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Deltek Vision Tips: De-Mystifying Cash Basis Accounting

Cash Basis AccountingFor many of us, the mere mention of cash basis is not unlike the old “fingernails on a chalkboard” – not something we want to hear.  However, cash basis accounting need not be something that is left only to your CPA.  Your Deltek Vision system can be set to easily track your transactions and financials on both an accrual basis and on a cash basis with minimal effort. 

What is Cash Basis Accounting?

Cash basis accounting is the process of recognizing revenue and expense at the time that you actually receive and disburse cash in your accounting system.  Accrual basis accounting, on the other hand, recognizes revenue when you produce invoices (creating accounts receivable) and recognizes expense when you enter vendor invoices (creating accounts payable).  For firms utilizing Vision’s Revenue Generation feature, revenue can be generated when time and expense is posted to the system – prior to invoicing the client.  Most firms that we consult for maintain their day-to-day books on an accrual basis and leave cash basis for their CPA to calculate at year-end for filing of tax returns. 

How and when should I get started with cash basis accounting?

To start using cash basis accounting in Vision, you will need to get with your CPA and make a plan.  It is generally best to enable cash basis at the beginning of your fiscal year, however, it can be enabled at any time.   You will also need to get copies of your year-end accrual and cash-basis financials from your CPA to ensure that your beginning balances for both methods are correct in Vision.  Most firms get accrual based closing entries from their CPA, but may not be getting cash-based closing entries.  Talk with your CPA and setup a time to bring your Vision accounting system up to date as of your most recent fiscal year end. 

The next thing you will need to do is to map your Accounts Receivable account(s) to the proper Revenue account(s) in the Chart of Accounts Info Center.  This setting lets Vision know which Revenue account(s) to credit when you record a Cash Receipt transaction in the transaction center.  The following illustration shows the process of recognizing both accrual and cash basis revenue in Vision:

Cash Basis Accounting, Deltek Vision Finance

Taking Cash Basis accounting to the next level:

  • You and your CPA may want to recognize cash basis revenue using multiple revenue accounts.  This can easily be accomplished by creating multiple AR accounts – one for each type of revenue.  Your AR reporting does not need to change and you and your CPA will have better detail
  • Many options are available for cash-basis reporting regarding timesheet postings and payroll.  Ask your Full Sail Partners Consultant when you are ready to explore these options, including the use of a Payroll Payable liability account as opposed to your Job Cost Variance expense account.

Has your firm implemented cash-basis accounting? Leave a comment and let us know your experience.

Be sure to check out other articles written by Rick Childs

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