Blind Spots May Be Limiting the Profitability of Your Professional Services Firm — How to gain visibility into time tracking and billing
Professional services firms are some of the most progressive and innovative businesses in the country — and many are putting tremendous energy into their digital transformations. But the ERP applications many professional services organizations rely on may fall short in (at least) two areas, creating blind spots that limit the profit potential of the firms. Time tracking and billing are two of the most critical functions within any professional services organization — so it makes strategic sense to invest in an ERP designed to streamline both functions, ensuring accuracy, timeliness, and visibility.
Put time on your side
The biggest challenge facing service-based businesses is managing and billing for time. It is estimated that 15% of chargeable consulting work is not billed to clients. Being able to accurately track and monitor time spent on projects on the phone, in transit, or onsite with clients is the key to profitability. In fact, improper time tracking can cost the average midsize consulting firm hundreds of thousands of dollars per year. This type of inefficiency leads to lost wages, unbilled revenue, and, perhaps most importantly, reduced customer satisfaction.
Using an ERP solution designed for professional services organizations can help ensure consultants can easily and efficiently track their time, and your billing team can swiftly and accurately bill for that time. By integrating time tracking into the organization’s workflows, both billable and non-billable time is accounted for and included in reports and analysis. Halloran Consulting Group, a life sciences consulting firm, increased their billable utilization rates from 50% to 68% after switching from QuickBooks to Sage Intacct.
Bill it right — and right on time
Professional services organizations’ billing processes are not simple, and manual processes combined with countless Microsoft Excel spreadsheets or multiple QuickBooks instances begin to take a toll — on accuracy and timeliness. Bills with errors or those that arrive late test customers’ patience. Delayed billing can lead to cash flow challenges. And, without consistent, real-time visibility into billing activity, management operates in the dark.
With an ERP solution that incorporates automated project accounting, data moves seamlessly across the business in easily customizable, unified workflows. Firms can manage projects and profitability by tracking project costs, expediting time-and-expense processes, and accelerating project billing. Visibility into the entire project workflow provides firms with insight into ways to refine and improve. And the results can be significant. Halloran Consulting Group, mentioned above, increased its profit by $4 million after adopting a blended-rate consultant billing model, thanks to insights generated through Sage Intacct.
A cloud-based ERP solution designed for professional services firms can yield numerous benefits, eliminating blind spots being one of the most significant. We invite you to learn more by reading The Value of ERP Systems Tailored to Professional Services Organizations, or by contacting a member of our consulting team.