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.
Here are five ways you can improve the accounting and financial management of a professional services firm:
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
These are examples of KPIs you should consider monitoring:
- 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
Project performance management:
- Earned value
- Actual cost up-to-date
- Cost performance index (EV/AC)
- Project margin
- Burn rate
The result: Using PSA for real-time reporting of all key metrics can help you achieve an 8.4 percent improvement in delivering projects on-budget.
Get control of billing
- Crack down on invoicing and billing.
- Ensure invoices are sent on time and are accurate.
- Automate billing with flexible schedules.
The result: A huge percentage of professional services are never billed – don’t let that be you. Bill accurately, strengthen your invoicing and maintain clear revenue projections.
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.
The result: Bring in better deals and execute them well for repeat revenue. You can see a 9 percent increase in projects delivered on time and on budget with PSA.
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.
The result: You can increase billable utilization by 6 percent with PSA.
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.
The result: Get insights you can trust, whenever you need them. You can have better visibility to your business, allowing you to accelerate and grow.
Want to learn more about how you can improve your PSO’s financial management? Get in touch with our team. We’ll help you drive the outcomes you need to grow your business: better margins, lower overheads, higher utilization and more revenue.