5 Ways to Improve Professional Services Accounting & Financial Management
Here are five ways you can improve the accounting and financial management of a professional services firm:
1. Get a grip on key metrics
- Decide which KPIs most impact your project and client health, as well as your overall business growth and profitability. These may differ based on the financial maturity of your business.
- Get immediate, real-time data and 24/7 reporting of all key metrics for sales, projects, resourcing, project finance and corporate finance.
- See what’s coming, so you can act decisively and effectively
- Utilization rate
- Gross margin
- Average revenue per project
- YoY revenue growth
- Annual revenue per employee
- % Projects on time
- % Projects delivered on budget
- EBITDA YoY growth
- Reference client % growth
- Earned value
- Actual cost up-to-date
- Cost performance index (EV/AC)
- Project margin
- Burn rate
2. Get control of billing
- Crack down on invoicing and billing.
- Ensure invoices are sent on time and are accurate.
- Automate billing with flexible schedules.
3. Focus on quality of revenue
- Analyze levers that impact the quality of revenue, including margin optimization, risk mitigation and cost of revenue.
- Get a better grip on pipeline – especially versus capacity – and maintain a healthy percent of new businesses each year.
- Resist “emptying the bench” with quantity-over-quality deals.
- Don’t default to contractors.
- Stay on top of quoting accuracy and keep tuning sales and cost rates.Build longer term plans with clients to build a pipeline six to 12 months out.
- Figure out your cost of sales.
- Stick to your competences and sell at value.
- Don’t rely on a few large clients, but find a mix of sizes of clients.
4. Keep a tight focus on over-delivery
- See all work in progress, hours spent and not yet billed.
- Manage project accounting and reduce your burn rate.
- Ensure earned value vs. actual costs are under control.
- Track against project budget.
5. Run your business from quote-to-cash
- Get 360-degree business control to set meaningful goals, make informed decisions and deliver predictable profits.
- Improve cash flow and cost control.
- Enable more efficient operations and optimal utilization.
- Bullet-proof your financial reporting and forecasting.
- Drive the outcomes you need with better margins, lower overhead, higher utilization and more revenue.