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How Can Software Help Prevent Restatements?

Constantly filing restatements raises a red flag for customers and lenders looking at field service organizations.

Showing strength in your working capital numbers could make the difference between getting that next job or losing it to a more stable company.

Consider this number from a recent article on The Wall Street Journal’s website: It took a median of 255 days for U.S. public companies to make restatements of financial results in the past two years.

Problems concerning revenue-recognition accounting and income taxes ranked as the most frequent explanation provided by companies. More than a third didn’t offer a reason.

“It’s not something you brag about,” Joe St. Denis, managing director at Baseline Insights, tells The Wall Street Journal.

Many industrial subcontractors and field service companies involved in long-term projects have more demanding needs for revenue reporting. That’s why it’s so important to make sure your job costing and project management software can report each project’s revenue position.

This can be based on committed costs, hours completed or revenue earned. For example, if you know that 60 percent of the job cost is made up from the price of materials, you can keep your project costs on track by charging for those materials once you buy them.

Regardless of the format of the revenue position, the software needs to accommodate it. This way, you let the system do the heavy lifting by reporting on your schedule rather than waiting for manual reports to be prepared by your busy employees.

Source: The Wall Street Journal, September 2012

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