Professional architectural, engineering, railroad, and utility companies who perform work for government agencies are generally required to have an independently audited overhead rate. You calculate this rate by dividing total allowable indirect expenses over direct labor but getting to this step and optimizing this result involves some effort.
It might seem as you're jumping through hoops to satisfy a regulatory body, but that's only partially true. If you're working in this space, your livelihood and success depend on your ability to be fully reimbursed for your eligible costs and make the right decisions on future contracts. These are just a few of the reasons why understanding and optimizing your overhead rate are vital.
If your business is anything like ours, it probably gets hundreds of unsolicited emails and calls every week. Whether it’s a seemingly innocuous request for payment information or a blatant attempt to swindle the company, scammers are constantly out to get our (and your) money and private information. Both are desirable to scammers, but information may be even more valuable than cash because they can sell it to numerous other fraudsters.
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