A majority of companies don’t know if they made money on a project until after they come to an end.
When you run a business you want to make sure you are taking on projects that will make you money. Otherwise, you won’t be able to grow.
With project accounting, your business can manage your project’s finances and increase your revenue.
In this article, we will explain:
- What is project accounting?
- How does it differ from project management?
- The value project accounting provides project-based dealerships
- Why it’s important for AV dealers
- Tips for project accounting
Let’s dive in!
Choosing the Best ERP System
When considering a project-based ERP system your first thought may be how it can help with your project management? But what you might not know is that project-based ERP systems can help with your dealership’s project accounting as well.
Most standardized accounting software doesn’t take into account the multiple dimensions of projects that project management does or how these projects can impact your business processes. Due to this lack of project consideration and customization within standardized accounting software, your business may encounter more upfront costs including the cost of ownership.
What is Project Accounting?
So what is project accounting? Unlike project management, project accounting is the monitoring of financial transactions when managing a project.
It is important to look at your activities to see the costs and revenues for a specific project and even break it down by each task.
Through project accounting, you can track project-specific costs to make sure you are taking on beneficial clients. It also helps to improve margins and reduces any erosion.
Integrate Project Accounting with Project Management
It is important to be able to have the full scope of your project. So every aspect of your accounting and management details and data for your projects should be in one place.
Project management and project accounting work hand in hand and are crucial to the success of any AV dealership.
That is why it is important to have software integrations for your ERP solution. For example, integrations with D-tools and Airtable through Khameleon allow you to apply project accounting to your project management tool and manage both aspects all in one place.
Why Do You Need Project Accounting Software as an AV Dealer?
Every business’s goal is to keep margin erosions down and revenue up. AV dealerships have to manage many moving parts and projects all at once.
This is where project accounting systems add value to your dealership.
Without project accounting software there can be erosions you miss and end up losing tons of money on a project.
Project Accounting ERP Can Help Improve AV Dealers’ Projects
There are several ways a project accounting ERP system can help improve the processes of AV dealers including:
- Financial Management
- Budgeting and Forecasting
- Contract management
- Billing and Invoicing
- Time and Expenses
- Project Reporting and Dashboards
- Real-Time Visibility
Now, let’s dig a little deeper into these improvements.
Your finance team handles a lot of responsibilities that can make or break your business. Project accounting software enhances their processes by:
- Reporting on project profits
- Shortening the billing lifecycle from quote to cash
- Keeping cost and charge rates contained
- Improving the accuracy of invoices
A project accounting system helps you to avoid accidentally deleting transactions. Once an order is placed, our software ensures the transaction cannot be deleted so you can always trace back invoices.
This brings us to the next benefit, enhanced forecasting.
Budget & Forecasting
Project-based accounting helps to track costs for every transaction, allowing you to maintain data integrity throughout your entire organization. With project accounting software you have the capability to set up, oversee, manage, and automate all Accounts Payable and Accounts Receivable.
By being able to monitor these projects hand-in-hand you’ll be able to easily drill all the way back to your general ledger and review it against your budget or forecast for unmatched accuracy. There you can see what’s profitable, and what is at a loss, and get insight into who are your best project managers.
Utilize Khameleon’s sales forecasting tool to improve your sales forecasting and make more informed business decisions.
Improve Contract Management
Through Project Accounting you can avoid accidentally deleting projects, invoices, and timesheets. You will be able to ensure you and your team can trace back every project invoice to avoid any confusion or market erosion.
Billing & Invoicing
Project-based accounting software, unlike generic ERP systems, generates bills based on each specific project and caters to each of your customer’s needs.
With project-based software, you can accurately track the costs and revenue of each project. Additionally, you can compare the costs vs. budget actuals in real-time, leading you to be able to avoid any bumps along the way till project completion.
With these real-time updates, you can create accurate project quotes to avoid any confusion towards the end of each project.
Time & Expenses
A project-based ERP system allows you to automate your approval and project allocation processes so you can:
- Generate and manage complex quotes
- Deliver detailed work orders
- Accurately forecast sales
- Obtain & report data in real-time
- Calculate job costs
- Establish an audit trail
- Measure performance goals
Eliminate redundancy and errors by having all project information in just one easy-to-use database.
Project Reporting & Dashboards
With project-based software, you no longer need to search for reports and invoices the old-school way. Instantly review important data on your very own, personalized dashboard so that you never have to hunt for vital information again.
With top-of-the-class reporting through a project-based software business intelligence, you can create a number of reports all ready to review on your personalized dashboard.
Through a customizable dashboard, you can save detailed project reports, discover any errors, and forecast projects all in one space. By doing so you can ensure quotas are being met and can adjust quotes accordingly based on these daily reports.
Provide Real-Time Visibility
Does your dealership struggle with data accuracy and timeliness? Are you spending too much time trying to forecast project deadlines and avoid erosions?
Have the ability to capture issues immediately and notify the appropriate team members in real-time right at your fingertips. By getting instant updates you can manage product damage and repair costs, out-of-scope services, and project notes.
Then you’ll be able to update project invoices and timetables accordingly. This will enable you to spend more time analyzing real-time data rather than gathering it.
When you are able to plan your projects better you can help to improve your business’s profits.
How to Choose the Right Project Accounting Software
Selecting the right software for your project accounting is the most crucial step. You need a partner that you can trust that is open to collaborating with you and your team to make the transition process a breeze.
When choosing which software to use for your dealership you should consider these criteria:
An All-Encompassing, Industry-Specific Solution
Generic solutions require customizations to fit your industry requirements and regulations. An industry-specific project accounting system should be designed with AV dealers and their needs in mind.
Khameleon gives your organization and project managers one cloud-based platform that combines all of your company’s data so you can see the entire project delivery lifecycle from quote to cash. Additionally, Khameleon was designed for AV dealers so you have everything you need to succeed.
A Well-Known Positive Reputation
Is your current vendor an industry leader? Do they stay up-to-date with industry updates and requirements?
Find a vendor that has gained trust within the industry and with a proven track record to help your dealership succeed.
Khameleon has over 20 years of experience working with AV systems providers and other project-based dealers, including BSI. Additionally, we are always working to learn and contribute to the AV industry through our Khameleon Conference.
Your vendor should hold themselves accountable for the success, or failure of their solution. They must always be fully transparent and upfront when problems arise.
With Khameleon your vendor will be an expert in AV dealerships and be able to answer any of your questions or concerns with the software. They will also make sure you are always in compliance with industry standards.
You need a solution that can help streamline and support your organization’s growth. Cloud-based software allows you to efficiently grow your company and take on more projects.
Khameleon allows you to easily add or remove additional functions and storage as you go. Additionally, we only make you pay for the capacity you need.
Any costs you may have to pay should be laid out from the beginning of your partnership. Pricing model options, recurring costs, and additional fees should all be clear to you and your team.
Khameleon has two subscription models depending on the size of your dealership. Additionally, training and support services are included, with no hidden fees.
Customer Experience & Support
You want a vendor that puts your experience and success first. One that treats your company like their own and always looks out for your best interests.
Additionally, you will want to assure you will still be able to get in contact with someone if you need help after implementation.
Khameleon has a 24/7 HelpDesk so you can always reach out for technical support and additional IT expertise.
Tips for Project Accounting
Now that you understand the importance of project accounting here are a few tips to help you manage your project accounting.
The first step to making sure you stay within budget is determining the scope of work for the project. This not only sets up clear expectations with your client but also makes sure your team does not do any work that won’t be paid for.
Next, you can break up the scope of work into specific tasks. From there you should determine the resources and team members you will need to assign to the project.
A good project accounting software would be able to pick up out-of-scope work and alert you, saving you time and tons of money.
Form Project Teams
Assigning people responsible for every project and its specific tasks is the best way to assure everything is completed on time and of high quality. Identify the roles you will need for the project and assign tasks to individuals on the team.
Project accounting software should allow you to attach your project team to a project and update them as changes occur over the course of a project. This is a great way to reduce margin erosion because the team will be notified if the project begins to erode too much.
Khameleon notifies your team with an email and detailed report as soon as margin erosion occurs.
Determine Project Goals
When you don’t know the direction you are trying to go in it’s easy to get lost. Determining goals gives you an efficient path toward success.
Setting project goals at the beginning gives you something to reference back to. Project accounting software allows you to better manage your project budget.
For example, you can see your project performance against the budget to compare how well you are doing compared to your original plan.
Create a Project Timeline
One of the biggest budget eaters is projects that exceed estimated timelines.
Create a project timeline that helps you map out what you need to do and how long it will take. The better you can stay within your timeline the more likely you will remain within budget.
The best way to create an accurate timeline is to start at your desired goal and work backward. You should also leave some padding in your deadlines. This way your clients can be pleasantly surprised if you finish early as opposed to being late.
Develop a Detailed Budget And Track It
A detailed budget should include capacity planning, cash flow analysis, and billing.
Project-based billing includes:
- Milestone billing
- Time and materials billing
- Estimate to complete billing
This will help you predict the costs of the project so you can make sure you’re charging your clients enough to make revenue.
You Can’t Always Predict the Future
While with the right software you can get very close to predicting your budget, there will always be the possibility of something going wrong. There are some things that are out of your hands.
For example, the cost for shipping has gone up due to supply chain issues from closures during covid. Project accounting software, like Khameleon, will update you automatically if any costs change.
Live alerts can let you see that your profits might change due to margin erosion so you can make updates to your pricing. For example, if you sold something to a customer based on an outdated quote and your manufacturer changes the price.
Additionally, as soon as you submit a shipping voucher Khameleon can notify you if the costs exceed the value you will be getting.
Generate an Installation Checklist
AV installation is a complex process that needs to be done properly in order to stay within budget. You have to account for all of the materials and products you will need like TVs and cables as well as the manpower.
Creating a project and installation checklist that is very detailed will help you make sure you don’t miss anything important that could lead to overspending. It also helps to limit any after-installation troubleshooting your client may need saving your staff lots of (possibly unbillable) time.
Make Real-Time Adjustments
Most people don’t know about a problem until it’s too late. Instead of waiting till the end of the project to look at reports and see that you went way over budget, you need to be proactive.
Using project accounting software allows you to see margin erosions as it is happening to stop them in their tracks. Then you can learn from your mistakes and make improvements.
Use the Right AV Project Accounting Software
At Khameleon, we have capabilities for all project accounting processes and are able to integrate with project management tools so you don’t need any other software. This makes things easier because you don’t have to waste time or money doing double data entries or bouncing back and forth.
We are an industry-specific ERP software made with AV dealers in mind to help your business thrive.
Don’t believe us? You don’t have to take our word for it. Read our case study to see how Khameleon helped another AV Dealer.