Editor’s Note: This Article Has Been Updated On 7/5/2023
It is mid-year planning time, and our GovCon Accounting Team would love to share with you a few items that should be on your radar. We are here to help you succeed, and we are committed to Quality, Proactiveness, and Communication.
Let’s jump right in!
- Budgeting and Forecasting – Budgeting and Forecasting are very important to track projected gains or losses. A few items to think about: Are you forecasting quarterly? If not, you should! Ensuring full visibility on how your projections are going against actuals is extremely important for stability and planning for growth. Additionally, if your 2021 budget is not trending upward as expected, you need to know why, and what is causing the variance. For 2022 budgets, August and September are the perfect months to start planning before the end of the year rolls around and you are scrambling to get one set up.
- Pipeline – Planning for growth requires a lot of effort, specifically creating a healthy pipeline. Make sure you keep on top of your projections as well as your winning strategy. Review your pipeline no less than bi-weekly. What changes are needed to ensure success? Do you have the right partnerships/subcontractors? Are there any events occurring that would put you in the game? Are you marketing to the right people? Do you have the right credentials needed to win more work?
- Pricing – This is a big one. When was the last time you reviewed your pricing? Are you competitive enough? If you do not feel comfortable with your pricing, now is the time to take action. In the GovCon space, you cannot afford to be asleep on the wheel. Taking a proactive approach to monitoring your pricing and making adjustments is a must.
- Accounts Receivables – Cash is KING! How is your AR trending? Do you have a lot of uncollected cash sitting in your 60-90 days of aging? It is imperative that you review your AR monthly, and if in a cash crunch, review it weekly. Keep on top of sending collections reminders and make it very easy for your clients to make payments, whether that be offering ACH options or a 3rd party service like bill.com. Bottom line is to make it extremely easy for them to pay. Additionally, do you have amazing clients that pay promptly? If so, and if your company can afford it, offer an incentive or discount for prompt payments! Relationship building is key to the success of your business.
- Accounts Payables – On the contrary, are you paying your vendors extremely fast? Are you seeing your AP aging is less than 30 days? It is important to know how these quick-pay behaviors impact your cash. It is ideal to keep vendor agreements to 30-45 days, and only priority vendors as less than 30 or pay upon receipt. It is a great time to review your vendor payment terms and renegotiate if needed.
- Vendor Analysis – How long has it been since you last negotiated payment terms with your vendors? When was the last time you looked at your priority vendors to ensure a mitigation plan is in place should such vendors cease to exist? When was the last time you rated your vendors’ performance, quality, and services? This is the perfect time to put thought and energy into these pieces!
- 1099 Preparation – Do you have W9s for all qualified vendors? 1099 submission deadline is right around the corner (end of the year) and taking a proactive approach to ensure you have all W9s would ensure compliance. If you find you don’t have W9s, reach out to your vendors now and give them plenty of time to reply with one. Create a folder to keep track of them, or make sure to upload them to your GovCon accounting system. Additionally, you should have them marked as 1099 in your system for reporting the total value paid. If you have paid a vendor more than $600, they will need a 1099 from you. Other considerations should be taken into account, however, it’s best practice to ask for one from all your vendors and keep records of such requests. Any vendor not complying, make sure to note that too.
- Indirect Rate Monitoring – When was the last time you looked at your actual monthly indirect rates and compared them to your company’s provisional billing rates? How are you trending? Have you had material change and need to submit a revised incurred cost submission? All things to consider before the end of the year.
- Salary, Wages & Bonuses – Have you heard of “The Great Resignation”? This is the time to review your employee’s performance bonuses, wages, and payouts. Are you competitive enough for the current job market? If not, this is the time to do a quick check for end-of-the-year bonuses and raises! How is your benefits plan matching up to your employees’ expectations? Do you need to set up a 401K matching program? Reach out to your HR representative to ensure the best benefits package is being offered, and if not, what changes are necessary? Cost-benefit analysis is key here to ensure your return on investment (ROI) is worth it.
- Policies and Procedures / Handbooks – Your Accounting Policies and Procedures manual should be up to date, however, if not, this is the perfect time to review and make sure it is. Do you have segregation of duties? Are you in compliance with all GovCon regulations; how about GAAP? Is it documented? What is your capitalization policy? Additionally, do you have a corporate handbook that you need to revise? This is the time to make sure all your ducks are in a row and it’s well documented. Policies for HR, IT, Accounting, et all need to be in place.
- Tax Strategy – Have you had mid-year tax planning with your CPA? If not, this is your friendly reminder to reach out to them ASAP! Are you making estimated quarterly payments? Are you trending for a high net income and need to plan for additional expenses before year-end? Do you have any capital expenditures on hold that need to be re-evaluated? Lastly, have you made sure your 2020 tax filings have been processed and submitted due to an extension? Any changes in equity? Mergers and Acquisitions are also a hot topic this time of the year – valuations are well underway.
- Legal Entity Re-evaluation – Make sure that the business structure you have is the right one for your legal needs. If you are not sure, reach out to your Tax CPA and ask! Additionally, make sure you know the legal implications of any changes should you decide to make one. Do not forget, that an unfortunate event can occur at any time, and you need to be prepared. Make sure you have a succession plan and or a trust set up if anything should happen to you or a business partner!
While we are positive that we provided you a lot to chew on, BOOST also has the SMEs to back it up. If you’d rather have a conversation to dive deeper into any or all of these pieces, reach out to our accounting for GovCons team at [email protected]. We’re ready to help get your books locked and loaded for your next phase of growth.
About BOOST’s CEO, Stephanie Alexander
Stephanie Alexander has spent more decades than she wants to admit supporting high growth government contractors with an eye towards their bottom line. She is the CEO and founder of BOOST LLC which supports back-office functions for government contractors. She is a co-founder and Partner at govmates, a free teaming platform and technology scouting tool to connect business across the federal landscape.