Our analysis reveals that as a government contractor timely issuance of accurate invoice is critical to solve the cash flow problem.
In order to achieve the goal we restructured the financial system to have the following components. First, set up the accounting system COAs using DCAA COAs and jobs to keep track of the budget verses actual for every contract. Second, utilized a DCAA approved timekeeping system where employees enter time activities daily and syncs with accounting system to ensure correct invoicing for direct labor hours. Third, structured Accounts Payables System where all direct bills are coded by CLIN number and tied to proper contract. The AP system also syncs with accounting system to ensure correct invoicing for ODCs and subcontractor costs.
Once the proper financial system is in place, we structured the process of the invoicing and all project managers will reconcile the invoice package with accounting records within 10 days after the end of prior month and once reconciled, submit invoice to the government before the 15th of each month which improved the speed of invoicing significantly.
We further streamlined the project management process so that project managers will confirm with GG before submit bids to make sure the bids take into account the indirect costs using the wrap rate calculated for the company, thus ensuring the company was bidding for profitable contracts. Once a contract is won, the cost of the budget is entered into the accounting system monthly and project managers will be provided monthly actual VS budget report to better monitor their projects.