Posted by Andre Beausoleil, Senior Account Executive, NetSuite
Over my 15-year career of working with thousands of services organizations to help solve business challenges, billing has consistently been atop the list of the most painful and problematic issues that firms wrestle with.
The reasons are many. Time and expense (T&E) capture is disconnected from project billing schedules. Billing data is entered manually into financials. Without purpose-built project functionality, teams resort to creative, time-consuming workarounds in Excel.
Disjointed billing isn’t just a nuisance. It has a tangible impact on the bottom line. I’ve seen firms suffer significant revenue leakage because T&E was billed to the wrong project, or billable T&E was incorrectly categorized as non-billable, or T&E simply fell through the cracks.
Cash flow suffers if billing drags on for weeks, or clients dispute an inaccurate invoice. One services company had more than 15 percent of its billings disputed because manual data entry had resulted in so many errors. Ultimately that means substantial write-offs and client dissatisfaction.
To top it off, services organizations waste tens of thousands of dollars in needless labor costs manually cobbling together billing data. Project managers, operations and accounting struggle with onerous data chores when billing information is scattered across financial, T&E and project management solutions. Besides costly inefficiency, those headaches can trigger high employee turnover.
I’ve seen the cumulative cost of these problems range up to $200,000 a year for a firm with a few dozen employees. Unfortunately, some organizations are oblivious to how much money they’re leaving on the table.
Solving the Billing Dilemma
Now billing is becoming even more complex as services organizations juggle multiple billing models — T&E, fixed fee, milestone, percent complete, prepays, retainers and hybrids that combine various elements. Some clients will ask for a complex one-off billing model, and many clients want line-item transparency that a disjointed billing ecosystem can’t satisfy.
One common misconception I encounter is services organizations thinking they need a new ERP application to overcome these problems. That’s like sticking a Band-Aid on your chest when you have a cold. What’s needed is professional services automation software (PSA) tailor-made for the challenges of services organizations, including billing.
With integrated T&E input, PSA manages billings across all projects and billing models. The best PSA solutions give you flexibility to handle complex billings, specify billing caps, create rate cards and set notifications and alerts. Automated workflows and approval queues streamline T&E management, and pro forma invoices can be customized and reviewed before an invoice is sent.
Rather than manual data inputs, PSA integrates with your financial application to give you complete, timely project billing information with drill-down to detail while automatically updating your general ledger. Based on my past experience, typical results a services organization sees after implementing PSA include:
- 50% reduction in administrative time.
- 50% to 75% fewer write-offs.
- 50% to 75% decrease in billable hours not properly recorded.
Those improvements go directly to the bottom line. At the same time, the organization enhances visibility and control across the services lifecycle through other aspects of an integrated PSA solution, including project management, resource utilization, project accounting and revenue recognition and forecasting.
To learn how Oracle’s NetSuite OpenAir can address your billing challenges and why OpenAir is the world’s #1 cloud PSA solution, trusted by more than 1,500 organizations, contact us for a complimentary services value assessment.
Posted on Tue, December 6, 2016
by NetSuite filed under