Many businesses can benefit greatly from project accounting software. If you have large projects that happen over a span of weeks or more, you are likely entering many invoices and paying invoices as the project continues. As time goes on, you will want to know where you stand on income and expenses. Enter, project accounting software. Using a project function within your accounting software allows you to maintain income and expenses for specific jobs or projects. Assigning a project to each of your transactions provides an easy way to track the cost of a project. Some programs also allow you to assign projects to labor costs, for even more accurate project cost calculation.
Who needs project accounting software?
There are three main scenarios for which project accounting can be useful.
Companies that manage ongoing projects and projects that require job bids can benefit from project accounting software. Tracking the income and expenses of a project lets you see at any given time where you are financially with your project, so you can make adjustments if needed.
Companies that travel and do business at events, or companies who simply want to track the effectiveness of trade shows can use project accounting software to see which events are the most profitable. When you use project tracking, it’s easy to run a report and see how profitable that event was, which can help you decide which events are most profitable.
- Internal projects
Are you building a new warehouse? Remodeling your office? Use project accounting to manage and track your expenses so you don’t go over budget.
How does project accounting software work?
A typical project accounting system works by tracking each expense and purchase and attributing it to the project you have set up in the system. So, you first set up and name your project. Then with every income and expense invoice you enter, you need to be sure to choose your project. Most systems will display a “project” field for you to choose from. If you enter an invoice and forget to choose the project, of course that invoice will not be attributed to that project. Don’t forget to add the same project to your payroll software system, if that system allows for project tracking. Adding project tracking to your payroll can help you also track labor expenses to your project, which is likely an important component of your project’s cost. Once transactions have been entered with the appropriate project, you can run reports and filter them by projects.
Is project accounting software the same as job costing software?
Project accounting software and job costing software are similar in function, but there are some major differences. Job costing software offers the ability to track the status of a job in progress as well as the income and expense; whereas project accounting only tracks the income and expenses. Job costing also lets you assign the parts of a job to a class or category. You can see what’s been billed for that project, as well as the status, retainage amounts, and more detailed information than you would find in project accounting. Job costing is typically a more complex system; whereas project accounting can be set up and used fairly quickly within your accounting system.
If you are looking for a way to track income and expenses to your project(s), project accounting might be a simple way to accomplish that! Why not set it up in your accounting system and give it a try today?