QuickBooks is considered a government-compliant accounting system and can definitely get the job done for a lot of small government contractors. However, there may come a time when you need to change your accounting system to something that is designed with government contractors in mind.
Price Differences
You may already be thinking that most accounting systems are very comparable in price. However, that could not be further from the truth. Accounting systems that were designed specifically for government contractors are very expensive. For example, QuickBooks Online Plus will cost about $1,000 per year at the time of writing this article. On the other hand, other software solutions will cost you thousands per year, depending on which licenses you get and how many users you need. That may not sound like a lot of money, but it is if your business is only doing $150,000 in revenue per year. Whereas a company earning $5,000,000 in revenue may be better equipped to handle the financial burden. Remember, this does not include the cost of paying someone to manage or run your accounting system (external or internal) and does not include implementation costs, which we will discuss later. So, just make sure your company is financially ready to make the switch.
Contract Volume and Complexity
QuickBooks does not currently have the ability to manage contracts within the accounting system. That means things like funding values, ceilings, percent of funding billed, period of performance, contract modifications, and much more all need to be tracked outside of QuickBooks. This is not really a big deal if you have a small number of contracts that are not very complex. However, this can become a bit more burdensome as you continue to add contracts. Not to mention, it is even more burdensome if you start working on multiple types of contracts like Time and Materials and Cost Plus. When that happens, customer invoicing and contract tracking can become a lot more difficult to manage outside of the accounting system. A system like Unanet or Deltek Costpoint can house all that information in the accounting system, which makes contract tracking and customer invoicing a much smoother and well-rounded process.
Personnel and Training Requirements
QuickBooks is a very user–friendly accounting system. This means a lot of small businesses can have one accountant manage the books effectively and efficiently using QuickBooks. However, with government accounting systems like Unanet or Deltek Costpoint, that may not be the case. There is a large learning curve for government contract accounting systems due to its complexity. This means that simply understanding accounting is not enough to use the system efficiently and effectively. Therefore, your accountant(s) will need to be trained on how to use the system appropriately if they are not already familiar with it. You will also have to hire someone (usually external) who is trained in implementing the specific system that you want to change to. If you try to implement the system yourself, you will soon be met with an abundance of unforeseen problems.
This information is not to dissuade you from changing accounting systems. Rather, it is an effort to highlight three key areas that you should consider when deciding if changing accounting systems is right for you. If you are considering making the switch to a government contract accounting system, our team can help with the decision-making process and implementation.
Redstone GCI has a Collaborative Accounting team with extensive experience available to assist contractors with all manner of GL accounting support. We provide ongoing real-time accounting services, periodic reviews, establishment of close processes, client training, and more. Our services in this area also include support setting up your accounting system (including QuickBooks) from scratch and/or optimizing your existing accounting system for government contract compliance, as well as assistance with pre-award accounting system review prep. Our team would be happy to discuss any potential issues or concerns facing your organization as it relates to these areas.
Dylan McMurrey is a Senior Consultant within Redstone GCI’s Collaborative Accounting Solutions Group based in Huntsville, AL. Dylan has several years of progressive experience in the public accounting industry and his role includes providing accounting support to our government contracting clients, as well as supporting government contractor specific reporting. Dylan has a passion for accounting and enjoys helping clients achieve success in their business. Professional Experience Dylan’s career in accounting began in the banking industry where he supported the accounting department for a regional credit union. Building on the experience gained in the banking industry Dylan moved into public accounting where he played a variety of role supporting the day-to-day accounting for clients and traditional CPA functions in attestation and taxation. During his time in public accounting, Dylan has supported companies operating in a variety of industries including government contracting. His diverse understanding of accounting processes in banking, government contractors and traditional commercial companies brings an additional perspective to the Redstone GCI team. Dylan’s primary role at Redstone GCI will be within our collaborative accounting group, where Dylan will lead the support of Redstone GCI clients with their monthly accounting and reporting activities. Dylan has a passion for accounting software and has supported clients on a diverse range of commercial accounting software, as well as supporting clients on more traditional government contract accounting systems like Deltek and Unanet. Additionally, Dylan provides support to both our compliance and software implementation groups where he assists with developing financial models to support forward pricing and strategic indirect rate evaluations.