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Top Tips for Choosing an Accounting System

As we discussed previously, accounting implementations are like dentist visits (sorry dental friends), necessary but definitely not fun. Yet, before we get to the implementation part, we have to go through the process of system selection; identifying and choosing the best system for your business.

We’ve compiled what we consider to be the top tips for choosing your new system.

  1. Have a team to evaluate your options.
    The minimum number of systems you should be evaluating for implementation is three. We’ll say that again: Evaluate a minimum of three systems (but probably no more than 5) to find the best fit for your company. This means you will need a team of people from your company who understand your business processes and the nuances of your business needs to take part in the evaluation. The key stakeholders in the decision to implement a new system are:

    • Executive Leadership
    • Accountants
    • Project Managers
    • IT Admin (hosting/software)

Including people from all of these stakeholder categories will ensure that (hopefully) all needs are met when choosing a new system.

  1. Choose an End-to-End system.
    Your accounting system, once implemented, should provide you with visibility, clear reporting, and above all more time spent on BD and other tasks instead of transaction processing. The reasons you’re moving away from your previous systems are typically due to the lack of visibility, lack of streamlined processes, and increased transaction volume. These are not issues you want to bring with you to the new system. We’re looking to ease tensions, reduce integration points, and gain efficiencies through automation of end-to-end transactions.
  2. The user experience should be intuitive.
    End users of the system should be able to navigate within the system without intense training. It should be configured with automated controls that reduce the need for redundancies that manual controls create. While each system has its own way of doing things, for the most part users should feel that the processes they’re using fall in line with their current routines versus creating something completely new.
  3. Choose a system you can configure.
    The best system is one that you can take directly off the shelf and implement with minimal configuration. You’re not looking to redesign or customize a system to fit each piece of your business. Rather, you need something that will fit into the slot and fill the needs that were identified within your previous system. The name of the game here is plug-and-play for the most part. If you’re finding that during your discovery phase, the questions you’re asking are how to change, manipulate, or redesign the system or the system provides solutions for less than 80% of your business, that system probably isn’t the one for you.

Above all, your accounting system should work with and alongside you. In an ideal world, it will be able to grow with you for a time as well. Choosing a new system should not be taken lightly and if your executive and accounting teams need guidance through this process, we would be happy to assist.

At BOOST, we thrive in helping clients to identify needs, find solutions, and get more time out of the system and back into the billable day. We’ll dive deeper into the discussion of Transitioning Systems in our July 7th webinar. Find more information regarding this digital event and register here. If you’re ready to find a new system now, contact our Managed Accounting Experts here.

SF1408, What is it? Why is it important for you?

Letters, numbers, acronyms, and more. It’s like a GovCon fairytale minus the lions, tigers, and bears. Oh my!
Today we’re discussing SF1408. What is it and why is it something you should be familiar with?

A 1408 assessment is the Pre-Award Accounting System Survey (SF1408).  The Accounting System Survey is sometimes referred to as a “pre-award audit” and it is necessary for the award of any Cost Type contract.

A few points to note:

This comes BEFORE contract award.
Imagine losing a bid because you didn’t have your act together in your financials!

• This is not an audit.
They (DCAA) focus on your accounting system’s ability to be compliant if you were to receive the award.    It is simply a review to determine if your system is set up and operating in accordance with the criteria on page 2 of Standard Form 1408.

This is where policies and procedures rule (Here’s a tip: an accounting system is not just the software being utilized).
DCAA is looking for you to document what your system does – think segregation of indirect vs. direct costs and unallowables (our favorite); how are costs captured and classified?; how and where do you charge your time?

If you plan on priming this year on a Cost Type contract or are awarded a cost type subcontract (looking at you DOD peeps!), make sure you are prepared with documented policies and a compliant accounting system.

Note that this is different than an Accounting System Audit!  An audit of your accounting system is much more in-depth and includes tests of internal controls (e.g., segregation of duties, etc.).  Know what you need when you read through the RFP.  If you have a question, ask the COR during the Q&A time – the difference between the two is huge!

Do you still have questions or want to discuss this as it pertains to your business specifically? Contact us here.

DCAA, Part II

(As promised, here’s the Part II to “DCAA Trends in 2020“)

We’re preparing to make a bold statement that is practically blasphemy in our industry and especially with what BOOST does.

Care less about DCAA compliance and more about financial acumen.

There.  We said it.  Here’s what we mean and our rationale:

As we learned in the seminar briefing from DCAA earlier, small GovCons between $5-$50M have a 5% chance of being audited on your incurred cost submission.  Smaller GovCons (under $5M) have ½ of 1% chance.  In general, if you submit the paperwork on time (ICS, forward pricing), you aren’t getting audited.  Especially if you are going after prime work that is T&M or FFP (which most people are).  So why do we hit people over the head with “you must be DCAA compliant” time and time again?  Why do we scare off non-traditional companies who may consider playing in the federal space?  We hit them over the head with FAR and cite it as a reason to drive a ton of changes.

Here is what we think is more important:

  • Profitability
    Are you in the green and have long-term positive net cashflow?  This is all your banker cares about.  Are you a safe bet to lend money to?  If you aren’t making money, why are you in business?  (Note to reader: this is our completely biased view that you should run companies to make money.  None of this “operate in business for years without a profit to show for it.”  Not very Silicon Valley of us, but hey, we’re capitalist!).
  • Competent Financials
    Does your balance sheet balance?  No seriously…this is a thing!  Does your P&L look reasonable and is it prepared in a logical manner?  Are you using accrual basis accounting?  Did your 18-year-old nephew/neighbor/spouse do your QuickBooks setup without any understanding of the federal market?
  • Job Cost Accounting
    Do you know your gross margin and profitability by project/customer?  Do you know and track your indirect rates?
  • Pre-award Surveys (i.e. 1408’s)
    This is way more important in our mind. Can you pass the audit to win the work?  To lose revenue or new opportunities simply because you don’t have your financials in order absolutely blows our mind.  Do you know how hard it is to win work as a prime?  Good grief, do not lose it on a technicality!

We view the above as the floor in terms of expectations.  If you can’t pull it together, you are dead in the water.  We’ve seen companies go out of business as they didn’t manage their wrap rates or their profitability.  This market is uber competitive and if you can’t win from a cost perspective, you will never grow.

Now that we’ve effectively scared the pants off of you (and if we didn’t it had better be because you are doing all of the above, and more) we can provide you with a solution. You guessed it, BOOST!  Our compliance and accounting experts have years of experience keeping all of the ducks in a row. Visit us at www.BOOSTLLC.net/consultation and let’s get the important things in order.

BOOST Accounting

 

Connect with BOOST to discuss how we can help with your accounting initiatives. [email protected]