After all the planning, proposal set-ups, consultations, and perhaps a few sleepless nights, you have finally been awarded a government contract! Congratulations! The time has come to celebrate all the hard work put into the proposal process and finally RELAX (yeah right) for a few hours, tops.
Winning the government contract is just the first step in this wonderful bureaucratic journey, not the last. This reward is going to completely change how your accounting department functions, so where do you go from here?
Proactivity is the key to success – Schedule a meeting!
Before you begin work on the contract, your accounting team needs to be prepared and ready to handle the incoming work. Here are three items to consider:
Payment Schedule & Funding Caps.
The payment schedule, method of payment, and contract funding cap are going to be crucial knowledge for your accounting team to ensure proper receipt and recording of payments. Understanding the contract’s funding cap will also play a major factor into your budgeting & forecasting. The ability to scale or react to unexpected costs becomes that much easier when your financials are prepared.
Knowing where your organization’s current cash flow stands is an absolute must prior to beginning any work on the contract. You must know how your company will be able to manage any upfront expenses required to fulfill the responsibilities set out by the contract. This discussion, alongside a detailed production plan, will allow your team to proactively manage your cash flow and seek out resources whenever additional materials are needed throughout the life of the contract.
While reviewing cash flow forecasts, your organization will quickly learn whether conversations regarding obtaining any lines of credit, or other financing alternatives are necessary. The earlier you know how your company will handle these expenses, the sooner that you will be able to find success.
Since compliance is the government’s favorite thing ever, your team will need to know how to properly set-up your accounting system. Your accounting and timekeeping system should be able to handle project and people set-ups and cost pool allocations. Your ability to manage and monitor your indirect costs and their corresponding rates on a timely basis will ensure your organization can effectively communicate these costs to your government customer.
As long as you establish a solid foundation your accounting team, you will set yourself and your organization up for future success, and you will be able to shift your focus on winning a second contract! If you are finding this to be a bigger burden than necessary, talk to the Accounting SMEs at BOOST! We live and breathe GovCon Accounting and would be happy to discuss how to lighten your accounting burden.