Project accounting is a specialised form of accounting that corresponds to the ever-evolving needs of project delivery, which helps adequately track, report and analyses financial results and implications.
With project accounting, you can keep track of the hours, related costs and other key tasks related to a specific project. Project accounting differs from traditional accounting in that it focuses only on the transactions related to a particular project.
How is project accounting used?
- Project accounting is useful because a project might require work across a variety of different departments within a business, making tracking the different transactions and progress more difficult, especially in larger companies.
- It provides the business with a clear indication of the resources and costs going into that project. The results of this can then be used to create financial reports, which are useful to a project manager in moving forward.
- The hours and related costs that are accrued regarding a project are used as a foundation for e.g. invoicing of the project, or in some cases as cost management regarding tasks on fixed prices.
Who handles project accounting?
In larger businesses, there is a designated project accountant. This person acts to track all of the activities related to the financial aspects of the project. These mainly include:
- Invoicing
- Expenses
- Financial reporting on the project
- Management of project assets
- Tracking hours spent on the project
And many other tasks depending on the scope and timeframe of the project.
Project accounting and accounting software:
When choosing an accounting software, it is important to take into consideration the needs of your business. Online accounting software today provides a broad range of features and functions, and some include a project accounting option, should your company need it.