How Professional Services Firms Can Ensure Accurate Project Accounting and Billing

When it comes to project accounting and billing at professional services firms, it’s all about hours and dollars. Can billable resources get their hours into the system and assigned to the right project—so dollars can be assigned and billed correctly to customers?

When the process doesn’t flow smoothly, or when data is inaccurate, that keeps project managers and the accounting team up at night.

With Proper Billing, Customers Are Glad to Pay

Everything has to work smoothly—starting from the resources on each project. They want to get their time entered quickly so they can get back to billable activity. They also want the time to be accurate and assigned to the right project tasks, so their paycheck isn’t held up.

Next up are the managers who approve the time entries. They need real-time access to the data with the ability to see any accompanying documentation. If they have questions, or if something is off, they need to get their questions answered quickly.

Once the time entries are approved, accounting needs complete information to confirm it’s accurate and then invoice the customer. Once payment comes in, they need to verify the payment is accurate against the invoice.

Professional services need all this to flow automatically so they can bill accurately and collect their invoices. But even more important, they want to make sure bills are proper from the customer perspective. Invoice accuracy factors into customer satisfaction—when a firm is billing properly and communicating clearly, customers are glad to pay.

Disconnected Systems Lead to Billing Inaccuracies

Professional services firms often struggle with project accounting and billing because they rely on disconnected systems—information does not flow automatically. Invoice, project management, time, and expenses might all run in separate applications. One firm we helped previously relied on 12 separate systems. As information was manually transferred from one system to another, this led to inaccuracies and information that was difficult to interpret.

Some firms rely on field service teams that document their time on paper while at job sites. The time has to be called in or reported when resources are back in the office. This approach delays the flow of information and requires utilizing other resources to manually enter data into the system. Accuracy, once again, suffers dramatically.

When people don’t enter their time right away after completing a task, their firms sacrifice revenue. They forget altogether or don’t remember to document all their work. In firms where resources work on several projects per day, the mysterious “Forgotten Fifteen” minutes can add up. The time then turns into an internal cost. Studies show that forgotten time can take away as much as 18% of a firm’s bottom line.

By not changing a thing in your process—and simply accounting for the time that you’re actually using to take care of customers—you can increase revenues.

Business Drivers That Lead to System Changes

Professional services firms typically move forward to correct problems with their project accounting and billing processes when a combination one of or more scenarios occurs:

• Revenue—the firm bleeds money because too much billable time is not invoiced.
• Inefficiency—inaccurate information causes internal resources to spend extra time correcting form submissions.
• Reputation—inaccurate invoices degrade customer sentiment—the best way to make sure a customer fires you is to send the wrong bill!
• Regulations—firms are sometimes forced by government bodies to properly document, communicate and secure their customer project information.

All these pain points can be alleviated by deploying a system that saves time for resources to enter and collect information and which makes it easy to input accurate information.

Starting Your Journey to Streamline Accounting and Billing Process

As you develop a plan to implement a system, start by identifying the required results and all the people who participate in the project accounting and billing process:

• Billable resources who do the work (consultants/field personnel)
• Schedules and approvers of the work (managers)
• Those who invoice for the work and collect the money (accounting)

From there, define the workflows and when each resource interacts with the workflow to get from time entry to approvals, billing, and financials. Determine how best to simplify the processes so you can maximize the efficiency of each role.

And remember, this isn’t rocket science. It’s more like building a bicycle—you just need the right parts to work together. Once you have a plan, you can map the software capabilities to the results you’re looking for.

On Your Way to Business Process Optimization

Simply flow-charting the processes is the first step in business process optimization. You may discover ways to enhance your processes even before you get to the software that will automate the system.

If you partner with experts in business process improvement, they can likely suggest adjustments you have not thought of or ways to implement new capabilities you want to add. One of the advantages of working with a partner who focuses on professional services is they advise customers in the sector on a regular basis. They can anticipate your roadblocks and know how to overcome them.

There’s also value in collaborating with a partner who knows your business model and your industry. They have encountered problems similar to yours and have solved them for many customers just like you. That just might take away a few headaches and make it easier to sleep at night!

For more information on how professional services firms can ensure accurate project accounting and billing, contact Velosio today.