One of the primary challenges — and in some ways advantages — of professional services is that the person billing the work is frequently the person doing the work. Professionals know what it takes to complete a project or manage an ongoing retainer, and it should be reflected in the final invoice with a percentage of profit figured in.
Ideally, that’s how time and billing should work, but each professional service firm — and client — is different. Quotes can vary. Payment arrangements can vary. Timelines can vary. Clients of successful firms also tend to engage more than one service, which makes time tracking and invoicing an adventure in cross-departmental emails.
At the end of the day, the goal of every professional is to bill a larger percentage of client work than the time they spent on non-client work. Their compensation and profits depend on that billable percentage. The only way to increase time for billable work is to do less nonbillable work. To solve this challenge, more firms are adopting automated processes and outsourcing services.
There are many areas in a business to automate and outsource today, but for the purposes of this article we’ll cover time and billing, accounting and payroll functions. Inefficiency in these areas has the biggest impact on productivity, cash flow and profits. We will cover tips for outsourcing and how automation can enhance that relationship.
What Keeps You From Putting Your Business First?
First, let’s talk about the reasons professional services firms experience inefficiency. Because professionals sell their time, which is tied to their expertise, they must be expert time managers. Time management skills, however, are not always immediate. They must be learned and practiced.
Using Dwight D. Eisenhower’s Principle of Time Management, imagine placing all of your tasks into the four quadrants of Important/Urgent; Important/Not Urgent; Not Important/Urgent and Not Important/Not Urgent. Once you organize your tasks, you will quickly see that many things in your day fall into the Not Important/Urgent and Not Important/Not Urgent categories. Those items should be delegated, outsourced or eliminated.
Most of your time and energy should be spent in the Important/Not Urgent quadrant of activities because these activities result in productive and profitable results. Some examples of Important/Not Urgent activities include:
- Client consulting
- Business development and strategy
- Delivery of high-level client work
- Process and systems improvements
- Planning and forecasting
- Relationship building
The items that keep professionals from these important activities are in the other quadrants. A lack of capacity or unrealistic deadlines may place their activities too often in the Important/Urgent quadrant, leading to stress and burnout. It may also be that they treat every activity as important and urgent when it really belongs in the other quadrants.
Not Important/Not Urgent tasks are wasteful distractions like web surfing and idle conversation that aren’t tied to relationship building or clients. Eliminate these activities from your work day. It would be better to take a walk or run errands as a mental break when necessary.
Not Important/Urgent tasks are those that can often be outsourced or automated (or delegated to staff with less experience). This is the quadrant that, when managed, can truly ramp up productivity in a professional service firm.
Here are some Not Important/Urgent activities (for experienced professionals) that adapt well to delegation.
- Preliminary or follow-up meetings
- Emails that require someone else’s information
- Mail sorting
- Vendor calls
- Reading industry journals
- Scheduling social posts
- Scheduling appointments
When it comes to outsourcing or automating processes such as time and billing, accounting or payroll processes, one could argue that these functions are very important and urgent for a professional service firm. We agree, and that’s why these decisions should fall into the Important/Not Urgent quadrant first. When a proper solution is found through careful research and focus, these activities are off your plate so that you can focus more on billable client work.
Cornwell Jackson’s Business Services Department offers a wide range of outsourced financial services to serve professional services — including outsourced payroll processing and solutions to improve cash flow and productivity. Contact us for a consultation.
Mike Rizkal, CPA is a partner in Cornwell Jackson’s Audit and Attest Service Group. In addition to providing advisory services to privately held, middle-market businesses, Mike oversees the firm’s assurance practice and works directly with many professional services firms in the metroplex. Contact him at firstname.lastname@example.org or 972-202-8031.