I am continuing to write about the different types of companies and the impact that automation has. Today I am writing about project based accounting. These are companies where their business is dependant upon certain events in order to bill or be billed (I am very proud of myself for not using the word “project” in the definition). Here are a few examples of companies that are project based accounting:
- Architectural Firms
- Engineering Firms
- Environmental Impact Companies
- Consulting Firms
- Law Firms
Construction is the best example of a project based and a type of company that really can benefit from accounting automation. What makes automation so helpful to project based accounting revolves around all of the steps that invoices have to go through before the invoices can be qualified for payment. There are three specific outcomes automation will have that project based accounting can use:
1 – Time: Project based invoices are extremely time sensitive. Using the construction example, during a project, if an invoice is not approved in time the contractor may move onto other projects. Or if there is a dispute in the approval process you need as much time as possible to resolve the dispute so work can continue. If automation is done right, process time can be cut by as much as 75%.
2 – Information: Project based invoices need additional attachments like:
- Lien Waiver or Lien Release
- Bid Sign Off
- Scope of Work
- Project Plans
There are other pieces of information that are needed to gathered during the approval process. Some project based accounting firms need to know if the client has been billed for the services or if the invoices that is being approved can needs to be billed back for the client. Automation has a big impact on the information gathering process because it can allow for attachments and communication about invoices.
3 – Defined Approvals: If you automate properly you will have the ability to define the workflow or automatic approval process. The impact to project based accountants is the assurance that everyone that needs to sign off on the invoice, see the invoices and that fact (seeing) is notated so if there is a future dispute the record reflects their sign off and notes. I know this sounds “big brother” like, but in a Law or Architectural Firm, these details of who approved what at what time for what reason is extremely important.
Time, information and definition are just a few of the things where automation can help accounting processes within project based firms. Stay tuned next week to look into those types of companies that have regulations requirement and how automation can help them.
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