Things to Consider When Buying Government Contractor Accounting Software

From basic, off-the-shelf programs to the most sophisticated and customized platforms, many different accounting programs designed for government contractors are available in today’s software market. Selecting the appropriate accounting software is essential for the success of government contractor startups. The right software will help a company efficiently run its business and ensure compliance with regulations. However, choosing the best software to meet your accounting needs and business operations can be challenging.

Self-Evaluation Questions:

• What types of government contracts do I have? And what kind would I like to have?
• What do I sell? Goods or services?
• What kind of financial reporting do I need?
• Do I want to have project management reports?
• Do I want an integrated time keeping system?
• Who will be operating it? What is their level of experience or sophistication?
• Do I need multi-user capability?
• Do I want a cloud based solution or to run it on my own hardware?
• Do I have inventory that needs to be tracked?

You should also consider compliance, scalability and cost in greater depth when selecting your software.

Compliance

It is important to determine whether or not the software has the tools and functions needed to comply with government contracting rules. For example, the ideal system:

• Needs to be capable of job costing, meaning can you accumulate all of the costs attributable to a particular contract or CLIN.
• Should have a customizable chart of accounts that allows you to set up separate accounts to distinguish direct vs. indirect costs and to segregate unallowable costs.
• Will incorporate indirect rate calculations and an easy interface with a compliant time keeping system.

Remember that software itself cannot make your system compliant with the regulations.

From the perspective of the DCAA, it does not matter what kind of software you use for accounting, as long as you have an “adequate accounting system” that meets all of their requirements. It helps to become familiar with the DCAA rules surrounding adequate accounting systems and other applicable rules before implementing any software.

Scalability

Once the software is operational, will it be able to easily grow with you? Try to imagine where your business will be in three or more years. As your business grows, you might have to update your accounting procedures and system in order to better manage the needs and obstacles your company will face. You will know it is time to pursue a bigger system when the following events start taking place:

• Increase in number of contracts and customer base. A growing customer base will require greater project management and job costing.
• Increase in number of employees. An interfaced time collection system will be essential to better accommodate the growing number of employees.
• Business expansion and new divisions/departments within your company. As your operational costs increase, it will be important to start tracking costs by segments.
• Expansion in business development. This will create a need to track costs by proposals and bids.

Cost

A key consideration here is your budget. Determine your budget limitations and software functionality needs before selecting a system. The right system should be able to ideally meet your particular business practices and easily adapt to technological innovations.

Just like any good investment, your purchase should yield a high return and contribute many great benefits to your organization in the long run.

Got questions? Connect with an experienced Aprio Government Contracting advisor today. 
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