Which of your work actually makes money?
By Andrew Isaacs, CIMA Member in Practice ·
You find out which work pays by looking at the profit on each job, customer or product, not the turnover. Turnover can rise while you quietly do more of the work that loses money. AI Finance Partners joins the system that runs your work to your accounts, so you can finally see the real margin and do more of what pays.
Why does turnover hide where the money is made?
Every owner knows their turnover. Far fewer know which bit of it actually makes money, because the answer hides in a gap between two systems that were never built to talk to each other. So a business can grow its sales while quietly doing more of the work that loses money, and the top line looks perfectly healthy the whole time.
That is why busy and profitable are not the same thing, and why owners are so often taken aback when you lay the two side by side. Everyone is flat out, the sales are up, and yet the margin is thin. The money leaks in the places nobody is watching: work done too cheaply because the price was set years ago, discounts and time knocked off quietly at billing, people costing more than the work they bring in, and cash tied up in jobs done but not yet billed or paid.
Busy can just mean doing more of the work that loses money.
How do you find and close the leak?
The reason the leaks stay hidden is that the answer lives in two places. The system that runs the work knows what was done and for whom. The accounts know what came in. Nothing joins the two and tells you what it means, so the real money made on a job, a customer or a product is never actually seen. An ordinary accountant reports the accounts and stops there, because joining them up is a different job. Our piece on work you love that loses money covers one common version.
AI Finance Partners joins them, with a proper read on top, so you can see what you are really making on the work rather than just what you are billing. Once you can see it, the calls are obvious: do more of what pays, reprice or drop what does not, and stop letting your busiest work be your least profitable. You can see how we work with small businesses here.
Andrew Isaacs is a CIMA Member in Practice and Practising Certificate Holder, and the founder of AI Finance Partners, the outsourced finance function for professional services firms turning over £500k to £5m across the South East. Legal cashiering is not part of what we do.