Most businesses sit across two or three of these, and the overlap is usually where the interesting problems are.
Practices
You bill a fee schedule, the insurer allows less, and you collect less than that. Until someone separates the three, your revenue is a fiction — and you can’t tell which provider or location is carrying the practice.
Practices →Projects
Costs land for months before the revenue does. Without a WIP schedule you can’t tell a profitable month from a deposit, and you find out a job lost money after it’s finished.
Projects →Goods
A point or two of cost of goods decides your year. Deposits don’t match sales because fees came out first, and if COGS is only trued up at year end, you learn your margin long after you could have changed it.
Goods →Missions
You have cash you aren’t allowed to spend and no clean way to prove which is which. Restricted and unrestricted sit in one balance until a funder or auditor asks — then it’s a reconstruction project.
Missions →Contracts
Cash arrives before you’ve earned it. A great month is often just a billing month, and without a deferred revenue schedule you can’t say what portion of billed revenue you’ve actually delivered.
Contracts →Assets
The money is spread across entities that each have their own books, so no single statement tells you how you’re doing — and money moves between them that nobody records on both sides.
Assets →Government contractors
Direct and indirect costs have to stay segregated in the ledger, indirect rates have to be defensible, and labor has to trace back to timesheets. The accounting system is part of the contract.
Government contractors →Go deeper on a specific field
Where we have written at length, the guides sit here.