Consultants & professional services
Bookkeeping for consultants and professional services firms
When what you sell is time, the books have to answer one question: which engagements are worth the hours they take.
Professional services firms usually have simple-looking books and a hard underlying problem. Revenue and expenses are easy to record. Whether a particular client is profitable, after the hours actually spent, is not visible anywhere in the accounts unless someone puts it there.
Retainers make it harder again. Money received in advance is a liability until the work is done, and firms that book it as revenue on arrival spend the first half of every engagement feeling richer than they are.
Where the books go wrong
What we look at first
Retainers recorded as income
An advance payment is unearned until the work happens. Recognizing it on receipt flatters the month it arrived and starves the months that follow.Unbilled time invisible in the accounts
Work performed but not yet invoiced is real value that the profit and loss cannot see. Without a note of it, a strong pipeline looks like a slow quarter.Pass-through costs absorbed
Travel, software licenses and subcontractor fees incurred for a client and never rebilled turn a profitable engagement into a marginal one, quietly.Scope creep that nobody prices
Extra hours given away are not visible in the books at all unless time is tracked against the engagement it belonged to.
What we do each month
- Retainers and advance payments held as a liability and released as work is delivered
- Revenue and direct costs recorded against the engagement they belong to
- Subcontractor and pass-through costs matched to the client they were incurred for
- Accounts receivable reviewed, with an honest aging list rather than an optimistic one
- Software, licenses and subscriptions reviewed for what is still being used
- Bank and credit card accounts reconciled, and owner compensation recorded consistently
Setting up QuickBooks for it
Projects in QuickBooks Online hold the revenue and direct cost for each engagement, which is what makes engagement-level profit a report rather than a spreadsheet exercise.
Retainers are handled through a liability account and drawn down as work is delivered, rather than invoiced straight to income.
Where you already track time in another system, we set the mapping up once so hours land against the right project without being retyped.
Carey is a QuickBooks Online Advanced ProAdvisor, so a file can be set up, cleaned up or migrated as part of the same engagement — see QuickBooks services.
Reporting
The numbers worth watching
Profit by engagement
Fees less the direct costs and the hours the work actually took.Realization on retainers
Work delivered against fees received, so an underwater retainer shows up in month two rather than month eight.Receivable days
How long invoices take to be paid. In a service firm this is usually the difference between comfortable and anxious.
Questions we are asked
We bill a mix of fixed fee, hourly and retainer work. Can one set of books handle that?
Yes. Each billing arrangement is recorded in the way that suits it — fixed fee against delivery, hourly against time recorded, retainers through a liability account — while they all report into the same profit and loss. The mix is normal; the important thing is that each type is handled consistently.
Do you set up the time tracking as well?
We can advise on how to structure it so the hours map onto the books cleanly, and set up the connection to QuickBooks. Choosing the tool itself is your call; we work with what you prefer.
Start with a conversation
Let's look at your books together
Tell us about your church or business and where your bookkeeping stands. Carey will follow up to arrange a consultation, and you'll receive a written scope before any work begins.