It’s been a tough 2009 for many professional services companies. But there is positive news in almost all sectors. BQE’s own internal and external predictive indicators (honed over several recessions) point to the light at the end of the tunnel getting brighter and brighter every day.
But good year or not, it’s time for year-end review and planning for 2010.
Start by reviewing eight key BillQuick reports for your company (you should review others too). With information and insights in hand, develop your 2010 Action Plan. Your goals, objectives and actions in your plan come from discussing the good and the bad, the dreams, the possibilities, rainmaking and costs. If you don’t know your destination for December 31, 2010, then how can you map out a route to get there?
With the right technology, procedures and policies ready for ramping up with the marketplace improvements, you can grow back to where you were in January 2008. If you wait, it may take 24 to 36 months to get close to your normal business volume and profits.
Top 8 Year-End Reports
Aging Report As Of
You’ve watched receivables like a hawk (we hope) for the last two years. Now is the time for year-end inspection. From the Reports, Aging menu, select this report and run it twice – first, as of December 31, 2008 and then, again as of December 31, 2009. To get a good measurement of collection efforts, compare the A/R totals and aging between the two reports by project, client and company. Be sure to take into account seasonality factors and the impact of the recession. Also, think about the collections policies and procedures you installed in the past two years. These are probably very good procedures to continue, even if the recession might have hindered their success.
Analyze your procedures and determine how you might improve them for 2010. Don’t let an improving marketplace lull you into old habits. Keep a tight rein on A/R. Protect your profits. One suggestion is to use the Agent Workflow Automation module to schedule an A/R report to be automatically delivered to the right people every week or two. To heighten sensitivity to A/R and overall investment in projects and clients (see WIP + AR by Client, By Project below), consider tying manager and executive compensation to unlocking your profits and cash flow sooner.
Days Receivables Outstanding
Along with the previous report, Days Receivables Outstanding (DRO) helps you manage and analyze receivables collections. To run this report, select the Company category on the All Reports screen (selected from the Reports menu). Do not apply date filters.
DRO is like a spotlight for collections. Knowing the age (in days) of each invoice highlights the risk to your investment in clients (also see the next report) and the profits locked inside the receivables. The longer a receivable is outstanding, the greater the probability of it not being paid in full (or at all) and the loss of company profits. What the normal age is for an invoice depends on your industry and clients. For most companies, DRO increased over the past two years. Even with the recession and what may seem normal for your industry, be cautious and do not quickly accept the situation.
Information on this report may lead to changes, such as more frequent conversations with clients about amounts due, charging late fees, raising fees, or requiring up-front or scheduled payments for work.
If project managers are responsible for collections, filter the report by Project Manager. With them, analyze the situations. If you want project managers (or executives) to be accountable for profits (including profit locked in receivables), put the right information in front of them on a regular basis. Again, use the Agent Workflow Automation module to schedule delivery of a weekly or biweekly report.
WIP + AR by Client, by Project
To run the report, select it from the Analysis category on the All Reports screen. Do not apply date filters. Use the report in conjunction with the previous ones to gauge profit-realization and cash flow risks. In other words, it is critical to know how much you have invested in clients and projects. Profit is locked both in your work-in-progress and your receivables. Also, there is a carrying cost for unbilled and uncollected work.
Even in a recession, excessive total investments are Red Flags. Ask yourself:
- What if your largest 3 or 5 clients went bankrupt?
- What would happen if 25% of your receivables evaporated?
- What if a client canceled a project with $25,000, $50,000 or more in work-in-progress?
To reduce the risk, there are several paths to travel. Don’t rely on one but spread out to increase your effectiveness.
- Expand new rainmaking efforts. If you’re out of practice, now’s the time to hone this skill.
- Offer new services using in-house expertise and/or collaboration resources in new and current business sectors.
- Set investment limits and add them to client and project records (custom fields). Adjust reports to track it.
- Require up-front (retainer), scheduled and pay-forward billing arrangements.
- Tighten collections and ask your clients to find another banker.
Like other reports, schedule this information with Agent Workflow Automation so it is in the hands of the responsible managers on a weekly or biweekly basis. Even as recovery expands, the manager should always know how much A/R and work-in-progress is invested in every project and client.
Gross Margins
From the Reports, Analysis menu, run this report for invoices dated 1/1/09 to 12/31/09. Each page lists invoices for a client, showing what was billed, its cost, gross profit, and the gross margin percentage.
For your analysis, first check to be sure the costs are accurate. Then, compare client and project profitability. Your analysis might indicate:
- A need to fine-tune employee pay rate and overhead multiplier information.
- A need to train staff and managers in more effective use of BillQuick and other technology, and in better adherence to company policies. (Contact your Account Rep about training at (888) 245-5669.)
- A need to work with a BillQuick Business Consultant on optimization, best practices and policy changes that improve efficiency and reduce job costs.
- A need to increase fees across the board, certain project types, or certain clients (this may be hard to do until the economic recovery is further along).
Continue to Part 2
Year-End Reports and Action Plan
It’s been a tough 2009 for many professional services companies. But there is positive news in almost all sectors, and BQE’s own internal and external predictive indicators (honed over several recessions) point to the light at the end of the tunnel getting brighter and brighter every day.
But good year or not, it’s time for year-end review and planning for 2010.
You first job is to review the top eight BillQuick reports for your company (you should review others too). With information and insights in hand, develop your Action Plan for 2010. Discuss the good and the bad, the possibilities and the dreams, the rainmaking and the costs, then lay down your goals and objectives. If you don’t know your destination for December 31, 2010, then how to map out a route to get there?
With the right technology, the right procedures and the right policies ready for ramping up with the market-place improvements, you can grow back to where you were in January 2008. If you wait, it may take 24 to 36 months to get close to your normal business and profits.
Top 8 Year-End Reports
Aging Report As Of
You’ve watched receivables like a hawk (we hope) for the last two years. Now is the time for year-end inspection. From the Reports, Aging menu, select this report and run it twice – first, as of December 31, 2008 and then, again as of December 31, 2009. To get a good measurement of collection efforts, compare the A/R totals and aging between the two reports by project, client and company. Be sure to take into account seasonality factors (if they apply) and the impact of the recession. Also, think about the collections policies and procedures you installed in the past two years. These are probably very good procedures, even if the recession might have hindered their success.
Analyze your procedures and determine how you might improve them for 2010. Don’t let an improving marketplace lull you into old habits. Keep a tight rein on A/R. Protect your profits. One suggestion is to use the Agent Workflow Automation module to schedule an A/R report to be automatically delivered to the right people every week or two. [link to post]
Days Receivables Outstanding
Along with the previous report, Days Receivables Outstanding (DRO) helps you manage and analyze receivables collections. To run this report, select the Company category on the All Reports screen (selected from the Reports menu). Do not apply date filters.
DRO is like a spotlight for collections. Knowing the age (in days) of each invoice highlights the risk to your investment in clients (also see the next report) and the profits locked inside the receivables. The longer a receivable is outstanding, greater the probability of it not being paid in full (or at all) and the loss of company profits. What is the normal age for an invoice depends on your industry and clients. For most companies, the recession increased their Days Outstanding. Even with the recession and what may seem normal for your industry, be cautious not to quickly accept the situation.
Information on this report may lead to changes, such as more frequent conversations with clients about amount due, charging late fees, raising fees, or requiring up-front or scheduled payments for work.
If project managers are responsible for collections, filter the report by Project Manager. With them, analyze the situations. If you want project managers (or executives) to be accountable for profits (including profit locked in receivables), put the right information in front of them on a regular basis. Use the Agent Workflow Automation module to schedule delivery of a weekly or biweekly report. [link to post]
WIP + AR by Client, by Project
To run the report, select it from the Analysis category on the All Reports screen. Do not apply date filters. Use the report in conjunction with the previous ones to gauge profit-realization and cash flow risks. In other words, it is critical to know how much you have invested in clients and projects. Profit is locked both in your work-in-progress and your receivables. Also, there is a carrying cost for unbilled and uncollected work.
Even in a recession, excessive total investments are Red Flags. Ask yourself:
· What if your largest 3 or 5 clients went bankrupt?
· What would happen if 25% of your receivables evaporated?
· What if a client canceled a project with $25,000, $50,000 or more in work-in-progress?
To reduce the risk, there are several paths to travel. You should try to travel all of them.
1. Expand new rainmaking efforts. If you’re out of practice, now’s the time to hone this skill.
2. Offer new services from your in-house expertise in new and current business sectors.
3. Set investment limits and add them to client and project records (custom fields).
4. Require up-front (retainer), scheduled and pay-forward billing arrangements.
5. Tighten collections and ask your clients to find another banker.
Like other reports, schedule this information with Agent Workflow Automation to be in the hands of the managers responsible on a weekly or biweekly basis. Even as recovery expands, the manager should always know how much A/R and work-in-progress is invested in every project and client. Use Agent Workflow Automation to manage deliver of reports.
Gross Margins
From the Reports, Analysis menu, run this report for invoices dated 1/1/09 to 12/31/09. Each page lists invoices for a client, showing what was billed, its cost, gross profit, and the gross margin percentage.
For your analysis, first check to be sure the costs are accurate. Then, compare client and project profitability. Your analysis might indicate:
· A need to fine-tune employee pay rate and overhead multiplier information.
· A need to train staff and managers in more effective use of BillQuick and other technology, and in better adherence to company policies.
· A need to work with a BillQuick Business Consultant [link] on optimization, best practices and policy changes that improve efficiency and reduce job costs.
· A need to increase fees across the board, certain project types, or certain clients (this may be hard to do until the economic recovery is further along).
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