As you venture into government contracting, it's in your best interest to focus on your service, leaving the intricate government contract accounting to the experts for 5 reasons: expertise, cost-effectiveness, flexibility, efficiency and compliance.
You have found your niche and have done your research. You have mastered your field and made a decision between a sub or prime contractor. You know where to look for contracts and how to structure your bids. Your software is now ready. What are you missing to get that first contract started?
The accounting part.
It is a surprise to those who are new to government contracts that the accounting that the federal government requires is very different from your everyday accounting. The focus, for example, is shifted to costs and how they are structured and separated from other costs.
It is in your best interest, as you start your journey into government contracting, to focus on your service or product rather than putting your energies into the intricacies of government contract accounting. This is why many contractors opt to outsource their government contract accounting to qualified professionals.
Here are 5 reasons to outsource your federal contract accounting.
1️⃣ Expertise.
Government contractors often have unique accounting needs due to the specific and numerous regulations and compliance requirements of their contracts. An outsourced accounting firm with experience working with government contractors can provide the specialized knowledge and skills needed to accurately and effectively handle these complex requirements.
2️⃣ Cost-effectiveness.
Outsourcing accounting services can be more cost-effective than hiring in-house staff, particularly for smaller contractors who may not have the resources to hire and train a full-time accounting team. An outsourced firm can provide the necessary accounting services at a lower cost, freeing up the contractor's resources for other priorities.
Imagine hiring your own team or training a person or two for your government contract accounting needs. What's stopping them from finding greener pastures as they have acquired this very in-demand skill? Or what happens when your one expert gets sick or takes a vacation? An outsourced firm always has people in a rotation that know exactly how to manage your accounting.
3️⃣ Flexibility.
Outsourcing allows contractors to scale their accounting services up or down as needed, depending on the workload and the size of their business. This can be particularly beneficial for contractors who experience fluctuations in their workload, as they can adjust their accounting services to meet their changing needs.
4️⃣ Improved efficiency.
An outsourced accounting firm can provide more efficient and accurate accounting services than an in-house team, especially accounting firms with a lot of experience. They have a very short learning curve, and mainly it's just to prepare your contract versus a very reliable software they have also used for other companies. This can help contractors save time and money by avoiding costly errors.
5️⃣ Compliance.
Government contractors are subject to a wide range of regulations and compliance requirements, including the Federal Acquisition Regulation (FAR) and Cost Accounting Standards (CAS). An outsourced accounting firm with experience working with government contractors can help ensure that the contractor's accounting practices are in compliance with these regulations, reducing the risk of costly mistakes or penalties. They also know how to deal with surprise audits from various government agencies.
If you are a government contractor, especially if you are just getting your feet wet. It's in your best interest to outsource your accounting; apart from the reasons above, whatever agency you will be working with will see you as professional who has their accounting in order. This will definitely help when you go to work for the same agency again in the future.
At PWCPA PC, we are led by Peter Witts, a former DCAA auditor himself, with more than 20 years of experience in the field of government contract accounting. He knows first-hand how to deal with all the red tape that's keeping you from making the best out of your government contracting. Contact us so we can help you improve your government contract accounting today.
I’m Kristin, the PWCPA PC Customer Success Specialist. For more information about this topic, or any other, you can always reach me through our customer ticketing system.