Accounting and management are essential parts of every SME and business. It is a broad area and is managed by accountants on a project-by-project basis. Across the United Arab Emirates, business owners look forward to advanced accounting and bookkeeping assistance. Modern financial accounting uses project accounting to provide a clear understanding of the projects a company is undertaking and their progress. This is essential to measure the performance of an organization on a daily or quarterly basis. We are a team of qualified chartered accountants in Dubai and offer one of the best project accounting services for individuals and organizations. Let’s take a look at our exclusive service:

What Is Project Accounting?

Project accounting is also known as job cost accounting, which is the process of evaluating the costs and financial benefits associated with a project. It is an accounting practice to track different types of complex projects over a period of time. Project accounting is mainly used to make sure that the cost of materials, time and special equipment are cost-effective and contribute to the profitability of the enterprise. Project management accounting can be performed by internal or external accountants.

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Why is project accounting important?

There are several reasons why project accounting is very important for a company. For example:

• To assess the cash flow of each project
• Timely completion and delivery of the project
• To keep track of the financial side of projects
• Managing multiple tasks at the same time
• Organize business plans with symmetry
• Add value to each accounting project

How Project Accounting Enhances Business Profitability?

Project management has a significant impact on the profitability and growth of your business. It ensures that your financial accounting is capable enough to manage complex customer projects. Project accounting is a way of monitoring whether a project is generating revenue or not. By keeping track of project costs, you can identify which projects have come in over budget. A proactive approach will protect your company from losses in the long run. This monitoring of project records helps you to manage projects efficiently and within deadlines. Your organization’s ability to manage projects effectively can increase your profits and improve customer relations.

General accounting and project accounting

Project accounting differs significantly from general financial accounting in the United Arab Emirates.

• General accounting measures transactions according to the company’s financial year, which varies from organization to organization, whereas project accounting has a start and end date.
• Project accounting focuses only on the factor fully related to the project task, while general accounting covers all financial aspects of the company.
• In general, the accounting and reporting criteria are based on the overall profit and loss made by the company, although project accounting is determined by the delivery of the projects. Cost allocations are calculated on the basis of the delivery of each project.
• With project management accounting, you will have a clearer view of day-to-day finances such as costs, accounting, estimates, invoices, etc. Unlike general accounting, it gives a broader overview of the company’s finances.

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The role of project accountants in companies

Accountants and project managers use different methods and techniques to track the accounts on a project-by-project basis. There are some basic functions of project accounting, such as:

• Preparing financial statements, timesheets, invoices, etc.
• Planning and strategies developed for the success of the project.
• Creation of related entries using project accounting software.
• Organizing the resources and budget required to complete the task.
• Approving supplier invoices and timesheets for project work.
• Adjust the project budget and work breakdown structure (WBS).
• To summarize the information on the progress billings in a report format for review by the manager.
• Evaluate the total overheads and expenses applied to the project.
• Evaluate project variances and communicate information to management.
• Prepare an appropriate report on the progress of the project.

All of the above are key responsibilities of the Project Accountant and he/she needs to have expertise at all stages. If the internal team is not competent and cannot perform these tasks efficiently, it is better to bring in external accountants to manage the workload and projects proficiently. This is a cost-effective approach that improves the financial aspects of the project by meeting the client’s expectations.

The 5 biggest advantages of project accounting?

Project accounting has a number of advantages that affect the profitability and reputation of a company. Some of them are mentioned here:

1. Avoid Project Deadlines

Missing a deadline for any type of project is highly unethical and a sign of poor corporate governance. To avoid project delays, project accounting is the best accounting solution for both small and large companies.

2. Streamline Daily Tasks

Project-based accounting helps to streamline daily tasks and improve management performance.

3. Maintain Account Reconciliation

Project-based accounting will help you maintain bank statement reconciliations for each monthly financial cycle. Updating and reconciling these records ensures the accuracy of project cash flows.

4. Reduce Costs and Time

Well-managed projects effectively reduce costs and time for accountants and management. They handle multiple tasks simultaneously with minimal downtime.

5. Well-defined Project Reporting 

Before and after invoicing, accounts receivable, tax reporting, and more are prepared using project accounting information. This understandable information helps management to make decisions.

Why Outsource BestaxCA’s Project Accountants?

Bestax Chartered Accountants UAE is a group of highly skilled and professionally trained financial advisors and business consultants in all key areas. We are holding over a decade of experience in the accounting and bookkeeping field and render our services as per client’s needs and expectations. Our experts handle every small and large accounting assignment carefully and professionally. We are considered the best professionals in handling forensic accounting, IFRS, bookkeeping, payroll, and especially project accounting. Our accountants implement sophisticated techniques and software to keep track of the day-to-day finances associated with a specific project. We help enable you to receive in-depth reports on all transactions and monitor progress. With BestaxCA’s exclusive project accounting service, companies can confidently manage multiple projects in a timely manner. Don’t hesitate to get in touch with a reputable and trusted accounting firm in Dubai.