5 Ways to Improve Professional Services Accounting & Financial Management
Financial management of a professional services firm is challenging. You’re stretched for time and resources. You need to manage capacity, matching supply with demand. You need to ensure that billing is correct, invoices are collected and margins are safeguarded. You continually report, book, plan, align, review and forecast. What you need is the visibility and integration across your business to manage the entire quote-to-cash experience. Using technology to automate your firm can bring all project fundamentals under one roof. From resource management to data and management, you have a window into all the key functions of your firm so you can make more informed decisions. Download Infographic
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.