You might have heard the term “accounting project management” at work as an accountant or project manager. For a layman, accounting and project management would appear to be quite distinct disciplines. So, what exactly is this strange combination of the two, and why does it matter?
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What is Accounting Project Management
In a sentence, accounting project management is the management of all the accounting and financial workload associated with a business project. This includes managing costs, budgets, revenue, and any other financial responsibilities of a project.
Accounting project managers, or project accountants, aim to keep the project on track financially. They are responsible for ensuring the project meets its established financial goals and investors and stakeholders make good returns on investment.
Accounting project management is entirely concerned with the financial side of a project. Project accountants are not there to manage the entire project as a general manager. Instead, they are on board to ensure the project is financially sound at every turn. Accounting project managers leverage specialized tools and strategies to boost project efficiency. They also drive a project to lower costs and improve the overall project outcome.
In a nutshell, imagine an expert accountant utilizing their experience in conjunction with advanced project management techniques. For example, take the Work Breakdown Structure (WBS) method. This is where a project manager breaks a project down into smaller, manageable compartments. These are then further broken down into tasks and responsibilities that must be managed. Apply this strategy with a financial spin, where you break the project down and then manage all the little costs and resources.
The perfect marriage of accounting knowledge and project management practices is accounting project management.
Why You Should Consider Accounting Project Management for Your Next Project
Budget Control and Resource Savings
Having an accounting project manager in the room is a game changer. They will put their foot down when needed and ensure things stay within the budget. One of the biggest problems in project management is the risk of going over budget. The Project Management Institute reports that 43% of projects exceed their initial budgets.
With accounting project management, this risk is significantly mitigated. You have tight control over project finances, and every penny is answered for.
Financial Transparency and Better Reporting
Accounting project management puts a tight leash on the budget. At the same time, the project accountant keeps regular, accurate recordings of all financial transactions. This makes the whole project much more transparent to investors and stakeholders. Everybody involved knows what’s happening and where the money is going. Good financial reporting leads to a sound paper trail. Which in turn makes everything easier for the business during tax and audit time.
Optimized Resource Utilization and Financial Processes
An accounting project manager is also the main driver of optimization in a project. As the ones responsible for the budget, it also falls to them to best allocate said budget. Timely resource allocation and payments make everything run smoothly. Redundancies are removed, and financial processes are streamlined to get the job done quickly and properly.
Faster payments mean things get done quicker. For example, the business is opening a new location. Well, this new location project comes to a grinding halt if construction payments are late. Everything comes to a standstill because one process is taking too long. The project accountant is there to make sure these things do not happen. Every financial process will be optimized as best as possible, and resources will be allocated appropriately.
It is important to stay within budget and finish the project on time. These criteria directly affect project returns, and accounting project management addresses them in one fell swoop.
Financial Analyses and Data-Driven Decision-Making
A dedicated project accountant is responsible for tracking the efficiency of the project. They can advise on budgeting in the planning phase and keep things in line with the budget during execution. Almost every project-related decision has a financial component. Having someone who is solely managing all of the accounting related to the project is key to decision-making. They can also keep you updated on the project’s practical realities.
How much of a deviation is happening in reality compared to in planning? What can be done to make things as financially strong as possible? Questions like these are all answered by accounting project managers.
Challenges Faced in Accounting Project Management
1. Managing Multiple Projects Simultaneously
Accounting project management is not easy work. It can quickly pile up and be too much for one person. Typically, project accountants end up working on multiple projects simultaneously.
Different projects also operate on different timelines and schedules. So, you may be handling the taxes for one project while preparing financial projections for another. The room for error is tremendous when keeping track of so much data.
While multitasking is fine, it is still a challenge to be wary of. A project accountant should manage a maximum of 2 to 3 projects. Things can easily get muddled if you are working on different projects at the same time.
2. Managing Deadlines
Projects are very sensitive to deadlines. While general business accounting typically does not have very strict deadlines, projects are different. Reports need to be generated by a certain time. The books have to be updated before a certain time. Everything is working within a time frame.
Missing a deadline can lead to Failure, especially for projects. For example, missing a payment to a contractor can lead to delays that cost the business money. Investors will want answers, and the project accountant will be responsible.
A critical skill here is being able to consistently meet these deadlines while balancing multiple projects. Without strong time management skills, you may end up dooming the entire project.
3. Breaking Down Silos
Projects are a collaborative effort, and strong communication is paramount. Unfortunately, organizations are prone to siloing off various business functions. By silos, we mean the phenomenon where different business functions end up working independently without sharing information. Imagine the accounting team not talking to the marketing team. Or the sales team never interacting with customer support.
Breaking down these silos and ensuring communication is another challenge that comes with accounting project management. Multiple different departments need to constantly share information for the project to succeed. The accounting project manager is in a unique position here. They need to communicate with every function throughout their duties. This means they are a pivotal juncture in the corporate communication scheme. Being aware of this, project accountants must be ready to break down these silos and help form a unified project vision.
Keeping Up with Technology
Every week, there seems to be some revolutionary technological breakthrough. While many glosses over these, accounting project management professionals must constantly stay in the loop. Some new software might greatly help in some aspects of the project. AI in accounting, for example, is all the rage right now. You have generative AI-producing financial forecasts and models. AI data processing allows vast swathes of data to be processed in hours. Staying in the loop and leveraging these tools is one big challenge. Every month brings a new technological learning session. Evolving and adapting is key to excelling in accounting project management.
Conclusion
Accounting project management can be the difference between project failure and success. Having someone dedicated to handling a project’s finances is key to success. While businesses typically have their regular accountant take the mantle, this is not always the best choice.
Your regular accounting professional already has their hands full with managing daily operations. Putting them in charge of multiple projects is a recipe for disaster. Instead of this, we recommend you leverage outsourced project managers for accounting.
Outsourced accounting project managers are a great way to have your cake and eat it. You can hire them on a contractual basis through an accounting firm and keep them around as long as needed. This makes life easier for your in-house accountant while granting you access to specialized project accountants at a reasonable cost.
That brings our short foray into accounting project management to a close. There are, of course, many things left unsaid. We will cover these in greater detail in later publications.