When professional services firms need CFO support

A consultancy can have a strong pipeline and a busy team while cash remains tight. Work may be completed before invoices can be raised, clients may approve milestones slowly, or fixed fees may no longer reflect delivery effort. Financial leadership connects those operational causes to the numbers.

Consider support when you are planning senior hires, changing pricing, adding a service line or relying heavily on a few clients. The first question is what decision the firm needs to make, followed by whether the available information is reliable enough to support it.

Understand fee recovery and client profitability

For time-based work, distinguish recorded time, the standard value of that time, the fee actually billed and the amount collected. These measures answer different questions. A write-down between standard value and invoice value may reflect a fixed-fee agreement, a commercial discount or an overrun.

For fixed-fee work, compare the agreed fee with the cost of completing the engagement. Use consistent employee cost assumptions and include subcontractors where relevant. Keep firm overheads visible rather than assuming that engagement contribution is the same as net profit.

Worked example: fee recovery is not cash collection

Hypothetically, 200 hours at a standard rate of £150 have a value of £30,000. If the agreed invoice is £24,000, fee recovery against that standard value is 80%. If the client pays £18,000 during the period, £6,000 of that invoice remains unpaid.

The 80% recovery measure does not describe the collection position or the engagement profit. Delivery costs and any remaining work still need to be assessed. These figures are illustrative, not a client result or recommended target.

Control work in progress and billing delays

Separate completed but unbilled work from invoiced debtors. Review what prevents billing: a contractual milestone, missing approval, incomplete work or an internal administrative delay. Assign an owner and next action to each material item rather than reporting only a total balance.

Age the balances and review their recoverability with your accounting adviser. Accounting treatment depends on the contracts and applicable framework. In the cash forecast, use a realistic expected receipt date, not simply the month in which work was performed.

Plan hiring around capacity and cash

A capacity plan should recognise chargeable delivery, supervision, business development and time away. A senior hire may bring capacity but also require onboarding time and a period before additional fees are collected. Separate contracted work from probability-weighted opportunities.

Test a delayed start, a smaller pipeline conversion rate and slower collections. Use financial modelling to compare scenarios and cash forecasting to identify the timing of funding needs.

What professional services CFO support can include

  • Client and service-line profitability reporting.
  • A fee recovery and write-down analysis with agreed definitions.
  • Work in progress and debtor review routines.
  • A capacity, hiring and cash scenario model.
  • Monthly reporting linked to management actions.

Start with a conversation about your billing model and the decision ahead. No financial documents are required to enquire. Scope can then be agreed around your accounts, time or project records, billing schedule and current forecast. See how fractional CFO fees are scoped.

Your questions, answered.

Can you support a fixed-fee consultancy?

Yes. Fixed-fee work can be assessed using expected delivery costs, remaining effort and the billing schedule rather than relying only on hourly billing metrics.

Do you replace our accountant?

Usually the roles can work together. The engagement should specify who handles accounting, tax, reporting and forward planning to avoid gaps or duplicated work.

Does this cover regulated client-money compliance?

That is not implied by this service description. Any sector-specific regulatory or client-money work needs a separate assessment of requirements and appropriate specialist support.