The story of stability and enviable financial results
Posted by Bas van Woudenberg
The top-performing service-based organizations boast high levels of profitability, stability and predictability. To find out how they’re doing it, let’s follow a short story.
The best professional services organizations (PSOs) earn more revenue per employee, project and consultant than the rest of the market. They enter each quarter with huge amounts of revenue in backlog and are much more likely to have achieved both their annual revenue and margin targets.
These metrics, which came from independent industry benchmarking* developed over more than a decade, tell the story of organizational excellence from people- and project-centered businesses around the world.
Join us as we follow The Story of Stability and Enviable Results.
Chapter 1: Faster payments
In this chapter, we witness a battle between old and new. The old, clunky technology is offline, siloed software like Excel, and it has created an endless future of tedium (labor-intensive tasks) for the people that use it. The new, digital solutions of PSA (professional services automation) and ERP (enterprise resource planning) are cloud-based, integrated and smart.
Spoiler alert: the new technology wins hands down. Here’s how.
PSA and ERP are helping top-performing organizations gather data to speed up their payment processes. They capture actuals as they occur through user-friendly mobile app interfaces and have a foolproof process for migrating contract details from original documentation to the invoicing software.
This keeps actuals accurate and data up-to-date; it streamlines the collections process, reduces the amount of days sales outstanding and immediately improves cash flow. It also provides management reporting and visibility into total service revenue, cost and profitability.
While the old technology locks businesses into endless cycles of manual tasks, the new tech liberates them from it.
Chapter 2: Error-free data
The second chapter in this story focuses on invoicing to help organizations like yours avoid billing disputes and a lengthy sales-to-cash cycle by manually recording data across multiple software platforms.
The powers of PSA and ERP here are real-time, remote data capture, plus automatic recording against projects, alongside the ability to catch errors as they crop up. These powers work for different fee rules too. Invoice automation allows the best PSOs to reduce admin time, tighten up cash control and bill with precision, which sets them up to execute more profitable projects.
PSA and ERP provide seamless integration between a single, cloud-based system of record for managing resources and projects. They also include a corporate financial management solution for expense management, invoicing, revenue recognition and project accounting.
All this creates space and frees up staff to add value to projects, the next chapter in our story.
Chapter 3: Creating space
In this chapter we discover a wonderful, stress-free place emancipated by automation of tedious tasks.
It’s a place where staff no longer repeat low-skilled tasks like entering and re-entering reams of data into finance and accounting systems. A place where sales, service and finance see eye-to-eye; where operational excellence in the front office is unified with financial excellence in the back office. And a place where staff have the time and space to add value to other projects.
All this harmony, freedom and space is down to PSA and ERP. And the protagonists in our story have a gift for us: a shorter sales-to-cash cycle.
Chapter 4: Proactive planning
In the final part of our story, we have the time, space and data to think ahead as we learn about the capabilities of proactive planning.
The powers of PSA and ERP here are superhuman insight for cash flow analysis and planning — they transform any service- or people-centered entity into a proactive planner at the touch of a button.
Success in a competitive market relies on operational excellence, which means you need visibility and management controls in place to optimize effective resource and project management. PSA and ERP bring visibility and management controls by the truckload.
Not the end of the story
In our brief story we’ve battled tedium and streamlined the collections process; avoided billing disputes with invoice automation and created space and harmony to steal a march on the competition.
But this is only the short version. To read the full-length story, download the e-guide: Solving the financial visibility puzzle to bill with precision
Read more about the finance service performance pillar in the PSMB 2018 report