Accountants for consulting firms

This is a common challenge for most companies – but while every business is different, a capacity planning model is ideal for helping you build a profitable business using the right amount of staff.

Capacity planning helps you calculate the amount of revenue your staff can produce, and how to do it profitably.

How you price your services and how much you pay your staff will also be major factors in capacity planning.

Timesheets are the most accurate way to calculate profitability, enabling you to determine whether you're charging the right amount for work.

Accurate timesheet records will also give you insights into your employees, and help you to know whether you're over or under-staffed. Some great applications include Workflow Max and Harvest.

As with most professional services, consulting businesses should be aiming for a gross profit of between 55% and 65%. The best way to achieve this is to analyse every client job to ensure that you hit this target every time.

A gross profit of around 60% will likely result in a net profit (before tax) of 25% to 35%.

To learn more about consolidating your profit targets, get in touch with the accounting team at Liston Newton Advisory.

Some of the main indicators you should keep track of are Gross Profit, Net Profit after Tax, Debtor Days (i.e how long it takes to get paid), staff billing capacity, number of proposals generated per month, and number of proposals won.