{"id":10135,"date":"2021-09-24T10:00:29","date_gmt":"2021-09-24T09:00:29","guid":{"rendered":"https:\/\/www.sage.com\/en-gb\/blog\/?p=10135"},"modified":"2026-01-29T09:37:00","modified_gmt":"2026-01-29T09:37:00","slug":"challenges-professional-services-firms","status":"publish","type":"post","link":"https:\/\/www.sage.com\/en-gb\/blog\/challenges-professional-services-firms\/","title":{"rendered":"5 challenges facing professional services firms \u2013 and how to beat them"},"content":{"rendered":"<header class=\"entry-header has-dark-background-color entry-header--has-illustration entry-header--has-illustration--generic\">\n\t<div class=\"container\">\n\t\t<div class=\"entry-header__row row align-center\">\n\t\t\t<div class=\"col col-lg-7 col-xlg-6 entry-header__content\">\n\t\t\t\t\t\t\t<div class=\"component component-single-header\">\n\t\t\t\t\t\t\t\t\t\t<div class=\"entry-header__misc text--subtitle text--uppercase text--small\">\n\t\t\t\t\t\t\t<a href=\"https:\/\/www.sage.com\/en-gb\/blog\/category\/money-matters\/\" class=\"entry-header__link\">Money Matters<\/a>\t\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t<div class=\"entry-title-wrapper\">\n\t\t\t\t\t<h1 class=\"entry-title\">\n\t\t\t\t\t\t5 challenges facing professional services firms \u2013 and how to beat them\t\t\t\t\t<\/h1>\n\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\t\t\t<p class=\"entry-header__description\">\n\t\t\t\t\t\t\t\t\t\t\t<\/p>\n\t\t\t\t\n\t\t\t\t\n\t\t\t\t\n\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t<\/div>\n\t<div class=\"single-post-details container\">\n\t\t<div class=\"col\">\n\t\t\t<span class=\"posted-on \"><time class=\"entry-date published\" datetime=\"2021-09-24T10:00:29+01:00\">24 September, 2021<\/time><\/span><span class=\"reading-time\"> min read<\/span>\n\t\t<button\n\t\t\ttype=\"button\"\n\t\t\tclass=\"social-share-button button button--icon button--secondary js-social-share-button\"\n\t\t\tdata-share-title=\"5 challenges facing professional services firms \u2013 and how to beat them\"\n\t\t\tdata-share-url=\"https:\/\/www.sage.com\/en-gb\/blog\/challenges-professional-services-firms\/\"\n\t\t\tdata-share-text=\"Please read this interesting article\"\n\t\t>\n\t\t\t<span class=\"social-share-button__share-label\">Share<\/span>\n\t\t\t<span class=\"social-share-button__copy-label\" hidden>Copy Link<\/span>\n\t\t\t<span class=\"social-share-button__copy-tooltip\" aria-hidden=\"true\" hidden>Copied<\/span>\n\t\t<\/button>\n\n\t\t\t\t<\/div>\n\t<\/div>\n<\/header>\n\n\n\n<div class=\"wp-block-post-author\">\n\t\t\t<div class=\"co-authors\">\n\t\t\t\n\t\t<div class=\"entry-author-wrapper\">\n\t\t\t<a class=\"entry-author\" href=\"https:\/\/www.sage.com\/en-gb\/blog\/author\/jenniferwilson\/\">\n\t\t\t\t<img loading=\"lazy\" decoding=\"async\" width=\"40\" height=\"40\" src=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2020\/06\/Jennifer-Wilson-350x350.jpg\" class=\"entry-author__image\" alt=\"Jennifer Wilson\" srcset=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2020\/06\/Jennifer-Wilson-350x350.jpg 350w, https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2020\/06\/Jennifer-Wilson.jpg 480w\" sizes=\"auto, (max-width: 40px) 100vw, 40px\" \/>\t\t\t\t<span class=\"entry-author__name\">Jennifer Wilson<\/span>\n\t\t\t<\/a>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t<\/div>\n\t\t<\/div>\n\n\n\n<p>To say the professional services industry is growing rapidly would be an understatement.<\/p>\n\n\n\n<p>With its value expected to rise to <a href=\"https:\/\/www.businesswire.com\/news\/home\/20190701005419\/en\/The-2019-Global-Professional-Services-Market---Worth-5.7-Billion-in-2018-Projected-to-Surpass-8-Billion-by-2022---ResearchAndMarkets.com\">\u00a35.8bn globally<\/a> by the end of 2022, the stage is set for professional services to thrive for years to come.<\/p>\n\n\n\n<p>But with that rising popularity comes a fresh wave of challenges for your firm to navigate.<\/p>\n\n\n\n<p>From cash flow to utilisation and everything in between, time is literally money, and you need to know how to make more of both.<\/p>\n\n\n\n<p>Read on to take a closer look at the top five key challenges facing professional services firms like yours, and how you can tap into tech to overcome them.<\/p>\n\n\n\n<p>Here\u2019s what we cover:<\/p>\n\n\n\n<p><a href=\"#invoicing-anchor-link\">1. Invoicing errors<\/a><\/p>\n\n\n\n<p><a href=\"#lengthy-anchor-link\">2. Lengthy billing cycles<\/a><\/p>\n\n\n\n<p><a href=\"#under-anchor-link\">3. Underutilisation<\/a><\/p>\n\n\n\n<p><a href=\"#write-anchor-link\">4. Write-offs<\/a><\/p>\n\n\n\n<p><a href=\"#payment-anchor-link\">5. Payment collection<\/a><\/p>\n\n\n\n<p><a href=\"#next-anchor-link\">Next steps: Track the professional services metrics that really matter<\/a><\/p>\n\n\n\n<div class=\"wp-block-buttons is-layout-flex wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link wp-element-button\" href=\"#gate-75500b87-75e1-492e-92d3-16a49351ce6c\">Download your free copy of 6 key metrics for professional service organisations<\/a><\/div>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"invoicing-anchor-link\">1. Invoicing errors<\/h2>\n\n\n\n<p>Cash flow \u2013 the money flowing in and out of your business \u2013 is something that can make even the most experienced finance professional sweat.<\/p>\n\n\n\n<p>Invoicing errors aren\u2019t just a little inconvenience.<\/p>\n\n\n\n<p>Reissuing invoices has a domino effect that could translate to a 7% increase in project cost overruns and an 11% drop in your team\u2019s ability to deliver projects on time, according to SPI Research.<\/p>\n\n\n\n<p>And this can come down to technical issues such as time-coding errors, or good old-fashioned human error.<\/p>\n\n\n\n<p>Employees might forget to input time, put it in the wrong place, or add the wrong labour code to the system.<\/p>\n\n\n\n<p>Using the right <a href=\"https:\/\/www.sage.com\/en-gb\/sage-business-cloud\/intacct\/\">cloud finance software<\/a> here eradicates hiccups such as these, streamlining the process and allowing your business to spend less time on admin and more time on what matters.<\/p>\n\n\n\n<p>Remember: if your project manager doesn\u2019t catch the error, your customers certainly will. And that kind of mistake can be a little embarrassing and give the impression of chaos behind-the-scenes.<\/p>\n\n\n\n<p>Protect your brand by keeping those accurate invoices flowing.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"lengthy-anchor-link\">2. Lengthy billing cycles<\/h2>\n\n\n\n<p>There\u2019s a lot more to healthy cash flow than just issuing invoices properly.<\/p>\n\n\n\n<p>Enter, billing cycles.<\/p>\n\n\n\n<p>If you bill for your services on a monthly basis, you might rack up an expense or labour cost on the first day of the month, bill for it on the last, and collect it <em>another<\/em> 30 to 45 days later.<\/p>\n\n\n\n<p>And that\u2019s if things go smoothly.<\/p>\n\n\n\n<p>It\u2019s not uncommon for companies to take an additional five or 10 days to prepare and send their invoices to customers.<\/p>\n\n\n\n<p>There are a few different actions that can lead to a billing cycle bottleneck, including:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Late time entry<\/li>\n\n\n\n<li>Adjustments<\/li>\n\n\n\n<li>Long or complex review process<\/li>\n\n\n\n<li>Complicated manual invoices<\/li>\n<\/ul>\n\n\n\n<p>Depending on the complexity of your billing process, it could take up to 10 days to get your bills out the door and in paying customers\u2019 hands.<\/p>\n\n\n\n<p>Serving your project managers real-time financial data for each project would help cut that time and let them know what needs to be on the invoice ahead of time, allowing them to act on any time-entry errors before they actually happen.<\/p>\n\n\n\n<p>Cloud software will also allow you to create a digital invoice review process \u2013 complete with handy notifications \u2013 that makes it easier for everyone to stay on task and keep things moving along swiftly.<\/p>\n\n\n\n<p>Traditional accounting systems don\u2019t have functionality for the heavy lifting needed here, so that\u2019s worth keeping in mind if you\u2019re considering an upgrade to your current setup.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">In practice: Bossing your billing cycle<\/h3>\n\n\n\n<p>Cutting your billing cycle down to size might seem small, but it has some serious financial benefits.<\/p>\n\n\n\n<p>For example, if your company is making \u00a325m in annual revenue with an average cycle of about 45 days, reducing it by 10% could translate to an extra \u00a3340,000 in the coffers.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"under-anchor-link\">3. Underutilisation<\/h2>\n\n\n\n<p>This is basically how professional services do resource management.<\/p>\n\n\n\n<p>Utilisation \u2013 the percentage of time each employee spends on projects \u2013 is ultimately what determines the success of your business, so you need to keep a close eye on it and make sure you\u2019re maximising those billable hours.<\/p>\n\n\n\n<p>Fail to manage your resources well, and those lost minutes quickly add up to hours, so keeping track of time is vital here.<\/p>\n\n\n\n<p>Because this is such a fast-paced industry, it\u2019s normal to see employees forget to input their time daily, and that\u2019s understandable.<\/p>\n\n\n\n<p>Why not make it easier for your team to improve their time tracking by providing a quick, straightforward process on software they can use anywhere, on any device (desktop computer, laptop, mobile phone, tablet)?<\/p>\n\n\n\n<p>While you\u2019re at it, encourage employees to update their timesheets daily, and to include time spent on administrative tasks too.<\/p>\n\n\n\n<p>\u201cWe were stuck in the day-to-day weeds of closing the month. We\u2019d get two days to breathe after the close, but couldn\u2019t analyse the data or get new projects done \u2013 there was no time. Now I can look at my dashboards and reports and know that the data is solid and literally up to the minute.\u201d \u2013 Tania Zieja, CFO at Halloran Consulting Group<\/p>\n\n\n\n<p>You\u2019ll quickly find that some of your best talent is being underutilised, and need more billable hours, while others might be overstretched and at risk of burnout.<\/p>\n\n\n\n<p>Use that information to balance your team and your books more effectively.<\/p>\n\n\n\n<div class=\"wp-block-buttons is-layout-flex wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link wp-element-button\" href=\"#gate-75500b87-75e1-492e-92d3-16a49351ce6c\">Download your free copy of 6 key metrics for professional service organisations<\/a><\/div>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"write-anchor-link\">4. Write-offs<\/h2>\n\n\n\n<p>From disputed charges to reworks and discounts, write-offs can cost your company a bomb if left unchecked.<\/p>\n\n\n\n<p>Also known as \u2018revenue leakage\u2019, write-offs are bits of revenue that you did earn, but weren\u2019t cashed in for some reason or other.<\/p>\n\n\n\n<p>The number one cause of revenue leakage is probably under-bidding contracts.<\/p>\n\n\n\n<p>If you\u2019re starting your project off by charging too little and taking on too much work for the resource you have, you\u2019re on the wrong track \u2013 and that\u2019s going to cost money down the line.<\/p>\n\n\n\n<p>To find out how your firm is doing, just compare your write-offs to your labour revenue.<\/p>\n\n\n\n<p>If you\u2019re around the industry average of 4.3% \u2013 which is pretty high \u2013 then there are two changes you can make right now to knock that down and keep more money in your pocket:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Quote projects based on past performance, not past contracts<\/li>\n\n\n\n<li>When changes are needed, bill for any additional work done<\/li>\n<\/ul>\n\n\n\n<p>What it all boils down to it is the equivalent of managing customer expectations in professional services.<\/p>\n\n\n\n<p>Clarity and good communication are priceless here.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"payment-anchor-link\">5. Payment collection<\/h2>\n\n\n\n<p>Whether you\u2019re a freelancer or thriving firm, chasing payments is never fun.<\/p>\n\n\n\n<p>The longer the collections process takes, the larger the strain on your financial health and the greater the chance of building up bad debt and write offs, not to mention the stress associated with late payments.<\/p>\n\n\n\n<p>These delays usually come from things such as billing disputes, calls for clarification, and the customers who just like to wait until the last minute to settle up.<\/p>\n\n\n\n<p>But there are steps you can take to make life easier, such as offering incentives to customers for paying early.<\/p>\n\n\n\n<p>You could also change your payment terms so they make more sense in practice, perhaps switching from 30 days to 14 or even 10.<\/p>\n\n\n\n<p>If you\u2019re working with larger companies, do some digging to understand their payment process, and make sure you invoice just before they cut their AP checks.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"next-anchor-link\">Next steps: Track the professional services metrics that really matter<\/h2>\n\n\n\n<p>There\u2019s no one-size-fits-all solution to the challenges professional services firms need to overcome. But there is one sure-fire way to understand exactly what you need to do to grow your business and not just increase revenue, but do it efficiently: tracking specific professional services KPIs.<\/p>\n\n\n\n<p>Use those metrics to work out which areas of your business are doing great, which ones need some work, and what kind of growth strategies you need to put in place to create that positive change.<\/p>\n\n\n\n<div class=\"single-cta gated-content\">\n\t<div class=\"single-cta__positioner\">\n\t\t<div class=\"single-cta__wrapper has-dark-background-color\">\n\t\t\t<div class=\"single-cta__content\">\n\t\t\t\t\t\t\t\t<h2 class=\"single-cta__title h3\">6 key metrics for professional service organisations<\/h2>\n\n\t\t\t\t\t\t\t\t\t<div class=\"single-cta__description\">\n\t\t\t\t\t\t<p>Discover the KPIs that can help you benchmark your firm&#8217;s financial data and identify where you need to focus as you strive for continuous improvement and growth.<\/p>\n\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a\n\t\t\t\t\t\thref=\"#gate-75500b87-75e1-492e-92d3-16a49351ce6c\"\n\t\t\t\t\t\tclass=\"single-cta__button button button--primary\"\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t>Download your free guide<\/a>\n\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<img decoding=\"async\" width=\"1440\" height=\"810\" src=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2022\/04\/GettyImages-961279906-1440x810.jpg\" class=\"single-cta__image\" alt=\"managing payroll tasks for the business\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2022\/04\/GettyImages-961279906-1440x810.jpg 1440w\" sizes=\"auto, (min-width: 48em) 33vw, 100vw\" \/>\t\t\t<\/div>\n<\/div>\n\n\n<div class=\"single-cta\">\n\t<div class=\"single-cta__positioner\">\n\t\t<div class=\"single-cta__wrapper has-dark-background-color\">\n\t\t\t<div class=\"single-cta__content\">\n\t\t\t\t\t\t\t\t<h2 class=\"single-cta__title h3\">Subscribe to the Sage Advice newsletter<\/h2>\n\n\t\t\t\t\t\t\t\t\t<div class=\"single-cta__description\">\n\t\t\t\t\t\t<p>Join more than 500,000 UK readers and get the best business admin strategies and tactics, as well as actionable advice to help your company thrive, in your inbox every month.<\/p>\n\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a\n\t\t\t\t\t\thref=\"#gate-b1a63862-3fa0-4a5e-bb67-c76b88bbc6b8\"\n\t\t\t\t\t\tclass=\"single-cta__button button button--primary\"\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t>Subscribe now<\/a>\n\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<img decoding=\"async\" width=\"1440\" height=\"810\" src=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2022\/04\/GettyImages-1073797282-1-1440x810.jpg\" class=\"single-cta__image\" alt=\"\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2022\/04\/GettyImages-1073797282-1-1440x810.jpg 1440w\" sizes=\"auto, (min-width: 48em) 33vw, 100vw\" \/>\t\t\t<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>From invoicing errors to write-offs, discover how to overcome some key business admin challenges for your professional services firm.<\/p>\n","protected":false},"author":1072,"featured_media":9100,"menu_order":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_sage_video":false,"post_featured_image_hide":false,"footnotes":""},"categories":[6],"tags":[135,24,159],"business_type":[3],"lilypad":[],"context":[],"industry":[63],"persona":[68,71],"imagine_tag":[96],"coauthors":[532],"class_list":["post-10135","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-money-matters","tag-business-finances","tag-cash-flow","tag-midsized-business","business_type-medium-sized-business","industry-professional-services"],"sage_meta":{"region":"en-gb","author_name":"Jennifer Wilson","featured_image":"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2021\/04\/me-gcc-ethnicity-business-builder-14.28922.jpg","imagine_tags":{"96":"Medium businesses"}},"distributor_meta":false,"distributor_terms":false,"distributor_media":false,"distributor_original_site_name":"Sage Advice 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