Leverage GP Project Accounting to manage your activity-based costs

Successfully tracking projects while reporting and analyzing financial implications requires a specialized type of accounting known as Project Accounting. Dynamics GP users find incredible value in leveraging the Project Accounting modules to track project revenues and expenses to ensure project delivery success. In this post we will analyze the GP Project Accounting modules, its features, and how it can benefit your business.

Project Accounting software manages the financial transactions related to projects including costs, billing, and revenue. These intelligent systems have many benefits compared to a standard accounting system in that, the project accounting system can consider additional controls that project-based activities require.

Microsoft Dynamics GP’s Project Accounting suite is a robust and highly configurable module that enables businesses to keep track of financial data by contract, project, and cost category. Additionally, it allows you to group projects together for reporting and budgeting to maintain complete control over costs, execution, and project budgets. GP Project Accounting can process project transactions while charging the appropriate general ledger account without additional entries or effort.

The Dynamics GP Project Accounting module is fully integrated with Financials to assist users in maintaining control over project completion deadlines as well as budget limitations. This powerful module offers the flexibility, precision, tools, and reporting that are required to manage simple to complex project tracking needs.

Begin date and end date

Projects are defined by having both a Begin Date and an End Date. This is an important distinction since your Chart of Accounts (CoA) is designed for longevity. Since a project has a defined End Date, it is a temporary entity and not a great candidate to be measured in your permanent CoA. This is where Dynamics GP Project Accounting can benefit your business as it allows users to charge the CoA and the project with a single transaction.

Project overview

With the Project Accounting module, you can record and access important information on a project. For example, the Project Maintenance Window shows descriptive characteristics such as Description, Project Manager, and Status. This window also gives users a quick financial summary of costs charged and Billings to Date, Profit, and even Committed Costs such as outstanding Purchase Orders. Managing your project is made simpler by knowing and communicating the status of your Project, Job, or Work Order. Users can even customize GP Project Accounting to add custom statuses that meet the needs of their business.  

Controls

Dynamics GP Project Accounting provides certain controls you can implement to manage your projects. For example, you can control which items will be used in a project and when items will be available for billing. Additionally, you can control the way revenue is recognized and which users can charge to a project. To minimize mistakes and transaction rework you can set GP to only display relevant projects to specific users. In the image below, you can see an example list that defines who can charge to a specific project.

Project budget

With the Project Accounting module, you can set a project budget that is separated from the financial budget. This allows you to focus on specific activity charges while the financial budget simultaneously stays updated. In some scenarios, specific cost activities may involve charges to multiple General Ledger (GL) accounts. For example, for a Fire Alarm Testing project, the annual test may need to be charged to regular labor time, overtime, parts or aerosol smoke cans, and sub-contracted fire and sprinkler companies. To budget for Fire Alarm Testing you may have to inquire on several GL accounts and then hunt for transactions that match and which transactions don’t match this activity. Let GP Project Accounting streamline this process by creating a project with the allowable Cost Categories that charge the GL Accounts that need to be charged.

A Cost Category points directly to a GL Account so one entry can update the Project activity and the CoA at the same time. Now that the Cost Categories are set up and Project Accounting transactions are controlled, the standard accounting entries are updated during the same transaction.

In our example, when the Inventory (INV) Cost Category is used, the Office Expense GL Account is charged and the cost of the inventory is relieved.

Cost Categories are tied directly to the GL account and Dynamics GP Project Accounting gives you the flexibility to create multiple cost categories. For example, if you have two inventory transactions where one is charged to Office Expense and the other is charged to capital project. For this example, we created the Cost Category E-INV that debits Office Expense and C-INV that debits Work in Progress until the project is capitalized.

Please note that the example above shows the more granular accounting setup, and if your needs are less complex, the accounting can be defaulted at a project level. If your needs are more simplified, you can use Cost Categories to facilitate any category or management reporting of your projects.

To receive the benefits of this project sub-ledger in GP, you don’t have to retrain users on several new transactions. Every transaction entry window that is currently in use will be replaced with a transaction entry window that is familiar to your users. For example, the normal window would have a field that is used to dictate the GL entry, while the new window would have fields for the Project and Cost Category that dictate the GL entry.

Below is an inventory example that is representative of transaction windows where all fields are familiar and users only need to simply add the Project fields. Most time entry partners who present an interface to users for GP time entry, also render Project fields so correct time entry becomes simplified.

Trusting your financial results is important and adding an entire layer of project reporting on top of Dynamics GP is simple. If you are trying to find a Project or Job Costing software, you likely own a great one and simply need to set it up to match your project efforts. If you are trying to manage project financial outcomes in your Chart of Accounts, you may be watching your permanent CoA grow out of control with segments that track temporary projects. These challenges and many more are often solved by adding Dynamics GP Project Accounting.

From simple to complex project needs, Rand Group has decades of experience with GP Project Accounting. As a multi-platform solution provider, Rand Group brings additional perspective by comparing other Project Accounting systems. For an assessment of your needs or assistance with more complex problems, contact our experts who specialize in configuring Project Accounting Software to meet specific business needs.