Bookkeeping for Professional Services Firms: What They Need
Bookkeeping for professional services firms starts from the fact that the firm sells people's time, so its finance function needs timely billing records, clear tracking of unbilled work and unpaid invoices, and a view of profit per partner or service line. This page explains those needs and how the three services map to them.
What do law firms and consultancies need from outsourced bookkeeping?
A large part of these firms' working capital is work done but not yet paid for. Time is recorded, invoices are issued, and clients pay weeks later. Bookkeeping has to track receivables carefully and make it plain which invoices are overdue.
Our monthly bookkeeping covers reconciliation, payables, receivables and statements.
What is the difference between cash and accrual for a services firm?
Some small firms keep their books on a cash basis, which records income when money is received and expenses when they are paid. It is simple, and it matches how some owners think about their money. Accrual accounting records income when it is earned and costs when they are incurred, which gives a truer picture of performance when work and payment fall in different months.
Which method is allowed or sensible for your firm is a tax and professional question. This is general information, not tax advice. Our guide to cash vs accrual accounting sets out the difference.
What reports does a professional services firm need?
Beyond the standard statements, owners often want to see:
- Revenue and margin by client, matter or service line.
- Unbilled work and aged receivables.
- Staff cost against the revenue each person generates.
- Budget against actual results each month.
A fractional controller oversees the month-end close, produces management reports and compares actual with budget. See our guide to budget vs actual.
When does a firm need a fractional CFO?
When the questions are about the shape of the firm. How should fees be priced? What does hiring another associate or consultant do to cash? How should profit be shared or reinvested? A fractional CFO builds forecasts, models those choices and plans cash. Funding readiness and exit and acquisition preparation are part of the CFO service. We do not give investment advice.
How do Record it, Control it and Drive it map to a firm?
| Need | Service | What it covers |
|---|---|---|
| Invoices, payments and accounts up to date | Record it (bookkeeping) | Reconciliation, AP and AR, monthly statements |
| Management reports and budget tracking | Control it (controller) | Close oversight, reporting, internal controls |
| Pricing, hiring and profit planning | Drive it (CFO) | Forecasting, scenarios, KPIs, exit preparation |
Starting prices are $500 a month for bookkeeping, $1,500 for a controller and $2,500 for a CFO, each a custom fixed monthly fee. See pricing and what we do.
What do we not do?
We do not prepare tax returns, audit or give investment advice, and we are not a legal or regulatory adviser. We work alongside your CPA or tax professional. English Oak has not published client claims or results for professional services firms. This page describes what such firms generally need. Related pages: healthcare practices, e-commerce and the wider industries list.
Need this done for you? See our Fractional CFO & Advisory service, or pricing. English Oak Financial does not prepare tax returns, perform audits or give investment advice. This guide is general information, not tax, legal or investment advice.
Related pages
Common questions
What should a services firm ask an outside bookkeeper?
Ask how often the books are reconciled and closed, which accounting file the work is done in, and how receivables and unpaid invoices are tracked. We are not a legal or regulatory adviser, so check any rules specific to your profession with your own regulator.
Why do some firms use cash basis accounting?
Mostly because it is simple and ties to the bank balance. Whether it is right for a firm depends on size, structure and tax rules, so confirm with your tax professional.
What does a fractional CFO do for a consulting or coaching business?
In general terms: forecasts income, models pricing and hiring choices, plans cash around lumpy client payments, and prepares reports for owners or lenders.
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