Contract Finance

CMMC compliance costs hit government contractors hard, but the accounting treatment determines whether you recover those dollars or absorb them. Misclassifying a single cost pool turns a recoverable investment into a questioned cost finding.

The government contractor year-end close is not a bookkeeping exercise. It is the first phase of your incurred cost submission. Every adjusting entry, rate pool reconciliation, and cost reclassification in December through February determines whether your ICS filing six months later survives DCAA review.

FAR 31.205 defines which costs government contractors cannot charge to federal contracts. Missing even one category exposes your firm to questioned costs, penalty assessments, and indirect rate adjustments across every open contract.

Government contractors face a 45-75 day payment cycle that commercial businesses never encounter. This guide covers cash flow forecasting, invoicing discipline, financing options, and building reserves that absorb payment shocks.

Government contract profitability requires CLIN-level cost tracking, not commercial P&L thinking. Here is how to set up job costing, catch underperforming contracts early, and protect your margins across FFP, cost-reimbursable, and T&M work.