Project accounting - What is project accounting?

Project accounting is the facilitation and integration of key tasks in the management of a large project

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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?

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.

By focusing only on the amounts related to a project, this 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.

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. The time frame for the project also often doesn’t meet up with the financial periods.

By using project accounting, the business can track the activities of a project regardless of the span of departments or the time frame. Project accounting also provides a deeper look into the financial health of the project.

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.

Keep in mind that if you’re just starting out, it’s often advisable to stick with software that is simple and straightforward, making it easy for you to manage your accounts quickly and easily, giving you more time to focus on other aspects of your business.