The Benefits to Automating Project Accounting and Invoicing

Although most professional services firms don’t specialize in technology, a certain level of comfort with tech is necessary to run a business in the modern marketplace. In reality, most of us are tech-proficient just to function comfortably in modern society. Yet, professional services firms appear to be largely resistant to one particular type of technology, and that is automation. Yet, the benefits of automating project accounting and invoicing are undeniable.

Automation may seem like a complex, and perhaps even scary, evolution. Below, we discuss some of the common barriers and solutions we encounter in talking to professional services leaders about automating project accounting.

Productivity

The idea of implementing a whole new tech system for accounting seems like it will be a time-suck. And, we won’t tell you it’s a fast process—but the time is worth it and results in cost savings in the medium- and long-term.

In a business that depends on billable hours to remain profitable, investing time in anything that takes you away from billable hours can look, on the surface, like time wasted. In this case, that is simply not true.

The time invested in implementing the new system is nothing compared to the time saved by not having to manually enter timesheet information or have lengthy back-and-forth communications between project teams and finance regarding invoicing. Consider the time spent entering information on timesheets, then manually processing those timesheets, reconciling differences, dealing with employees who forget to enter time and then end up doing so inaccurately, and the list goes on.

Manually tracking time and expenses, manually processing invoicing, and all of the other small but crucial and boring tasks take up time—and it’s not billable time. Yes, setting up a new system requires the investment of unbillable time upfront, but the result is a big increase in productivity down the road.

One other productivity issue that we encounter when we discuss automation is that often people are worried that automating accounting processes puts jobs in danger. Although professional service organizations that automate do see an increase in productivity, it’s not typically a “job-killer.” Employees need training to understand the new system and how to use it, but automation usually removes the need to do repetitive tasks manually but leaves time for more important work.

Cost reduction

Any new tech requires some upfront investment, and automation software is no different. However, you can manage the cost by using cloud technology and a subscription model. That allows you to scale up or down as needed, as well as to plan for busy seasons or expansion.

As with any investment in your business, the key is deciding whether the ROI justifies the upfront cost. With automated project accounting and invoicing, the overall cost savings is undeniable. Industry surveys have shown quite clearly that professional service organizations that automate outperform those that do not, but significant margins.

Accuracy

The accuracy of virtually everything improves with automation. That’s because you remove human error, and because the system can provide you with reports based on correct data. Data accuracy and reporting means more precise forecasting.

Making decisions about the direction of your business, resource allocation, and other crucial elements is less risky when you know that you’re working with automatically generated reports that are based on correct data. Even when unforeseen and unpredictable events take place, you can see your options more clearly with accurate data.

Revenue recognition

Different companies use different revenue recognition methods, and each has pros and cons. The bottom line is that you need to understand very clearly where your revenue is coming from, and you need all of the information to be as accurate as possible.

When you set up automated processes, you input rules for the core financial systems governing when data is reported. Each project, too, is rules-based. Far fewer discrepancies occur, project communication is streamlined, you remain in compliance.

Get specifics

Yes, there are challenges associated with implementing automated project accounting and invoicing, but they’re not insurmountable and the return on the investment of time and capital yields long-lasting positive results. Your business is unique, and you may have some questions about specifics. We’d be happy to answer those questions as well as help you understand in a more granular way how automation could benefit your professional services firm.