A common misconception is that only professional service firms who bill customers through calculating time and attendance require the use of a project accounting module in Microsoft Dynamics GP.
What some firms don’t realize is that the use of this module goes beyond managing projects. It is a good accounting practice even for those who may not generate revenue but want to be able to track their costs by various cost centers, activities or events.
The wealth of knowledge and flexibility by coding your costs (and revenue) by project allows your organization to obtain at a granular level all the detail of your operations regarding a group of activities that is typically called a project or job. By managing your organization in this way, you now have the opportunity to have access to your data already structured by cost center or group of activities.
Having your information set up with this type of structure allows your organization to break down the profitability of your operations. In turn, it offers you the flexibility of a wider range of analysis possibilities than a standard financial system since your data has already been sorted and stored at its most granular level.
Even if the activities you need to analyze don’t usually generate revenue, you may still want to use this module to track all of your associated costs. Doing so allows you to have a clear list of what has been costed to a particular job, project or group of activities.
There are some industries where we see this application typically being used outside the standard professional service firms, such as:
- Firms who have research and development departments: They are able to more accurately track their costs related to a particular research program or product. By including labor and not just expenses, this allows for an even more accurate cost of the efforts. This can also help companies if they have to calculate tax credits or want an easier way to calculate the capitalization of a product.
- Organizations and not-for-profit firms: They usually use this module to track events and other types of member-facing activities. By having this detail, these organizations can more accurately budget for future years as well as have a better system for tracking grants that they may have received.
- Health care industry: Within this industry, there are typically different groups of services and/or offices that overlap under a parent company. In many cases, there are also resources that are shared across the different centers. By using a project accounting module, these companies are able to automate the cross-center lending mark-ups, as well as break down general costs such as administrative services over the entire portfolio of centers to provide management with a true view on the profitability of their operations.
These are just a couple of examples of where a project accounting solution can help out different types of organizations. The Dynamics GP community has many members who use this module outside the traditional sense of just capturing time and materials. I challenge you to think of different ways that you would view a group of activities within your organization so that you may optimize your analysis with a project accounting module within Microsoft Dynamics GP.
To learn more on this subject, read our previous article on Signs that you have outgrown Analytical Accounting to see if you recognize yourself within one of these situations.
By JOVACO Solutions,