Winery owners constantly innovate to improve their cultivation and fermentation processes. What many don’t realize is that these daily activities may qualify for valuable Research and Development (R&D) tax credits. Despite the significant financial benefits available, most wineries leave this money on the table simply because they don’t know their work qualifies.  

This article will explore what makes your winery eligible, which activities qualify, and how recent tax law changes make these credits even more valuable. 

Understanding R&D Tax Credits for Wineries 

R&D tax credits allow businesses to claim a dollar-for-dollar reduction in their tax liability for qualified research and development expenditures. These credits represent a significant financial advantage. You can reduce your tax bill and generate cash back for reinvestment in your operation. 

Companies of all sizes qualify for the federal R&D tax credit. Additionally, 70% of states now offer their own research and development tax credits. According to industry research, while more than 14,000 U.S. companies claim federal R&D credits annually, less than 33% of companies that actually qualify apply for them.  

What Qualifies as Research and Development? 

The tax definition of qualified research extends beyond traditional laboratory work. Companies that develop new or improved products, processes, or software for its operations may be eligible for the R&D tax credit. 

Your research must meet a 4 part test criteria at a “business component” or project level: 

• Technological in Nature: 
  The work must rely on principles of physical sciences, biological sciences, engineering, or computer science. 
• Permitted Purpose: 
  The activity must aim to create or improve a product, process, technique, invention, formula, or software in terms of performance, reliability, quality, or functionality. 
• Elimination of Uncertainty: 
  The activity must attempt to resolve uncertainty about how to develop or improve the product or process (uncertainty about capability, method, or design). 
• Process of Experimentation: 
  The activity must involve a process of evaluating alternatives through modeling, simulation, systematic trial and error, or other testing methods. 

The good news? Your project doesn’t have to succeed to qualify for the credit. 

Qualifying Activities for Wineries 

Wineries conduct research and development in various ways. New manufacturing processes qualify. Improvements to wine quality and taste may qualify. Developing new or improved beverages can potentially qualify for the R&D tax credit. 

Vineyard Optimization 

Your vineyard work may qualify when you evaluate soil conditions, water availability, and ground slopes to optimize grape cultivation. Developing soil and rootstock improvement processes counts. So does designing trellis improvements and developing plant irrigation systems. 

Production and Bottling Improvements 

You may qualify when you develop new or improved bottling and packaging processes. Testing new or improved corks qualifies. Developing improvements to bottle labeling materials counts. Evaluating varied filtration methods to prevent microbial spoilage and increase wine quality qualifies. Testing products to ensure shelf life also makes the list. 

Enhancing Your Production Mix 

Many qualifying activities happen during production. Evaluating conditions like humidity, lighting, ventilation, temperature, and barrel fermentation for wine production may qualify if it meets the 4 part test. Developing flavor or aroma profiles, improved ingredient mixing methodologies, and product prototype batches all may potentially qualify. 

You can claim credits for developing new or improved quality assurance testing processes. Testing products to ensure consistency qualifies. So does developing new or improved preservative chemicals. 

Economic Efficiency Research 

Improvements to the economic efficiency of your fermentation process qualify. Experimenting with equipment to improve both efficiency and precision during fermentation counts. Developing improved grape strains qualifies. Testing product ingredient mixtures for desired flavor or aroma profiles also makes the cut. 

Learn more about R&D Tax Credits

Recent Tax Law Changes: The One Big Beautiful Bill Act 

The tax landscape for R&D credits recently improved significantly. The One Big Beautiful Bill Act, signed into law on July 4, 2025, permanently restored immediate expensing for domestic research and experimental expenditures for tax years beginning after December 31, 2024. This reverses years of required capitalization and amortization that created cash flow challenges for innovative businesses. 

Small businesses with average annual gross receipts under $31 million can now amend prior year tax returns to expense domestic R&D costs retroactively back to 2022. This means you may be eligible for refunds on taxes you already paid. 

All taxpayers can elect to accelerate remaining unamortized domestic R&D expenses from 2022-2024, either in full in 2025 or split between 2025 and 2026. This creates immediate cash flow benefits for wineries that have been capitalizing these costs. 

The new law creates a clear incentive for domestic research. Foreign R&D expenses must still be amortized over 15 years, but domestic expenses can now be fully deducted in the year incurred. 

New Reporting Requirements 

Be aware that the IRS updated Form 6765 for 2025. Detailed project-level reporting is now mandatory for businesses with over $1.5 million in Qualified Research Expenses. You’ll need to track R&D projects and expenses more precisely than before. Higher audit risk exists if your documentation is incomplete or inconsistent. 

Work With BPM to Navigate R&D Tax Credits for Your Winery 

Navigating R&D tax credits requires specialized knowledge of IRS requirements and documentation standards. The recent changes under the One Big Beautiful Bill Act create new opportunities but also add complexity around elections, retroactive claims, and coordination with other tax provisions. 

BPM helps wineries identify qualifying activities, document research efforts properly, and maximize available credits while maintaining compliance with new reporting requirements. For a free assessment to determine your R&D tax credit eligibility and develop a strategy that puts cash back into your winery, contact us.  

The cryptocurrency landscape has reached a critical inflection point for businesses. With Bitcoin surging and stablecoins processing over $15 billion in daily transactions—surpassing traditional payment networks—the question is no longer whether your business will encounter digital assets, but how you’ll account for them. As stablecoin transfer volumes hit $27.6 trillion last year, surpassing the combined volume of Visa and Mastercard transactions, the need for sophisticated crypto accounting has moved from niche to mainstream. 

The accounting complexity intensifies with new regulatory requirements. FASB’s ASU 2023-08, effective for fiscal years starting after December 15, 2024, requires subsequent measurement of certain crypto assets at fair value, with fair value changes recorded in net income in each reporting period.  

This fundamental shift from cost-less-impairment to fair value accounting means businesses must decide: build internal crypto accounting capabilities or partner with specialized providers? 

The hidden complexity of crypto accounting 

Unlike traditional assets, cryptocurrency accounting presents unique challenges that compound traditional accounting costs. The complexity goes far beyond simple transaction recording, requiring specialized knowledge of blockchain technology, DeFi protocols, and evolving regulatory frameworks. 

Multi-layered transaction complexity 

Crypto transactions involve intricate details that traditional accounting systems can struggle to capture. Each transaction requires tracking across multiple dimensions: 

• Cost basis calculations with multiple accounting methods (FIFO, LIFO, specific identification)  

• Fair value determinations from multiple exchanges with varying liquidity and spreads  

• Transaction fee allocations across different blockchain networks with fluctuating gas costs  

• Multi-chain asset tracking as businesses operate across Bitcoin, Ethereum, Solana, and emerging networks  

• DeFi protocol interactions including staking, lending, and liquidity provision 

Hiring a specialized crypto accountant can cost anywhere from $200 to $500 per hour, with more complex cases involving DeFi complexity like liquid staking rebase tokens or NFT bonds seeing fees rise further. Some firms offer monthly packages ranging from $1,000 to $5,000, depending on the services provided. 

Regulatory compliance burden 

The regulatory landscape creates additional layers of complexity and valuations are constantly fluctuating, so businesses must maintain: 

• Real-time fair value tracking with proper documentation for audit purposes  

• Detailed transaction logs across all platforms, exchanges, and protocols  

• Multi-jurisdiction compliance as crypto regulations vary significantly by location  

• Audit-ready documentation that satisfies both internal and external requirements 

The true cost of in-house crypto accounting 

Building internal crypto accounting capabilities requires substantially more investment than traditional accounting teams. The specialized knowledge, technology infrastructure, and ongoing training create substantial hidden costs. 

For crypto accounting, you need: 

• Crypto accounting specialists with blockchain knowledge, often commanding premium salaries  

• Compliance officers familiar with evolving crypto regulations across jurisdictions  

• Technology specialists capable of integrating multiple exchanges, wallets, and DeFi protocols  

• Risk management professionals who understand digital asset volatility and security concerns 

Additionally, the talent shortage in crypto accounting drives compensation higher. While the crypto space is relatively new, some traditional accounting firms are slowly accepting clients with digital assets, while other firms are completely web3 native, specializing in the unique needs of this space. 

Technology infrastructure investments 

Crypto accounting demands sophisticated technology infrastructure that traditional accounting software cannot provide. Internal teams require: 

• Multi-blockchain integration capabilities to track assets across 200+ supported chains 

• Real-time data feeds from exchanges, wallets, and DeFi protocols  

• Automated reconciliation systems to match on-chain and off-chain transactions  

• Advanced reporting platforms capable of fair value calculations and regulatory reporting  

• Security infrastructure to protect sensitive wallet and exchange data 

Basic crypto accounting software offerings begin at less than $100 a month and range to over $750 a month, with the main driver being transaction volume. However, enterprise-level solutions for complex operations can cost significantly more. 

Ongoing training and compliance costs 

The rapidly evolving crypto landscape requires ongoing education and system updates. Regulatory approaches risk fragmenting the global digital finance landscape: a dollar-based stablecoin system in the U.S., a state-backed European digital euro regime, and a mix of regional approaches elsewhere. 

Internal teams face mounting costs for: 

• Continuous professional education on new protocols, regulations, and accounting standards  

• Software updates and integrations as new blockchains and protocols emerge  

• Compliance monitoring across multiple jurisdictions with different requirements  

• Risk assessment and mitigation as the crypto ecosystem evolves 

Learn more about our Outsourced Accounting for Blockchain and Digital Assets service

The strategic advantages of outsourced crypto accounting 

Specialized crypto accounting firms offer comprehensive solutions that address both the technical complexity and regulatory requirements while providing cost predictability and scalability. 

Outsourced providers offer: 

• Comprehensive blockchain coverage across major and emerging networks 

• Real-time integration with exchanges, custodians, and DeFi protocols 

• Automated reconciliation and transaction categorization 

• Advanced reporting capabilities for regulatory compliance and internal management 

• Audit-ready documentation with proper controls and documentation 

• Streamlined support for monthly and quarterly close processes 

• Proactive implementation of new accounting standards and frameworks 

• Technical accounting guidelines development for compliance assurance 

• Crypto-native software implementation for operational efficiency 

• Strategic advisory on crypto and control best practices for risk management 

• Regulatory filing support for all crypto-related transactions 

Regulatory compliance and risk management 

Organizations considering the integration of stablecoins into their operational framework should prepare for evolving regulations. The patchwork of regulatory measures, originally designed for traditional finance, has been adapted to the unique challenges presented by virtual assets, sometimes leading to inconsistencies. 

Specialized firms navigate this complexity by maintaining: 

• Multi-jurisdiction compliance capabilities across different regulatory frameworks  

• Current regulatory knowledge of evolving requirements and interpretations  

• Established audit relationships with firms experienced in crypto asset reviews  

• Risk assessment frameworks tailored to digital asset volatility and operational risks 

Cost efficiency and scalability 

As crypto adoption accelerates, outsourced solutions provide scalability advantages: 

• Variable cost structure that scales with transaction volume and complexity  

• No upfront technology investments in blockchain infrastructure or specialized software 

• Predictable monthly fees for budget planning and cost management 

• Immediate scalability during periods of high transaction volume or market volatility 

Making the strategic decision 

The choice between in-house and outsourced crypto accounting requires evaluating transaction complexity, business stage, and future growth projections. Consider these key decision factors: 

Transaction complexity 

• Simple buy-and-hold vs. complex DeFi interactions  

• Current volumes across exchanges, wallets, and protocols 

• Multi-chain operations and cross-chain bridge transactions 

Business considerations 

• Risk tolerance for regulatory compliance and operational errors  

• Internal resources for specialized crypto knowledge  

• Future crypto adoption and scaling requirements 

Technology trends 

• AI-powered automation and real-time compliance monitoring  

• Integration with existing ERP and accounting systems  

• Evolving protocols and regulatory requirements 

The demand for tokenized assets reached $2.7 billion in Q1 2024, projected to hit $30 trillion in the next decade. As mainstream adoption accelerates, the decision becomes less about whether to address crypto accounting complexity and more about the most strategic approach. 

The bottom line for crypto-forward businesses 

The cost-benefit analysis for crypto accounting has fundamentally shifted as digital assets move from experimental investments to core business operations. FASB’s new guidance benefits both reporting entities and investors by better reflecting crypto asset economics, risks, cash flows, and financial statement impacts while reducing cost and complexity compared to previous cost-less-impairment accounting models. 

For most businesses, outsourced crypto accounting provides superior value through specialized knowledge, advanced technology infrastructure, and regulatory compliance capabilities that would be prohibitively expensive to build internally. The decision ultimately comes down to whether your business can afford the significant investment in specialized talent, technology, and ongoing training required for effective internal crypto accounting. 

The crypto accounting landscape will continue evolving rapidly as new protocols emerge, regulations solidify, and mainstream adoption accelerates. Partnering with specialized providers positions your business to navigate this complexity while focusing internal resources on core business activities. 

Rather than viewing this as a simple cost decision, consider it a strategic investment in your business’s digital asset infrastructure. The right choice provides not just accounting services, but a foundation for compliant, efficient, and scalable crypto operations that can adapt to the rapidly changing digital asset landscape. 

Ready to explore how specialized crypto accounting can support your digital asset operations while maintaining compliance and optimizing efficiency? Contact BPM today to discuss your specific cryptocurrency accounting needs and learn how our comprehensive approach can help you navigate the complex world of digital asset financial management. 

You know your business needs HR support, but you’re not sure what kind. Should you bring in a fractional HR leader? Outsource specific functions? Hand over your entire HR department to a trusted partner? These terms get thrown around frequently, and the lines between them often blur in real-world applications. 

Here’s the truth: the terminology matters less than finding the right solution for your unique situation. This article will clarify what fractional and outsourced HR actually mean, explore how businesses use each approach, and show you how to identify what your organization truly needs. 

What Fractional HR Means for Your Organization 

Fractional HR typically refers to bringing in an interim HR professional, leader or director to fill a specific position or leadership gap in your organization. This person works on a part-time or temporary basis, providing guidance and support without the commitment of a full-time hire. 

You might need fractional HR  when your HR manager or director leaves unexpectedly, HR staff takes extended leave, or when you’re growing rapidly and need strategic HR guidance before you’re ready to hire a permanent leader. Some companies start with a fractional arrangement and discover it works so well that it becomes a long-term solution. 

Fractional HR professionals integrate into your organization’s HR team. They attend  meetings, understand your culture and business objectives, and make necessary decisions about your people and processes. The difference is they’re not sitting in your office five days a week or drawing a full-time salary with benefits. 

This arrangement gives you access to seasoned HR professionals when you need it most, whether that’s for three months during a transition, one year while you scale, or ongoing as your business evolves. 

Understanding Outsourced HR Services 

Outsourced HR can mean different things depending on your needs. Some companies outsource specific HR functions like payroll processing, benefits administration, or leave management. Others outsource their entire HR department, essentially partnering with an external team that becomes their complete HR function. 

When you outsource your full HR function, your partner doesn’t just handle paperwork from a distance. They become embedded in your organization, working closely with your leadership team, understanding your culture, and developing people strategies that align with your business goals. 

Outsourced HR professionals participate in important conversations about talent acquisition, employee development, performance management, and organizational culture. They know your people, understand your challenges, and bring both strategic thinking and tactical execution to your HR needs. 

The key advantage of outsourcing is that you get a complete HR team without the overhead of hiring, training, and managing multiple full-time employees. You pay for the services you need while gaining access to professionals who handle everything from compliance requirements to employee relations issues. 

Learn more about our Outsourced HR Services

When Each Solution Makes Sense 

Your business might benefit from fractional HR support if you’re facing a temporary gap in HR professionals, need interim guidance during a transition period, or want to test whether a  HR role makes sense for your organization before committing to a full-time hire. 

Outsourced HR services work well when you need specific functions handled by specialists, want to eliminate the burden of managing an internal HR team, or need a complete HR department but can’t justify the cost of building one in-house. 

Many companies actually need a combination of both approaches. You might outsource payroll and benefits administration while bringing in a fractional HR leader for strategic guidance. Or you might start with a fractional leader who helps you transition to a fully outsourced model. 

The Challenge of Knowing What You Actually Need 

Here’s where it gets complicated: most business leaders don’t work in HR, so they’re not always sure what they need. You might call looking for a fractional HR leader and discover that project-based support or partial outsourcing better addresses your challenges. You might think you need to outsource payroll when what you really need is someone to build your entire HR infrastructure. 

The terms “fractional” and “outsourced” get used interchangeably, and honestly, the distinction doesn’t matter as much as finding the right solution. What matters is having someone assess your current HR capabilities, identify gaps, understand your business objectives, and recommend an approach that actually solves your problems. 

“Many of our clients are re-evaluating their HR departments, partly because the business environment keeps changing, partly because of AI capability, or maybe as a cost cutting measure.   Starting with an assessment of the HR capability and needs of the organization is a great place to start, allowing us to partner with organizations to create the ideal structure for their function.” – Jill Pappenheimer, Partner, at BPM leading the HR Consulting services team.   

This is why trying to self-diagnose your HR needs rarely works. You need a partner who can look objectively at your situation and tell you what will actually move your business forward. 

Discover practical ways HR teams are integrating AI for measurable impact.

Let BPM Help You Determine the Right Approach 

At BPM, we recognize that every business faces different HR challenges, and those challenges evolve as you grow. Rather than pushing you toward a predetermined solution, we start by conducting a comprehensive assessment of your HR function, current roles, overall capabilities, and business objectives. 

Through this assessment process, we work with you to identify exactly what you need—whether that’s fractional leadership to guide you through a transition, outsourced services for specific functions, a complete HR solution, or some combination that we customize for your situation. We provide both fractional and outsourced HR services because we understand that different businesses need different solutions, and sometimes those needs change over time. 

Ready to stop guessing about what your business needs? Contact BPM today to schedule an HR assessment. We’ll help you understand your current state, identify your gaps, and develop a clear path forward that aligns with your business goals and budget. 

The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, dramatically changed integral parts of the Inflation Reduction Act of 2022 (IRA). The OBBBA has provided repeal of certain tax credits, introduced complexities in claiming credits for certain entities, and eliminated credit eligibility for certain clean energy technologies.  

Here’s what you need to know and how to capture these benefits under the new law. 

Terminated Tax Credits 

Under the OBBBA, several clean energy and vehicle-related tax credits are scheduled for full termination over the coming year: 

• Ending September 30, 2025: 
  • Section 25E: Previously Owned Clean Vehicle Credit 
  • Section 30D: Clean Vehicle Credit 
  • Section 45W: Credit for Qualified Commercial Clean Vehicles 

• Ending December 31, 2025: 
  • Section 25C: Energy Efficient Home Improvement Credit 
  • Section 25D: Residential Clean Energy Credit 

• Ending June 30, 2026: 
  • Section 30C: Alternative Fuel Vehicle Refueling Property Credit (for property placed in service after this date) 
  • Section 45L: New Energy Efficient Home Credit (for homes acquired after this date) 
  • Section 179D: Energy Efficient Commercial Buildings Deduction (for property beginning construction after this date) 

The credits still available  

The good news? Pre-IRA and several technology neutral tax credits are still available.  

Pre-IRA Tax Credits: 

Section 45 Production Tax Credit (PTC) – A per-kilowatt-hour credit for electricity produced and sold over a 10-year period, with base rates of 0.3 cents per kWh increasing to 1.5 cents per kWh when certain labor requirements are satisfied. 

Section 48 Investment Tax Credit (ITC) – A credit worth 6% to 30% of your qualified solar facility investment, depending on several factors including facility size and whether prevailing wage and apprenticeship requirements are met. 

Both credits are generally available for projects beginning construction before January 1, 2025, and remain transferrable in applicable years. 

Clean Energy Credits Available under the OBBBA 

Section 45Y – Clean Electricity Production Tax Credit – Similar to the Section 45 PTC above, this is a per-kilowatt-hour credit for electricity produced, at a qualified facility, with base rates of 0.3 cents per kWh with certain credit increases available if applicable requirements are satisfied 

• Wind and Solar Termination: Facilities beginning construction after July 4, 2026 are ineligible for the credit if placed in service after December 31, 2027. Projects started before this date remain eligible. 

• Phaseout for property other than Solar and Wind: 
  • 100% credit for facilities with construction beginning in 2033; 
  • 75% in 2034 
  • 50% in 2035 
  • 0% credit for facilities with construction beginning after December 31, 2035 

• Bonus Credit: A new 10% bonus applies to advanced nuclear facilities located in metropolitan areas with ≥0.17% nuclear-related employment (current or post-2009). 
• Transferability & Direct Pay: Still allowed under Sections 6418 and 6417, but transfers to SFEs are prohibited. 
• FEOC Restrictions (see below): Facilities starting construction after December 31, 2025 are disqualified if they receive material assistance from a prohibited foreign entity (“PFE”) or are under specified foreign entity (“SFE”) control after July 4, 2025. 

Section 48E – Clean Electricity Investment Tax Credit – Similar to the Section 48 ITC above, this is an investment credit equal to the applicable percentage of the qualified investment (qualified facility or energy storage technology). 

• Wind and Solar Termination: Same deadlines as Section 45Y. Energy storage technologies are exempt from the placed-in-service cutoff. 
• Phaseout for Other Technologies: Follows the schedule provided under Section 45Y above. 
• Domestic Content Alignment: Requirements updated to align with Section 45Y for projects starting after June 16, 2025. 
• Transferability & Direct Pay: Maintained under Sections 6418 and 6417; transfers to SFEs prohibited. 
• FEOC Restrictions (see below): Same as Section 45Y. 

Section 45Q – Carbon Oxide Sequestration Credit – Available to taxpayers capturing qualified carbon oxide. 

• Base credit changes for different uses: Base credit raised to $17/ton for general use and $36/ton for direct air capture, matching geological storage rates for equipment placed in service after July 4, 2025. 
• Timeline Unchanged: Projects with construction beginning before January 1, 2033 remain eligible. 
• Transferability & Direct Pay: Section 45Q credits continue to be eligible for transfer and direct pay, however, transfers to SFEs are prohibited. 
• FEOC Restrictions (see below): Taxpayers cannot be SFEs or foreign influenced entities (“FIE”) after July 4, 2025. 

Section 45U – Zero-Emission Nuclear Power Production Credit – Credit available for the production of electricity produced at a qualified nuclear power facility. 

• Available for  zero-emission nuclear power production facilities through December 31, 2032. 
• Transferability & Direct Pay: Section 45U credits continue to be eligible for transfer and direct pay. 
• FEOC Restrictions (see below): SFE restrictions begin after July 4, 2024, and FIE restrictions begin two years after July 4, 2025. 

Section 45V – Clean Hydrogen Production 

• Delayed Phaseout: Credit ends for facilities starting construction after December 31, 2027. 
• Transferability & Direct Pay: Section 45V Credits continue to be eligible for transfer and direct pay. 
• No FEOC Restrictions (see below): Notably exempt from FEOC rules. 

Section 45X – Advanced Manufacturing Production Tax Credit – Credit available for manufacturing certain clean energy technologies as provided in Section 45X(b). 

• Wind Component Credit Ends: No credit for wind components sold after December 31, 2027. 
• Domestic Content Rule: Starting December 31, 2026, 65% of material costs for integrated components must originate from U.S. sources. 
• Critical Minerals Phaseout: 
  • 2031: 75% 
  • 2032: 50%
  • 2033: 25%
  • Post-2033: 0% 

• New Eligibility: Metallurgical coal added. 
• Battery Module Definition Tightened: Must include all essential equipment for functionality. 
• Transferability & Direct Pay: Maintained; transfers to SFEs prohibited. 
• FEOC Restrictions: No credits for PFEs or SFE-controlled production after July 4, 2025. 

Section 45Z – Clean Fuel Production Credit – Credit available for taxpayers producing transportation fuel at a qualified facility that meets certain emissions requirements. 

• Extended Credit Period: Deadline for eligible fuel sales moved to December 31, 2029. 
• Feedstock Origin Requirement: Must be sourced from the U.S., Mexico, or Canada after December 31, 2025. 
• Additional Changes: 
  • No dual credit under Section 6426(k) 
  • Sustainable aviation fuel loses enhanced IRA rates 
  • Lifecycle emissions simplified; negative rates and indirect land use emissions excluded 

• Transferability & Direct Pay: Preserved; transfers to SFEs prohibited. 

Section 40A – Small Agri-Biodiesel Producer Credit – Credit available for production of biodiesel mixture, biodiesel or small agri-biodiesel that meets certain requirements, 

• Extension & Increase: Valid through December 31, 2026; credit amount doubled. 
• Feedstock Origin Requirement: Must be exclusively from the U.S., Mexico, or Canada. 
• Transferability: Allowed under Section 6418. 
• FEOC Restrictions: Applies to SFEs after July 4, 2025 and FIEs two years later. 

Learn more about our IRA Tax Credit Solutions

New complications: What got harder 

While many clean energy credits survived OBBBA, claiming them became significantly more complex. Three major changes demand your attention: 

Prohibited foreign entity restrictions 

OBBBA introduced stringent rules around foreign ownership and supply chains. Your energy property is not credit-eligible if: 

• Your business is itself a prohibited foreign entity (“PFE”) (which includes specified foreign entities (“SFE”) or entities designated as foreign terrorist organizations and “foreign controlled entities”, those with certain ownership ties to China, Russia, North Korea, or Iran) 
• Your business is a foreign-influenced entity (FIE) where an SFE has some legal and financial control over an entity. 
• Your facility receives “material assistance” from PFE’s above specific thresholds 

For facilities beginning construction in 2026, up to 60% of manufactured products and components can come from prohibited foreign entities. That threshold tightens over time—dropping to 40% by 2030. This means you’ll need careful documentation of your supply chain and vendor relationships. 

Increased domestic content requirements 

To claim the 10% bonus credit for meeting domestic content thresholds, the bar just got higher. For projects beginning construction after June 16, 2025: 

• 45% domestic content for construction starting before 2026 (up from 40%) 
• 50% for construction starting in 2026 
• 55% for construction starting after 2026 

Executive order uncertainty 

A July 7, 2025 executive order directed the Treasury Department to issue guidance on “beginning of construction” rules by Aug. 21, 2025. This guidance aims to prevent what the administration views as artificial acceleration of project timelines. Until Treasury provides clarity, project developers face additional uncertainty about whether their construction commencement activities will satisfy federal requirements. 

Strategic considerations for businesses 

Given these changes, businesses considering clean energy investments should focus on three priorities: 

Move quickly on project planning. With various construction deadlines approaching, starting your evaluation process now is critical. Clean energy projects typically require significant lead time for site assessment, engineering, permitting, and financing. What might have been a two-year planning cycle now needs to happen in months. 

Document everything meticulously. The tightened timelines and new prohibited foreign entity rules mean IRS scrutiny of clean energy tax credit claims will likely intensify. Beginning of construction determinations, supply chain documentation, and prevailing wage compliance records will all face heightened examination. Contemporary documentation throughout your project timeline is no longer optional; it’s required. 

Model different scenarios. The interaction between 100% bonus depreciation (also reinstated under OBBBA), the section 163(j) business interest limitation rules, and these clean energy credits create complex planning opportunities. Some businesses may benefit from different combinations of these provisions depending on their specific tax situation, including potential Corporate Alternative Minimum Tax implications. 

Our perspective 

The OBBBA changes to clean energy tax credits represent a significant policy shift that will impact business investment decisions across industries. While the credits remain valuable, the increased complexity means that what was once a straightforward financial decision now requires sophisticated tax planning and rapid execution. 

For businesses that have been waiting for the “right time” to invest in clean energy, this is it. The alternative is watching these incentives disappear altogether. 

The reality is that many businesses won’t be able to move fast enough to meet these deadlines. But for those that can, the combination of available tax credits, energy cost savings, and sustainability goals may make 2025 and 2026 the most opportune moment to invest in clean energy property for the foreseeable future. 

What to do next 

If you’re considering a clean energy transition, start these conversations now: 

• Evaluate your current and projected energy costs and usage patterns 
• Assess potential sites and preliminary project feasibility 
• Review your organizational structure for any prohibited foreign entity issues 
• Model the tax benefits under various scenarios 
• Develop a realistic timeline to meet construction or placed-in-service deadlines 

The clock is ticking. But for businesses that act quickly and plan carefully, significant tax benefits remain available. 

Ready to explore your clean energy tax credit opportunities? 

Our team can help you navigate the complex requirements of OBBBA, model your potential tax benefits, and develop a strategy to maximize your clean energy investment. Contact BPM to discuss how these changes impact your specific situation and whether a clean energy project makes sense for your business. 

Companies today face a dilemma: they need senior financial leadership to facilitate growth, build great teams and processes, give visibility to investors, or navigate hardship.  But the cost and commitment of a full-time executive don’t always make sense. A full-time CFO typically commands a salary between $300,000 and $500,000 annually, plus benefits, equity, and overhead. For many businesses, that’s simply too much too soon. 

6 Reasons Companies Are Shifting to Fractional CFOs 

Fractional CFOs are changing the game. They deliver the same strategic oversight and financial planning that full-time CFOs provide, but on a flexible, part-time basis. This shift isn’t just a trend. It reflects a fundamental change in how companies approach growth, cost management, and financial leadership. This article explores why more businesses are choosing fractional CFOs and what’s driving this rapid adoption. 

1. The Cost Equation Has Changed 

Money talks, and the numbers tell a clear story. Hiring a fractional CFO typically costs between $3,000 and $15,000 per month, depending on the scope of work. Compare that to the $25,000+ monthly cost of a full-time CFO, and the savings become obvious.  

But this isn’t just about cutting costs. Companies gain access to high-level financial strategy without the long-term commitment. They get a highly skilled CFO when it counts the most, and they pay only for the hours they need. The skillset a company needs during periods of change and transition is often not the same as what they will need on a long-term permanent basis — so it pays off to use a fractional specialist during the startup phase or critical junctures.  A startup preparing for Series A funding might need 30 hours per month. A stable mid-market company might need just 10 hours for quarterly planning and board reporting. A newly acquired private equity portfolio company might need more. 

“During points of inflection and change, it’s imperative to have an experienced CFO providing full visibility to stakeholders and guiding decisions on hiring cadence, timing of system implementations, and the establishment of sound policies and procedures. A fractional CFO also helps identify key operational metrics and efficiencies that can translate into millions of dollars in cost savings. The investment in a fractional CFO often multiplies back in both measurable ROI and invaluable peace of mind.” – Brenda Rose – Managing Director, Advisory 

This flexibility allows businesses to allocate resources where they matter most. Instead of locking in a full-time salary, companies can invest in building infrastructure, new technology systems, product development or marketing while still maintaining strong financial oversight.  

2. Business Needs Are No Longer Static 

Your company doesn’t grow in a straight line. Revenue fluctuates. Market conditions shift. Strategic priorities change quarter to quarter. A full-time CFO represents a fixed cost in a variable world.  

Fractional CFOs scale with your business. During a fundraising round, you might need intensive support for financial modeling, due diligence preparation, and investor presentations. Once funding closes, those needs decrease. A fractional CFO can ramp up during critical periods and dial back when things stabilize. 

Seasonal businesses benefit enormously from this model. An e-commerce company might need heavy financial planning before Q4, then lighter support in January and February. A fractional CFO provides the right level of involvement at the right time, without paying for unused capacity. 

3. The Talent Pool Has Expanded 

Geography no longer limits your options. The rise of remote work means companies can now access top financial talent from anywhere. You’re not restricted to CFOs in your city or region. You can find someone with specific industry experience, whether that’s SaaS, manufacturing, healthcare, or professional services. And most often, a remote fractional CFO can come onsite initially to get acquainted with the team. 

This expanded talent pool also means faster placement. Recruiting a full-time CFO can take months. Fractional CFOs can often start within weeks, sometimes days. When you’re navigating a cash flow crisis, preparing for an audit, or closing a major deal, speed matters. 

4. CFO Turnover Is Driving Demand 

According to HealthLeaders Media, CFO turnover hit a three-year high of 22% in 2024. Leadership gaps create operational chaos. Financial reporting stalls. Strategic planning loses momentum. Board confidence wavers. 

Companies can’t afford long recruitment cycles when financial leadership disappears overnight. Fractional CFOs step in immediately to stabilize operations. They maintain continuity during transitions, keep reporting on track, and ensure nothing falls through the cracks while you search for a permanent hire. 

Some companies discover they prefer the fractional model permanently. Why commit to a full-time role when a fractional arrangement delivers everything you need? 

5. Engagements Drive Real Impact 

Critics sometimes dismiss fractional CFOs as short-term band-aids. The data shows otherwise. According to the 2024 State of Fractional Industry Report, nearly half of fractional CFO engagements last between one and two years. Another 42% run for several months. These aren’t quick fixes. They’re meaningful partnerships that drive measurable results. And given the high level of expertise a fractional CFO brings, it’s like having a strategic advisor on hand to help lay down the red carpet for a future permanent CFO. 

A fractional CFO has time to understand your business model, identify inefficiencies, build financial systems, and implement strategic initiatives. They work alongside your team long enough to create lasting change, not just generate reports. 

6. The Market Is Booming 

Demand for fractional CFOs has doubled in just two years. According to Business Talent Group, requests for interim CFOs have surged 310% since 2020. These aren’t isolated statistics. They reflect a massive shift in how businesses think about financial leadership. 

The finance and accounting outsourcing market is projected to reach $76 billion by 2033. This growth stems from companies realizing they can access world-class financial guidance without the constraints of traditional employment models. 

Ready to Explore Fractional CFO Services? 

At BPM, we understand that every company’s financial leadership needs are different. Our fractional CFO services give you access to seasoned financial professionals who integrate seamlessly with your team. Whether you need help with strategic planning, an unexpected departure of your CFO, M&A, fundraising preparation, financial system implementation, or investor reporting, we tailor our approach to match your goals and budget. 

We’ve helped startups prepare for funding rounds, mid-market companies navigate complex acquisitions, and growing businesses build scalable financial operations. Our fractional CFOs bring real-world experience across industries and business stages, delivering the insights you need to make confident decisions. To find out more about how a fractional CFO can transform your financial operations, contact us.

   

Your accounting system seems to be working. Your team has developed workarounds for its limitations, and you’ve grown accustomed to the manual processes that fill in the gaps. The software was paid for years ago, so why invest in something new? 

Here’s what many growing businesses don’t realize: the current “working” system is sapping up your resources in ways that don’t show up on any invoice. The hidden costs of outgrowing your accounting software compound over time, creating a financial burden far exceeding the investment required to upgrade. By the time these costs become obvious, you’ve already left substantial money and opportunities on the table. 

Time is your most expensive resource 

When your accounting system isn’t keeping pace with your business complexity, your team compensates by working harder, not smarter. Your finance staff spends hours manually entering data across multiple systems, reconciling discrepancies, and creating workarounds for basic functionality that modern solutions handle automatically. 

Calculate the real cost: if three employees spend just two hours daily on manual data entry and reconciliation at an average fully loaded cost of $50 per hour, you’re spending over $78,000 annually on tasks that could be automated. That’s just the direct labor cost. The hidden cost? These same employees could be analyzing financial trends, improving cash flow management, or identifying cost-saving opportunities instead of pushing data through outdated systems. 

The ripple effect across your organization 

The inefficiency goes beyond your finance team. When accounting software isn’t integrated with other business functions, everyone pays a price: 

• Operations teams manually update inventory counts because your system can’t track in real-time 
• Sales representatives delay quotes while waiting for pricing updates that should be automatic 
• Management makes decisions based on week-old data instead of current financial insights 
• Your IT department patches together fragmented systems that were never designed to work together 

Each disconnected process multiplies the time investment and increases the likelihood of errors that create even more work downstream. Modern cloud ERP systems like NetSuite combine financial management, inventory control, order management, and business intelligence in a unified cloud platform.  

Learn more about our NetSuite services

Bad data creates costly mistakes 

Outgrown and outdated accounting systems generate increasingly unreliable information. When your software struggles to handle transaction volumes, data integrity suffers. Manual entry increases human error. Multiple systems create version control issues. Before long, you’re making strategic decisions based on incomplete or inaccurate financial data. 

That can lead you to: 

• Overstock inventory based on flawed demand forecasts, tying up cash in products that sit unsold 
• Underprice services because your cost tracking doesn’t capture the full picture 
• Miss early warning signs of cash flow problems until they become critical 
• Invest in the wrong growth initiatives because your reporting can’t show true profitability by product line or customer segment 

One poor strategic decision based on bad data can cost far more than a modern accounting system. 

Find out how emerging accounting trends are reshaping finance.

Missing the strategic forest for the tactical trees 

When your team spends all their time managing your accounting system’s limitations, they have no bandwidth for strategic financial planning. Your CFO or controller should be a strategic partner to your leadership team, but instead, they’re troubleshooting software issues and managing manual processes. This opportunity cost is rarely quantified but represents one of the most significant hidden expenses of inadequate accounting technology. 

Growth shouldn’t require heroic effort 

Your business is growing, which should be celebrated. But if that growth means doubling your accounting staff just to keep up with transaction volumes, something is broken. Legacy accounting software has hard limits on users, transaction volumes, and data storage. Once you hit these ceilings, your options are limited and expensive. 

Some companies try to stretch their existing systems by: 

• Deleting historical data to free up storage space (destroying valuable trend analysis in the process) 
• Implementing complex workarounds that create technical debt 
• Adding supplementary software that doesn’t integrate, creating information silos 
• Simply accepting slower processing times and delayed financial close cycles 

Each of these approaches carries hidden costs in lost insights, increased risk, and operational inefficiency. Systems like NetSuite are customizable and be built specifically to scale with growing businesses, eliminating these artificial constraints and supporting expansion without the need for painful system replacements down the road. 

Cybersecurity vulnerabilities in legacy systems 

Desktop accounting applications built a decade ago weren’t designed for today’s threat landscape. If your financial system lacks modern security features like multi-factor authentication, encryption, and role-based permissions, you’re sitting on a security vulnerability. A data breach doesn’t just cost money to remediate; it damages customer trust and can expose you to legal liability. 

Many legacy systems also create security risks through their workarounds. When employees email financial files, store data in personal cloud accounts, or share login credentials because the system can’t accommodate enough users, you’ve created multiple points of exposure. 

Regulatory risk grows with your business 

As your company expands, so does your regulatory complexity. Whether it’s industry-specific requirements, multi-state tax obligations, or evolving labor regulations, staying compliant requires current data and robust reporting capabilities. Outdated accounting software puts you at risk in multiple ways: 

• Tax calculations based on old rules can trigger penalties and audits 
• Inadequate audit trails make it difficult to demonstrate compliance 
• Manual compliance processes increase the likelihood of errors 
• Lacking role-based access controls creates internal control weaknesses 

The cost of a compliance failure (penalties, legal fees, reputational damage) can be devastating. Yet many businesses overlook this risk until they face it. 

The human cost of inefficient systems 

Another hidden cost that rarely gets connected to outdated technology: employee retention. Your finance team didn’t pursue careers in accounting to spend their days copying data between spreadsheets and fighting with software limitations. Talented professionals want to work with modern tools that let them add value, not waste time on administrative drudgery. 

When you lose a skilled financial analyst or accountant because they’re frustrated with your systems, you face: 

• Recruitment costs averaging 20-30% of the position’s annual salary 
• Productivity loss during the vacancy period 
• Onboarding time for the replacement 
• Risk that the replacement will leave for the same reasons 

Creating a technology environment that empowers your team to do their best work creates a culture that attracts and retains top talent. 

Take the next step with NetSuite 

If you recognize your business in these scenarios, it’s time for a candid assessment of what your current accounting system is really costing you. At BPM, we work with growing businesses to identify these hidden costs and develop strategies for financial system optimization that drive measurable results. As a NetSuite solution provider, we help organizations evaluate whether this cloud-based ERP platform aligns with their growth trajectory and operational needs 

Contact BPM today to discuss how the right accounting technology can transform your financial operations from a cost center into a competitive advantage. 

Every day in America, nearly 10,000 baby boomers turn 65. By 2031, nearly one in four workers will be 55 or older. At the same time, younger employees are burning out at unprecedented rates, searching for better work-life balance and career flexibility. 

The collision of these two workforce realities is creating a talent crisis. Companies are watching their most experienced employees approach retirement (and taking decades of institutional knowledge with them) while simultaneously struggling to retain younger talent. Traditional HR strategies aren’t designed for this moment. 

Enter the Chief Longevity Officer. 

The Role That’s Redefining How We Think About Work 

A Chief Longevity Officer (CLO) is an executive-level position focused on making workforce longevity a competitive advantage. This role brings together responsibility for workforce management, employee health, workplace equity, and market opportunity into a single strategic function, transforming longevity from an abstract goal into a measurable business strategy. 

The CLO designation is still emerging. While it hasn’t yet appeared in Fortune 500 companies, it’s been adopted by biotech startups, venture capital firms, and forward-thinking organizations in sectors like hospitality. But you’re already seeing variations of this role embedded within existing C-suite positions like Chief Human Resources Officer, Chief Strategy Officer, and Chief Wellness Officer. 

What makes a CLO different? They’re not just managing benefits or wellness programs. They’re redesigning career paths, benefit structures, and workplace culture for employees whose work lives may span 60 years or more. 

Why Companies Need This Role Now 

The workforce is undergoing a seismic shift. Workers 75 and older are the fastest-growing segment of the labor force. Individual careers can now span six or more decades, meaning companies must support four to five generations of workers at any given time. 

This isn’t just about accommodating older workers. Many employees want to work beyond traditional retirement age and not just for financial reasons. They find their work provides purpose, social connection, and a sense of accomplishment. Meanwhile, the competition for talent has never been fiercer. 

Research suggests there’s enormous potential economic output from effectively employing older workers. Companies that figure out how to harness this opportunity while still supporting younger employees will have a significant competitive edge. 

What Does a Chief Longevity Officer Actually Do? 

The CLO’s mandate is surprisingly broad. They work to eliminate age-related barriers and create programs that leverage the strengths of each generation. Here’s what that looks like in practice: 

• Breaking down age silos. A CLO designs programs that blend fresh perspectives from younger employees with the deep experience of seasoned professionals. This might mean implementing reverse mentorship programs where a 25-year-old digital native teaches a veteran marketing director about TikTok, while that director shares decades of strategic brand-building wisdom. 
• Creating flexible career paths. Rather than the traditional straight-line career trajectory, a CLO helps employees envision “second acts” within the same company—like a marketing manager taking a sabbatical to earn a data science certificate, then leading a new analytics team. 
• Rethinking benefits and wellness. The CLO ensures benefits packages address the full spectrum of employee needs—from student loan assistance for younger workers to elder care support for those in their 50s and 60s. They design wellness initiatives that promote healthy aging across all life stages. 
• Preserving institutional knowledge. Before experienced employees retire, a CLO implements knowledge transfer programs, mentorship structures, and succession planning that prevent brain drain. 
• Fostering lifelong learning. Some organizations, like L’Oreal, are training internal “longevity coaches” to bring practical knowledge about career development and skill-building to employees at all levels. 
• Addressing the business opportunity. CLOs recognize that individuals 50 and older fuel a multi-trillion-dollar longevity economy, and an age-diverse workforce provides companies with deeper insight into this vast consumer segment. 

Learn more about our Human Resources Services

The Business Case Is Compelling 

When you dig into the numbers, the value of workforce longevity becomes clear: 

Workers age 55 to 64 stay with employers for a median of 9.6 years, compared to just 2.7 years for those aged 25 to 34. That kind of retention reduces recruiting costs and preserves organizational knowledge. 

Employees ages 50 and older are considered the most engaged of any age group, which directly correlates to higher organizational productivity. 

Work teams comprising multiple generations perform better than those that don’t. The combination of innovation from younger workers and wisdom from experienced professionals creates stronger outcomes. 

Skills evolve rapidly—the half-life of a technical skill is now just 2.5 years. Training investments in older workers often deliver equal or better returns than training younger employees, especially given their higher retention rates. 

How to Implement This in Your Organization 

You don’t necessarily need to create a standalone CLO position to benefit from longevity-focused strategies. Some companies embed longevity within the Chief Human Resources Officer portfolio by appointing a vice president of longevity and multigenerational workforce. Others expand the scope of a Chief Health and Wellbeing Officer to include healthspan and equity, or form cross-functional longevity councils that connect HR, benefits, learning and development, diversity initiatives, and product strategy. 

The structure matters less than the commitment. What’s non-negotiable is that longevity must be owned, measured, and resourced. 

Key strategies include: 

1. Flexible work arrangements 

Seventy-eight percent of workers over 50 want more flexible hours. Options like phased retirement, reduced schedules, or hybrid work models help retain experienced talent while respecting their changing needs. 

2. Age-inclusive policies 

Review your entire employee experience—from job applications to promotion criteria—for subtle age bias. Make sure benefits, health programs, and professional development opportunities serve employees at all career stages. 

3. Intergenerational collaboration 

Create formal mentorship programs that go both ways. Pair employees from different generations on projects. Build teams that intentionally mix age groups. 

4. Continuous learning culture 

Only 54% of employers place significant emphasis on professional growth among employees of all ages, including those 50 and older. Invest in training and development that helps all employees stay relevant as skills and technologies evolve. 

5. Proactive succession planning 

Don’t wait until someone announces retirement. Build leadership pipelines that prepare the next generation while keeping experienced employees engaged in meaningful work. 

Where Outsourced HR Comes In 

Many organizations recognize the importance of longevity strategies but lack the internal bandwidth or know-how to implement them effectively. This is where outsourced HR providers can step in as strategic partners.  

An experienced HR services firm can: 

• Assess your current workforce demographics and identify age-related risks and opportunities 
• Design and implement age-inclusive policies and programs 
• Create flexible work arrangements and phased retirement options 
• Build mentorship and knowledge transfer programs 
• Develop training initiatives that serve multigenerational teams 
• Monitor compliance with age discrimination laws 
• Provide the ongoing support and measurement that longevity strategies require 

The Bottom Line 

The workforce is changing in ways we haven’t seen before. People are living longer, working longer, and expecting more from their careers. Companies that view this as a problem will struggle. Companies that see it as an opportunity will thrive. 

Whether you call it a Chief Longevity Officer, embed these responsibilities within your existing HR structure, or partner with an outsourced HR provider, the goal is the same: create a workplace where employees of all ages can contribute, grow, and find purpose. 

The organizations that get this right won’t just solve a demographic challenge. They’ll build a more innovative, more stable, and ultimately more successful business. 

Ready to Explore What This Could Mean for Your Organization? 

The conversation around workforce longevity is evolving quickly, and the organizations that act now will be positioned for long-term success. If you’re interested in discussing how age-inclusive strategies could strengthen your talent management approach, we’re here to help. 

Contact BPM to learn more about our outsourced HR services and how we can support your workforce strategy. 

If you’re a government contractor, you already know that revenue recognition isn’t straightforward. Between multi-element deliverables, variable fees, and the maze of FAR and DFARS regulations, applying ASC 606 (Revenue from Contracts with Customers) requires careful attention to detail. 

Whether you’re working on U.S. federal contracts, Direct Commercial Sales (DCS), or Foreign Military Sales (FMS), understanding how ASC 606 applies to your specific situation can prevent costly missteps. Here’s what you need to know to get it right. 

Why government contracts make revenue recognition complicated 

Government contracts rarely fit into neat boxes. You’re often dealing with bundled products and services, option years, contract modifications, and funding that arrives in phases. Each of these elements affects how and when you recognize revenue under ASC 606’s five-step model. 

The stakes are high. Misidentifying a performance obligation or incorrectly estimating variable consideration can lead to misstated financials, audit findings, and compliance issues. Let’s break down the key complexities you’ll face. 

Bundled deliverables require careful analysis 

Consider a defense contract that provides for the delivery of an aircraft, along with the initial setup efforts and training activities. Is this one combined performance obligation or three separate ones? The answer depends on whether these components are “distinct within the context of the contract”—a critical ASC 606 criterion. 

If the customer could benefit from the training services on their own, especially when those services could be provided by another 3^rd party provider, you may have separate obligations. If the components are highly interrelated and integrated (e.g. this is training provided for the initial operation of the aircraft), they may constitute a single obligation. Getting this determination wrong leads to revenue misallocation across your contract timeline. 

Customer options can create hidden performance obligations 

Government contracts frequently include option years or follow-on purchase rights for additional units or services. Under ASC 606, if an option provides a material right—such as a significant discount the customer wouldn’t receive without the original contract—you must treat it as a separate performance obligation. 

This effectively creates a deferred revenue component that you’ll recognize when the customer exercises the option. Contract modifications add another layer of complexity. Each change order or supplemental agreement requires analysis to determine whether it: 

• Adds new performance obligations 
• Alters the existing contract scope 
• Changes the transaction price 

How you account for the modification (as a separate contract, cumulative catch-up adjustment, or prospective change) depends on this assessment. Auditors regularly flag inconsistent handling of similar contracts as a red flag. 

Learn more about our Technical Accounting services

Variable consideration is the rule, not the exception 

If your contracts include award fees, incentive fees, penalties, cost reimbursements, or funding contingencies, you’re dealing with variable consideration. ASC 606 requires you to estimate these amounts, but with an important constraint: only include amounts when it’s probable that recognizing them won’t result in a significant revenue reversal later. 

Award and incentive fees demand careful estimation 

Department of Defense programs often tie award fees or bonus incentives to performance metrics like quality, delivery timing, or cost savings. A contract might offer up to 5% additional fee for meeting specific targets, or impose liquidated damages if you fall short. 

These are textbook examples of variable consideration. You need to estimate the amount you’ll earn and assess whether it’s probable you won’t have to reverse that revenue when the uncertainty resolves. This requires judgment based on your historical performance, current project status, and contract-specific factors. 

Cost reimbursement structures introduce transaction price uncertainty 

In cost-type contracts, your revenue equals allowable costs incurred plus a fee. While the fee may be fixed, the costs themselves are variable. Some contracts include incentive fees that share cost underruns or overruns, or impose caps on reimbursements. 

Even fixed-price contracts can have escalation clauses or economic price adjustments tied to published indices. All of these elements must factor into your transaction price estimate, and you’ll need to update that estimate as circumstances change. 

Unfunded contract portions create unique challenges 

U.S. federal contracts often come partially funded at inception. You might sign a multi-year agreement, but Congress appropriates funds annually. The unfunded portion lacks guaranteed funding, which raises a fundamental question: Does it meet ASC 606’s definition of a contract? 

The standard requires enforceable rights and obligations with collectible consideration. Until you receive or have reasonable assurance of funding, the unfunded portion may not qualify for revenue recognition. If it is determined that both the funded and unfunded portions meet the contract existence criteria, the unfunded portion becomes variable consideration, and the contractor would then need to evaluate whether any variable consideration is constrained.  

The practical implication: Significant judgment is necessary in evaluating contracts with these characteristics, and the probability of receipt of payment for the unfunded portion will drive the contract existence determination. Continuous reassessment is necessary unless or until funding is appropriated. 

Recognizing revenue over time versus at a point in time 

Most U.S. government contracts qualify for over-time revenue recognition, typically using the cost-to-cost method. This makes sense because you’re usually creating custom products or services specifically for the government’s needs. 

When over-time recognition applies 

ASC 606 allows over-time recognition when your performance creates an asset with no alternative use to you, and you have an enforceable right to payment for work completed to date (Representing the third of three criteria which, individually, allow for over-time revenue recognition under ASC 606-10-25-27). Government contracts typically meet these criteria through termination-for-convenience clauses (like FAR 52.249) that require payment for work performed even if the contract terminates early. 

For cost-reimbursable contracts that allow billing as costs are incurred, ASC 606 offers a practical expedient. If your invoices correspond directly to value delivered, you can recognize revenue in the amount you have the right to invoice. This invoice-based method is common for straightforward cost-plus contracts, essentially matching revenue to billable amounts each period. 

The cost-to-cost method requires robust forecasting 

If you’re using the cost-to-cost method to measure progress, your forecasting capabilities become critical. Unexpected cost growth may distort your percentage complete and can trigger loss provisions under ASC 606’s requirement to record the full amount of an anticipated loss when you identify it. 

You need robust processes to update total cost estimates frequently and flag situations where estimated costs exceed contracted consideration—a common scenario in fixed-price development projects. 

Some contracts require point-in-time recognition 

Not every government contract qualifies for over-time treatment. Short-term product sales (like off-the-shelf items) or certain foreign contracts without strong termination clauses may require point-in-time recognition upon delivery or acceptance. 

For example, a DCS transaction with a foreign government might be structured so title transfers only on final delivery. If you don’t have a guaranteed right to payment until that point, you recognize revenue at delivery based on when control passes to the customer. 

Understanding FMS versus DCS transactions 

The distinction between Foreign Military Sales and Direct Commercial Sales significantly impacts how you apply ASC 606. While both use the same accounting framework, the contract structures and risks differ substantially. 

FMS: The U.S. government as intermediary 

In FMS transactions, the U.S. Department of Defense acts as an intermediary. The DoD (through agencies like DSCA) contracts with you, then sells or transfers the product to the foreign government under a government-to-government agreement. 

From your perspective, your customer is the U.S. government. This means: 

• U.S. FAR and DFARS requirements apply 
• DCAA audits and FAR/CAS compliance are required 
• Payments flow through the U.S. government to the contractor  
• Credit risk is expected to be minimal, given U.S. government is the counterparty 
• Foreign exchange risk is minimal 
• Revenue timing typically follows over-time recognition patterns (assuming applicable FAR clauses) 

DCS: Direct engagement with foreign customers 

In DCS arrangements, you contract directly with the foreign government or its agencies, without U.S. government intermediation beyond export licensing requirements. 

This creates a different risk and accounting profile: 

• Foreign customer’s contract terms govern (FAR clauses don’t apply) 
• Payments made directly by foreign government(s) to the contractor 
• Foreign audit standards may apply instead of DCAA 
• Credit risk is likely a greater factor given direct remittance by the foreign government(s) 
• Foreign exchange risk becomes significant 
• Revenue timing depends entirely on your specific contract terms 

The accounting model remains consistent, but FMS arrangements behave more like standard U.S. government contracts with predictable terms and protections. DCS arrangements require case-by-case contract analysis. You should maintain separate procedures for FMS versus DCS to capture these important distinctions. 

Key risks and how to mitigate them 

Government contractors face several recurring challenges when applying ASC 606. Understanding these risks helps you build stronger processes and controls. 

Performance obligation identification errors 

The risk: Failing to identify all distinct performance obligations (like embedded training, warranties, or offset obligations) or incorrectly combining separate obligations into one. 

Mitigation approach: Develop a standardized checklist for contract review that covers common government contract features. Include cross-functional review involving contracts, engineering, and accounting teams before finalizing your revenue recognition position on significant new awards. 

Variable consideration estimation issues 

The risk: Being too aggressive in estimating award or incentive fees, leading to revenue reversals when actual results differ from estimates. 

Mitigation approach: Build historical data on your actual award fee realization rates by contract type and customer. Apply the constraint principle conservatively—only include variable amounts when reversal is improbable. Document your estimation methodology and update it quarterly based on current performance indicators. 

Unfunded contract treatment 

The risk: Recognizing revenue on unfunded contract portions before funding is probable, creating receivables that may never materialize. 

Mitigation approach: Establish clear policies defining when unfunded portions enter your contract scope for ASC 606 purposes. Track funding status separately and create controls to prevent revenue recognition on work performed against unfunded contract line items unless specific criteria are met. 

Inadequate cost forecasting 

The risk: Poor cost estimates may distort your percentage of completion under cost-to-cost methods, causing revenue swings and potentially triggering loss recognition requirements. 

Mitigation approach: Implement formal Estimate at Completion (EAC) processes with monthly or quarterly updates. Require program managers to document assumptions and risks. Create escalation procedures for contracts approaching or exceeding budget, and consider independent cost reviews on high-risk fixed-price development contracts. 

Contract modification accounting inconsistency 

The risk: Applying different accounting treatments to similar contract modifications, creating comparability issues and potential audit findings. 

Mitigation approach: Create decision trees or flowcharts for common modification types based on ASC 606’s guidance. Document the rationale for your treatment of significant modifications, including why you classified them as separate contracts, cumulative catch-ups, or prospective adjustments. 

FMS versus DCS confusion 

The risk: Applying U.S. government contract assumptions to DCS arrangements that have different terms, or vice versa. 

Mitigation approach: Maintain separate revenue recognition policies and templates for FMS and DCS contracts. Train your accounting team on the distinctions and require explicit identification of contract type during the setup process. 

Building a sustainable ASC 606 compliance framework 

Getting ASC 606 right isn’t a one-time exercise. You need ongoing processes that keep pace with your contract portfolio’s complexity and evolution. 

Start by documenting your significant judgments and estimates. When auditors or stakeholders question your revenue recognition positions, you’ll need clear documentation showing how you arrived at your conclusions. This includes your performance obligation assessments, variable consideration estimates, cost forecasts, and contract modification analyses. 

Invest in cross-functional collaboration. Revenue recognition decisions for government contracts require input from contracts administrators, program managers, engineers, and accountants. Create regular touchpoints where these groups review new awards, modifications, and performance issues together. 

Monitor your key estimates quarterly at minimum. Your award fee assumptions, cost forecasts, and funding probability assessments should reflect current information. Building this into your close process prevents surprises and ensures your financial statements reflect your best current knowledge. 

Finally, stay current with evolving guidance. The AICPA’s Aerospace and Defense Contractors guide, FASB updates, and industry practice developments all affect how you should apply ASC 606. Your contract structures evolve, and your accounting positions should evolve with them. 

Get your government contract revenue recognition right 

ASC 606 creates real challenges for government contractors, but it also provides a consistent framework for addressing those challenges. The key is applying the framework thoughtfully to your specific contract terms and risk profile. 

Your contracts are unique. Your customer relationships, performance obligations, variable consideration structures, and risk allocations all require careful analysis under ASC 606’s principles. Generic approaches lead to errors that can affect your financial reporting, audit results, and stakeholder confidence. 

BPM’s accounting and advisory professionals work with government contractors to navigate ASC 606’s complexities. We can help you assess your current revenue recognition policies, address specific contract accounting questions, and build sustainable processes that scale with your business. Contact your BPM advisor or visit bpm.com to discuss how we can support your revenue recognition requirements. 

Missing a quarterly estimated tax payment can trigger a cascade of financial consequences that catch many business owners off guard. While the immediate impact might seem manageable, the long-term costs of penalties, interest, and compliance issues can significantly affect your bottom line. 

The IRS operates on a “pay-as-you-go” system, meaning they expect tax payments throughout the year as you earn income. When you miss these deadlines, you’re not just dealing with a simple late fee—you’re facing a structured penalty system designed to encourage timely compliance. 

Understanding quarterly estimated tax deadlines and requirements 

Business owners must navigate four quarterly payment deadlines for 2026: April 15, June 15, and September 15 in 2026, with the final payment due January 15, 2027. These dates don’t align with calendar quarters and may shift if they fall on weekends or holidays. 

Individuals, including sole proprietors, partners, and S corporation shareholders, generally must make estimated tax payments if they expect to owe $1,000 or more when filing their return. Corporations face a lower threshold at $500 or more in expected tax liability. 

The safe harbor rules provide some protection against penalties. Most taxpayers avoid penalties if they pay at least 90% of the current year’s tax or 100% of the prior year’s tax, whichever is smaller. However, high-income taxpayers face stricter requirements—those with adjusted gross income exceeding $150,000 must pay 110% of their prior year’s tax to qualify for safe harbor protection. 

Many business owners underestimate their quarterly obligations, particularly during profitable periods or when receiving irregular income from contracts, investments, or seasonal business fluctuations. The key is consistent monitoring and adjustment of payments based on actual income patterns rather than outdated projections. 

How fiscal year differences and business structures affect payment schedules 

Your business structure and fiscal year significantly impact when and how you make estimated payments. Calendar year businesses follow the standard quarterly schedule, but fiscal year businesses must adjust their payment dates accordingly. 

Partnerships and S corporations using fiscal years calculate their deadlines based on the 15th day of the 4th, 6th, 9th, and 12th months of their fiscal year. For example, a business with a July 1 to June 30 fiscal year would make payments on October 15, December 15, March 15, and June 15. 

Farmers and fishermen receive special treatment, with calendar year farmers having only one payment deadline of January 15 for the entire year, provided at least two-thirds of their gross income comes from farming or fishing. This recognition of seasonal income patterns shows how the IRS adapts requirements to different business realities. 

For businesses like BPM’s real estate, venture capital, and private equity clients, seasonal income variations can make quarterly estimates challenging. Real estate professionals often see commission income clustered around certain periods, while VC and PE partners experience income shifting each quarter based on transactions, making annualized income installment calculations potentially beneficial for managing cash flow and penalty avoidance. 

Federal penalties and interest rates for missing estimated tax payments 

The financial consequences of missing quarterly payments extend beyond simple late fees. For 2025, the IRS charges 7% annual interest on underpayments, compounded daily, meaning every day of delay increases your total obligation. 

The underpayment penalty applies even if you’re due a refund when you file your annual return. This catches many business owners by surprise who assume their withholdings or overpayments from other sources will eliminate penalty exposure. 

The penalty calculation considers both the amount of underpayment and the duration of the shortfall. The IRS calculates penalties based on the difference between what you paid and what you should have paid, applied to each quarterly period separately. This means partial payments don’t fully protect you—each quarter stands alone for penalty purposes. 

Beyond estimated tax penalties, businesses, individuals, and trusts face additional consequences for broader non-compliance. The failure-to-pay penalty starts at 0.5% per month of unpaid taxes, increasing to 1% if taxes remain unpaid after the IRS issues a notice of intent to levy. 

Interest compounds daily on the total amount owed, including penalties. This exponential growth means small initial underpayments can become substantial obligations over time, particularly for businesses with irregular cash flow that might delay payments further. 

State-specific requirements that add complexity to compliance 

State estimated tax requirements often differ from federal rules, creating additional compliance layers for business owners. California requires estimated payments if you expect to owe at least $500, with high-income taxpayers facing stricter safe harbor requirements similar to federal rules. 

California’s penalty structure mirrors federal calculations but operates independently. California taxpayers with AGI exceeding $1 million must pay 90% of the current year’s tax to avoid penalties, eliminating the prior year safe harbor option. This creates challenges for businesses experiencing significant growth or volatile income. 

California imposes additional penalties for electronic payment failures, charging 1% of amounts not electronically paid when required. This administrative penalty stacks on top of underpayment penalties, creating multiple compliance requirements. 

States without income taxes like Texas, Florida, and Nevada eliminate this complexity for residents, but multi-state businesses must navigate varying requirements across jurisdictions. This becomes particularly relevant for businesses with diverse service offerings that operate across state lines or serve clients in multiple states. 

Some states offer more generous safe harbor provisions than federal rules, while others impose stricter requirements. Understanding your specific state’s rules prevents costly surprises and helps optimize your payment strategy across all jurisdictions. 

Immediate steps to take if you miss a quarterly deadline 

When you discover a missed quarterly payment, immediate action minimizes financial damage and demonstrates good faith compliance efforts. The first priority is calculating and paying the missed amount as quickly as possible to stop interest accumulation. 

Make the quarterly payment to the IRS as soon as possible. The 0.5% monthly penalty applies only when taxpayers fail to pay the full amount due by the extension deadline, not for missed quarterly estimated payments. 

Contact your tax professional immediately to assess the full scope of your obligation. They can help determine whether annualized income installment calculations might reduce penalties, particularly if your income varies significantly throughout the year. 

Consider adjusting your remaining quarterly payments upward to compensate for the shortfall. While this doesn’t eliminate penalties on the missed payment, it prevents compounding issues and demonstrates compliance intent for future periods. 

Document the circumstances surrounding the missed payment. The IRS may waive penalties for reasonable cause, such as casualty events, disasters, or unusual circumstances beyond your control. While these waivers are limited, proper documentation supports any reasonable cause claims. 

Review your withholdings and payment methods. If you receive W-2 income alongside business income, increasing withholdings can help cover estimated tax obligations and reduce future quarterly payment requirements. 

Planning strategies to avoid future payment issues 

Successful quarterly payment management requires systematic planning and regular monitoring of your tax obligations. Establish a dedicated business account for tax payments, automatically transferring a percentage of revenue to help ensure funds availability when deadlines arrive. 

Use technology to your advantage. Set up calendar reminders for quarterly deadlines and consider making monthly payments to smooth cash flow impacts. Many business owners find making smaller monthly payments easier than large quarterly installments. 

Monitor your income patterns throughout the year and adjust payment amounts accordingly. If business accelerates beyond projections, increase subsequent payments rather than waiting until year-end. This proactive approach prevents large underpayment penalties and improves cash flow predictability. 

Consider the annualized income installment method if your business has seasonal or irregular income patterns. This approach matches payments to actual income timing rather than assuming even quarterly distributions, potentially reducing penalties during slower periods. 

Work with experienced tax professionals who understand your industry’s specific challenges and opportunities. They can help optimize your payment strategy, identify beneficial elections, and support compliance across all jurisdictions where you operate. 

Partner with professionals to simplify your tax compliance 

Managing quarterly estimated tax payments requires ongoing attention and experience that many business owners struggle to maintain alongside their primary business responsibilities. Missing payments creates financial stress and compliance risks that can impact your business’s long-term success. 

Professional guidance helps you navigate complex requirements, optimize payment strategies, and avoid costly mistakes. Tax professionals understand the nuances of different business structures, industry-specific considerations, and changing regulations that affect your obligations. 

Looking to streamline your quarterly tax planning and avoid costly penalties? Contact BPM to explore comprehensive tax strategies tailored to your business structure and industry requirements. 

Growing a SaaS company comes with unique financial challenges that most business owners aren’t prepared to handle alone. You’re juggling subscription models, managing churn rates, and trying to make sense of metrics like CAC and LTV while keeping your business profitable. A fractional CFO brings the financial experience you need for ongoing part-time CFO leadership or just to get you through an immediate hurdle – without the six-figure salary commitment of a full-time hire.  

5 reasons to engage a fractional CFO for your SaaS company 

This article explores five compelling reasons why bringing a fractional CFO onto your team could be the smartest move for your SaaS business.  

1. They understand the SaaS business model inside and out 

Your SaaS company operates differently than traditional businesses. You deal with deferred revenue, monthly and annual recurring revenue, and complex customer lifetime calculations. A fractional CFO who specializes in SaaS knows exactly how to navigate these waters and set you up for success. 

They can help you track the metrics that actually matter for your business. Customer acquisition cost, lifetime value ratios, and churn rates become more than just numbers on a spreadsheet. They transform into actionable insights that drive your decision-making. 

Revenue recognition alone can become a compliance nightmare if you don’t have someone who understands GAAP requirements. A fractional CFO ensures your financial statements accurately reflect your business performance while keeping you compliant with accounting standards. 

2. You get high-level financial leadership at a fraction of the cost 

Hiring a full-time CFO typically costs $300,000 or more annually when you factor in salary, benefits, and equity. Most early-stage and growth-stage SaaS companies simply can’t justify that expense. A fractional CFO gives you access to the same caliber of financial leadership for significantly less and can flex their time up and down to meet your needs. 

This cost efficiency doesn’t mean you’re getting a watered-down service. You’re working with seasoned financial professionals who have helped multiple SaaS companies navigate growth, fundraising, and scaling challenges. They bring battle-tested strategies that come from years of experience. 

The money you save can be reinvested into product development, marketing, or sales. You’re making your dollars work harder for your business while still getting the financial guidance you need to make smart decisions.  

3. They provide flexibility that matches your growth stage 

Your needs today won’t be the same as your needs six months from now. A fractional CFO adapts their involvement based on what your business requires at any given moment. 

Maybe you need intensive support during a fundraising round. Once that closes, you might only need quarterly financial planning sessions. This flexible arrangement means you’re not paying for full-time help when you don’t need it. 

As your company scales, your fractional CFO can help you determine when it’s time to bring on additional finance team members. They can assist with recruiting and structuring your finance function so you’re building the right team for your growth trajectory.  

4. They accelerate your fundraising efforts 

Preparing for a funding round requires more than a compelling pitch. Investors want to see detailed financial models, realistic projections, and clean financial statements. A fractional CFO knows exactly what investors are looking for because they’ve been through the process before. 

They’ll build financial models that showcase your unit economics and growth potential. They’ll prepare you for due diligence questions before investors even ask them. This preparation makes you look polished and professional, which builds investor confidence. 

The stress of fundraising falls heavily on founders who are already stretched thin. Having a fractional CFO manage the financial side of your raise lets you focus on telling your company’s story and building relationships with potential investors. 

5. They create financial systems that scale with your business 

Many SaaS founders start out managing finances with basic spreadsheets and simple accounting software. That approach works until it doesn’t. A fractional CFO implements the financial infrastructure you need before you run into problems. 

They’ll help you select and implement the right financial tools for your stage and size. These systems provide visibility into your cash flow, runway, and key performance metrics in real-time. You can make informed decisions quickly instead of waiting for month-end reports. 

Good financial systems also make your life easier when it’s time to raise capital or consider an exit. Clean, organized financial data accelerates due diligence and can positively impact your valuation. You’re building value into your business from the ground up. 

Work with financial professionals who understand SaaS 

At BPM, we work with SaaS companies at every stage of growth. Our fractional CFO services are designed to give you the financial leadership you need when you need it. We understand the unique challenges of subscription-based businesses and the metrics that drive your success. 

Whether you’re preparing for your first funding round, scaling your operations, or planning an exit, we can help you build the financial foundation your business needs. To discuss how a fractional CFO can support your company’s growth and success, contact us.