Professional Practices
Bookkeeping for firms that bill for expertise. Retainers, receivables, partner distributions, and the gap between time worked and cash collected.
The Industry
Professional practices sell time and expertise. There’s no inventory to track, no cost of goods sold in the traditional sense. The product is the work, and the work gets billed by the hour, by the project, or against a retainer. Simple in theory. Complicated in practice.
A law firm holds client funds in trust that can’t be touched until earned. A consulting practice collects a retainer in January for work delivered through March. An engineering firm bills on project milestones while staff gets paid every two weeks regardless. The timing between when work happens, when it gets billed, and when cash arrives creates gaps that need managing.
Who This Covers
Who This Covers
Law firms, accounting practices, engineering firms, architecture firms, consulting businesses, marketing agencies, IT service providers, financial advisors. Any practice billing for professional expertise.
What Makes It Different
What Makes It Different
Revenue recognition tied to work delivered, not payment received. Retainers that create liability until earned. Trust accounts with strict compliance requirements. Partner or owner distributions that aren’t salary. Receivables that age because clients don’t pay invoices the way they pay for products.
What We Handle
Monthly bookkeeping with revenue recognized when earned, not when collected. Retainers tracked as liability and drawn down as work is performed. Receivables aged so you can see which clients owe what and for how long. The numbers that show whether the practice is actually profitable, not just busy.
Partner and owner distributions tracked separately from payroll. Quarterly estimates calculated so tax time doesn’t bring surprises. For firms with employees, payroll handled with Ohio withholding and BWC. Books that give you real visibility into realization rates and collection cycles.
Revenue Recognition
Revenue Recognition
Retainers recorded as liability until work is delivered. Project billings matched to work performed. Income recognized when earned so your P&L reflects actual practice performance.
Receivables Management
Receivables Management
Invoices tracked by client with aging visible. You see who’s current, who’s 30 days out, who’s 90 days and climbing. Collection problems surface before they become write-offs.
Common Problems
Professional practices often confuse billings with earnings. You billed $40,000 last month. Great. But $12,000 of that is still sitting in receivables from three months ago, and $8,000 of this month’s billings won’t be collected for another 60 days. Cash flow and profit are different numbers, and the gap between them is where practices get squeezed.
The other problem is knowing what the practice actually makes per hour of work. You bill at $200, but after unbillable time, write-offs, and slow collections, the realized rate is closer to $140. Without tracking utilization and realization, you can’t see where the leakage is happening.
Collection Lag
Collection Lag
Work completed, invoices sent, payment arrives eventually. Or doesn’t. Receivables aging past 90 days that nobody’s chasing. Cash flow that doesn’t match the billable hours being logged.
Realization Blindness
Realization Blindness
Time worked versus time billed versus time collected. Write-downs on invoices clients dispute. Unbillable hours that eat into margins. The gap between standard rates and what you actually realize.
What Changes
You see the practice clearly. Revenue that reflects work delivered, not just invoices sent. Receivables aged so collection problems are visible early. Retainers tracked correctly so you know what’s been earned and what’s still owed to clients. The real financial picture, not the one that assumes everyone pays on time.
Distributions and draws handled properly for partners and owners. Quarterly estimates calculated so April isn’t painful. If you have staff, payroll runs without issues. The books support the practice instead of creating questions every time you look at them.
Cash Flow Visibility
Cash Flow Visibility
Know what’s been billed, what’s been collected, and what’s still outstanding. See the collection cycle by client. Plan around the gap between earning and receiving.
Practice Profitability
Practice Profitability
Understand what the work actually yields after write-offs and collection issues. See which clients and which types of work are worth pursuing. Make decisions based on realized revenue, not billed hours.
Northwest Ohio’s Trusted Bookkeeping Partner
The Next Step:
A 15-Minute Discovery Call
Let's talk about your current bookkeeping situation. We'll assess your needs, outline a plan of action, and give you a clear quote.
