Professional services firms exist in many different industries. They include lawyers, advertising professionals, architects, accountants, financial advisers, engineers, and consultants, among others. Basically, they can be any organization or profession that offers customized, knowledge-based services to clients.
Unlike other types of organizations, professional services firms sell knowledge and expertise – not tangible, physical products. So these firms have different needs, and face different challenges:
Qualify a potential customer
Obtain purchase orders
Schedule project work
Manage the invoices, expenses and bills.
Billing for professional services is not a “one size fits all” endeavor. What works for an IT firm may not work for an accounting firm, which is why it is important to choose a billing mode that suits the nature of the work being carried out.
Sciforma offers three billing modes:
Fixed Price – A Fixed price billing mode is perhaps the most straightforward way to bill a client. It is billing based on an agreed-upon fee. If the parties involved agree that the total cost of the project will be $2,000, then that is the amount that will be paid upon completion. This is ideal for projects with very few fluctuating costs.
The Fixed Price Billing Mode allows the user to enter manually the Billable Amount.
Time & Material – A Time & Material billing mode may best serve businesses and clients whose expenses are subject to a number of variables like supply and equipment costs. A Time & Material billing would cover the cost of materials and other overhead, plus the cost of labor.
The Billable Amount is calculated as follows: Total Effort x Project Revenue Rate.
Hybrid – A Hybrid billing mode allows the user to choose the Billing Mode at the Task level (Fixed Price or Time & Material).
Billable hours are the hours of work that can be charged to a client. Typically, this is work that is necessary for the completion of a project.
Non-billable hours includes anything that may benefit an employee or organization, but not the eventual outcome of a project. Generally speaking, employee training and pursuing new business opportunities cannot be considered billable work. Neither does time spent entertaining a client or preparing an invoice for them.