need in my project accounting software?
The truth is that not every company needs this type of software. If your company rarely does projects, or the projects are very basic, then you are probably better off without project software. If your company completes projects on a regular basis and your success depends on having successful projects then this type of accounting software is exactly what you need. As usual when purchasing software, it is always a good idea to list out your needs. Are your company’s projects different than most other companies’ projects? Are you running a service firm? Will you have work in process materials that need carefully tracked (WIP)? These are just a few of the many questions you will need to ask before purchasing this software. One final question you will want to ask is whether or not you are looking for a complete project management software package or just accounting? Keep in mind that many management packages come with an accounting module.
Intacct (http://us.intacct.com/products/intacct_project_accounting.php) – Intacct’s project software is geared towards service firms. Service firms have special project needs and keeping track of costs in a service firm can be extremely difficult.
Khameleon (http://www.khameleonsoftware.com/solutions/project-accounting-software.php) – This software is geared towards medium to large sized companies. It is Oracle-Based. The makers of the software seem to really understand that project accounting is all about getting an accurate estimate of whether or not a project was profitable.
Synergy (http://www.synergybusiness.com/project-accounting/project-accounting-software.php) – This is more of a project management software package, but the truth is that the two types of software often overlap.
Epicor (http://www.epicor.com/Solutions/Pages/ProjectAccounting.aspx) – A good software package that is very flexible. Flexibility is very important in project accounting software because every company does their project accounting differently (there are no set rules for project accounting like there are for financial accounting).
If you have any experience with any of these project accounting software programs, then please list them below. By sharing this information you will be helping others make a more informed decision. If you would like to recommend another program, then please list it below.