5 Areas Professional Services Firms Should Focus On

Oct 28, 2020Accounting, Business Consulting, Business Tax, Professional Service Firms

COVID-19 has presented various challenges for professional services firms in 2020, unlike anyone could have foreseen. We understand the professional services industry since we are part of it ourselves. Issues of client businesses closing, contracting operations, health concerns, staffing, and communication have all come to the forefront. As firms move forward during these difficult times, it is crucial to continue to look towards the future and lay the groundwork to become stronger and more flexible than before. The Smith Schafer Professional Services Experts have compiled five areas for firms to focus on to achieve those goals.

Cash Flow & Liquidity

Cashflow analysis and liquidity will be vital over the next 6-10 months. Liquidity is an important area to review and improve. By putting your firm in a strong liquidity position, you strengthen your capabilities to manage internal costs such as staffing and IT infrastructure, as well as the ability to jump at new opportunities. We recommend the following:

Cashflow analysis and projections are crucial for both current and future operations. We recommend creating a 14-week cash flow forecast to assist with your firm’s projections.

Be aware of alternate funding sources, such as SBA loans or other federal or state programs.

State and local funding allocated across various industries that impact professional services and clients are expected to be affected over the coming years. Stay on top of state and local funding cuts that could impact clients and the firm’s cash flow. We recommend planning for additional revenue shortages and reforecast financial plans.

Review and improve the firms billing of work in progress structure.

Review strategies for accounts receivable collection and cash conversion cycles.

Overhead Costs

Determine how to reduce overhead costs and ensure your firm is making a return on the investment of those dollars spent.

  • Assess your current office needs. Can you shed or consolidate existing facility locations or office spaces? This is especially important if firms can shift staff to virtual work models.
  • Consider your current lease to see if there is a possibility of renegotiating or extending it to unlock liquidity.
  • Analyze current property and planned purchases or tenant improvements.

Tax Planning

Review tax relief options. Amidst the current crisis, two significant stimulus legislation pieces were signed into law and may provide your business with opportunities – the CARES Act and FFCRA. Changes include:

We can help you identify tax savings and credits you may be eligible for. Please contact your Smith Schafer professional to determine if these will benefit your firm.

Technology

Efficiency has primarily been the driving factor for the adoption of technology in the professional services industry. This was the case before the current pandemic state, but now it is emphasized for staff flexibility and health. Here are several ways that improvements to technology may propel your business:

  • Expand your workforce remotely while reducing office space needs.
  • Remote work access to create work flexibility to attract more qualified candidates.
  • Review security practices.
  • Increase cybersecurity training for office and remote staff, in addition to installing two-factor authentication for network access. 
  • Cloud computing for all files, with VPN to securely access the firm’s networks and shared files encrypted. 
  • Data loss prevention solutions.
  • Identify IT support systems and services.
  • Improve how clients can securely provide and receive information or documents.
  • Virtual collaboration and digital client engagement to keep client communication open and expand areas of service.
  • Utilize IT for more efficient KPI tracking to measure long-term goals and business strategies. 
  • Review if you are underutilizing current applications. 
  • Reevaluate disaster recovery/back-up sites.

Business Management & Development

Management must put procedures and guidelines in place to set the foundation for a successful firm. The following are potential building blocks to utilize:

  • Open and transparent communication with staff.
  • Open workplace environment to encourage collaboration and creativity.
  • Look at your expected workflow and discuss ways to resize your workforce. Ensure that your staffing levels are balanced for future work.
  • Review workflow support applications, project pipelines, and planning.
  • Analyze client onboarding.
  • Review communication procedures to help customers and employees feel safe as they return for meetings and to work.
  • Identify core response teams to lead crisis management efforts.
  • Scenario planning for operations.

Utilize your internal team and external advisors to keep your professional service firm on the path to be leaner and meaner in the days ahead. We recognize your firm may be facing decisions you have never had to face, and we are here to help navigate these uncertain times. Please contact our Professional Service Firm experts if you need help with business decisions, accounting tasks, cash flow management, or tax planning.

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