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Accounting Challenges for Government Contractors and How Microsoft Dynamics Can Help

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Government contractors always have faced accounting and financial management challenges. Simply put, the bar is higher than in the commercial market. Government agencies’ stringent, complex, and seemingly ever-changing accounting and contract regulatory requirements can be especially daunting for small and midsize businesses. Here are six of the most common accounting and financial management mistakes companies make – and ways to avoid them.

  1. Not Understanding Government Rules and Requirements – If you think government accounting involves a slight variation from commercial business, I’m sorry, but you are wrong. Through Federal Acquisition Regulations and FAR agency supplements, government contractors must comply with criteria above requirements enforced by the Financial Accounting Standards Board.
  2. Building a System Around an Individual – As government contractors grow, they “systematize” the accounting function to improve compliance and may hire a mid- or senior-level accountant to institute a system. A question you should ask, assuming it is financially possible, is how that system can be maintained if key individuals leave the business.
  3. Failure to Keep Pace – Whether it is a new administration, increased government transparency driven by the stimulus plan or the normal run of new regulations, there will be more changes to government accounting and financial management requirements. You need to anticipate and implement systems, policies and procedures designed to support compliance with changing requirements.
  4. Lack of Trained Personnel – If data is wrong or entered into the system improperly, or internal accounting processes such as contract cost allocations are performed incorrectly, the system is jeopardized. You need to ensure you not only have skilled personnel but also have policies and procedures to avoid mistakes and correct them properly when discovered.
  5. Waiting Too Long – Your company needs to operate on the assumption that it will face a rigorous government audit, possibly with little or no advance warning. You should be ready and confident that you will obtain a positive evaluation.
  6. Failing to Use Available Information – Implementing an accounting system, designing procedures and following policies to comply with government regulations will make more information available to the contractor, but it has little value if the contractor does not leverage it to manage and grow the company. With innovative technology, companies are far better able to comply with government contracting requirements and can use the systems to manage and grow their companies while gaining necessary compliance.

To capitalize on opportunities, government contractors should evaluate their internal operations and consider alternatives for improving their chances of survival and growth such as software enhancements. SSi Consulting is a Gold-Certified partner serving customers in the Mid-Atlantic area offering hosted Microsoft Dynamics® GP and Microsoft Dynamics® SL at very low monthly rates. Whether you need accounting software, job cost accounting, help with your wholesale/distribution supply chain, or business management solutions for non-profits, SSi Consulting is your total solution provider.

By:  Bill Aiton with SSi Consulting, Mid Atlantic Microsoft Partner

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