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Financial Management For Government Contractors

Financial Management For Government Contractors

DCAA Financial SoftwareThe need for reliable, accessible and traceable data that reconciles internal billing information with federal contracts, and with annual estimates of expenses, is of critical importance to federal government contractors who do business with the Department of Defense (DoD).

By far, the largest hurdle for small to midsized government contractors to overcome is the requirement to provide significant detail about the direct, indirect, and overhead expenses associated with every item billed to the government in fulfillment of specific contract awards.

For this reason, government contracting organizations are increasingly turning away from basic accounting software or services, instead seeking broader and integrated enterprise resource planning (ERP) and document management solutions, such as those offered by Microsoft.

A strong financial management platform can provide government contractors with clear visibility into all costs associated with each contract, to help them anticipate indirect rates and manage accounts. “At the end of each year, a government contractor should be able to walk away with no money left on table, or worse, a requirement to return funds to the government because earlier estimates were not accurate,” said Bill Maxwell, Vice President of Finance and Accounting and Controller for CALIBRE, an Alexandria, Va.-based government contractor. Using older, less capable or inflexible accounting systems makes performing accurate estimates a crap shoot. “If the first goal of government contracting is NOT to fail an audit, the second goal would be to gain authorization to direct bill, to gain greater control over the organization’s finances,” said Maxwell.

The last thing contractors want is for a government agency to reassess the value of a contract award based on poor operational estimates, which is a sign the contractor is not in control of daily expenses.

After studying the DCAA audit requirements and seeing that government contractors were being underserved in terms of financial management, Microsoft stepped into the market in 2001.

Customers have found Microsoft Dynamics’ SL solution is fully FAR, CAS and DCAA compliant. They claim Dynamics excels because contractors can easily prepare reports, so that when auditors show up for a surprise floor check, “we have the information readily in hand, in the required format, to show precisely where our numbers come from,” Maxwell explained.

Source: DCAA Compliance Requires Better Processes and Flexible Tools (PDF)

Learn more about using Microsoft Dynamics SL by viewing the following case study. Carney Inc., a professional services based government contractor, automated processes and increased client loyalty with Microsoft Dynamics SL. Read the case study here (PDF).

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