Editor’s Note: This site was updated on 12/27/2022
So, you are a small GovCon, living on a wing and a prayer. You are bidding on a ton of proposals, winning some work, growing, adding employees, and maybe making a small profit. When you are small, growing is a grind and it’s fun (thinking this keeps us sane!). Sometimes, you might close your eyes and keep your fingers crossed that your back office, especially accounting, is just running itself. It’s like your teenager’s messy room; you just close the door so you don’t have to look at it.
Trust us, we have seen our fair share of companies who have closed the door on their GovCon accounting. Here are just a few of the top examples of GovCon accounting mistakes we have seen. (At least the ones that we can write about.)
- Bank account balance accounting – Are you running your business on your bank account? Are you thinking “Hey, I’ve got enough money in my checking account to make payroll, all is good”. Short answer: It’s not. On this system you can’t run your company effectively, pay taxes, be compliant or scale your company, simply by checking the bank account balance.
- Forgetting to record small transactions – You need a good chart of accounts that is GovCon compliant, with explanations as to what gets recorded where. Then follow it. All transactions need to be recorded. This includes those monogrammed golf balls you thought were a great idea, or the wine tasting that was a “team building activity”. Don’t be lazy and just enter something as a general journal entry. Be specific, do the work and your books will look a lot better.
- Make a budget – It takes time, but it’s a must do. You have a budget for your personal life, right? Well, maybe not if you are also running your personal life on bank account balance accounting. You need a corporate budget to plan and track. Assign budgets for each project/contract as well. Track funding, track burn rates and learn where you are missing or making the mark. Do this routinely, we suggest quarterly as well as annually.
- Doing it all – It’s okay not to know much about accounting. Really, we think you are fabulous and have amazing strengths. But, own the fact that you don’t know accounting and outsource it! Accounting is not an area where you should use shortcuts or be cheap. Outsource your weaknesses and free up mind space for business development that will help you grow your company. The risk is too high to find out otherwise.
We have all closed doors and tried to ignore things that look scary. GovCon Accounting is just not one of these areas where you can afford to do this. Contact BOOST if your accounting is messy and needs a good clean up. We can help you clean the room so you can keep the door open!accou