SUMMARY
Government contractors can eliminate manual spreadsheet accruals and maintain DCAA compliance by using XTIVIA GovCon365 within Microsoft Dynamics 365 Business Central to decouple revenue recognition from billing workflows.
Key Takeaways:
- XTIVIA GovCon365 separates revenue recognition from client invoicing, allowing government contractors to meet strict DCAA regulations and ASC 606 standards based on the actual percentage of work completed rather than static billing milestones.
- The system provides independent Billing and Revenue formulas, enabling organizations to customize client pricing and indirect burdens separately from Profit and Loss calculations such as Estimate to Complete (ETC) models.
- Automated month-end revenue accrual workflows eliminate manual unbilled receivable tracking, automatically debiting WIP sales accounts and reversing accruals when invoice proposals post.
- Integrated Business Central analytics deliver real-time visibility, granting project managers immediate transparency into billed versus earned performance without relying on external spreadsheets.
Government contractors should adopt GovCon365 to automate complex project accounting, maintain audit-ready financial records, and streamline month-end billing cycles.
Table of contents
Introduction
In standard commercial accounting, generating an invoice usually means recognizing revenue. Simple. But for government contractors (GovCons), the reality is far more complex. While you might invoice based on project milestones, DCAA regulations and federal accounting standards require you to recognize revenue based on the actual percentage of work completed. This gap forces many GovCons into a frustrating cycle of managing “unbilled receivable” data outside their core ERP. XTIVIA GovCon365, built within the robust platform of Microsoft Dynamics 365 Business Central, finally resolves this challenge by running Revenue Recognition and Billing as two distinct, yet perfectly synced, processes.
The Power of Independent Formulas
GovCon365’s strength is rooted in its highly flexible, formula-driven design. For every project, you gain the ability to define two separate and powerful parameters: the Billing Formula and the Revenue Formula.
- Billing Formula: This engine precisely controls what your client sees on the final invoice. It handles everything from pricing labor (cost vs. sales price) to applying indirect costs (burdens) and calculating administrative fees.
- Revenue Formula: This determines the project’s impact on your Profit and Loss statement. For example, a Firm-Fixed-Price (FFP) contract may involve a single $50,000 milestone bill upon delivery. However, your system can be configured to recognize that revenue over the contract duration using the “Estimate to Complete” (ETC) methodology, accurately reflecting ongoing operational effort.
Goodbye, Manual Accruals. Hello, Automation.
The manual tracking and reversal of “Unbilled Receivables” are notorious time sinks. GovCon365 eliminates this with its automated month-end process, Calculate Revenue Accrual:
- The Accrual: At the close of the month, the system calculates and accrues earned revenue. This transaction instantly debits your WIP Sales Account (an asset on the balance sheet) and credits Accrued Revenue. Your financials are immediately updated to reflect work performed, regardless of the billing cycle.
- The Billing Cycle: When the contract milestone is reached, you utilize the Invoice Proposal workflow to generate the official client bill.
- The Automatic True-Up: Once the invoice is posted, the system automatically reverses the initial revenue accrual. This seamless action guarantees your books remain balanced and audit-ready without requiring a single manual journal entry adjustment.
Compliance and Clarity in One Platform
By natively decoupling these financial lifecycles, GovCon365 ensures unwavering compliance with key accounting guidelines such as ASC 606 while providing the cash flow flexibility your contracts demand. Whether you are running simple Time & Materials (T&M) work where “Revenue Equals Billing,” or complex ETC-based recognition for major FFP programs, the system manages the intensive accounting load.
Real-Time Performance Visibility
With Billing and Revenue Recognition fully integrated within Business Central, your project managers and leadership gain instant insight into “Billed vs. Earned” performance. There is no longer a need to wait for compiled external spreadsheets; your project data is live, accurate, and completely transparent, ensuring projects stay on track and audit risks are minimized.