Your firm is probably leaving money on the table.
It happens in different ways: clients who expect more without paying for it, partners who cut time off the bill before a client even complains, teams who work past scope but never flag the extra effort, invoices that sit unpaid for months, marketing budgets that are rolled over from last year with no thought… the list goes on.
Historically, professional services firms have relied on intuition over structure, expecting their professionals to craft on-the-fly strategies to manage the business, from the top of the revenue funnel (e.g., business development efforts) to the bottom (e.g., handling write-offs). But your teams are stretched thin and this probably isn’t their core competency, so unsurprisingly, profitability suffers.
While firms are engrossed in the revenue race, most can push far more to the bottom line without signing a single new engagement letter. After all, leaky buckets are an expensive way to gather water.
1. The Issue
Revenue alone doesn’t create profitability. Too many firms assume that more work, more clients, and more billable hours will solve financial challenges. But firms don’t just lose money in obvious ways—like uncollected invoices or rising overhead costs.
Profitability erodes in small, invisible ways that add up. A partner discounts her rate and the associates forget to bill all their hours. A client requests “a quick addition” that turns into extra work, but no one revisits the scope. A client pushes back on an invoice and the firm absorbs the reduction.
On their own, these moments seem insignificant. But added up across an entire firm, they quietly drain margins.
All leaders are hyper-focused on growing revenue. But ask yourself, “if we’re seeking 10% growth, what if an addition 5% could hit the bottom line simply from better managing the revenue you have without closing a single new client?”
The rest of this article provides some simple ways for your firm to get started on tightening up the bottom line.
2. Client Relationship Management and Scope Control
All firms know that bad clients are a drain on profitability. But one of the biggest threats isn’t bad clients—it’s good clients with poorly defined expectations. Without clear parameters on budget, scope, and value, firms end up absorbing work that should have been billed, negotiating rates downward, and dealing with collections issues that could have been avoided.
These small inefficiencies add up—hours of additional work per engagement that never make it to an invoice.
The best firms take control of these conversations before they become problems. They ensure expectations are clearly defined at the outset and have structured processes to ensure that additional work is billed appropriately. Some tips:
- Include a Budget Conversation and Talk About Reasonable Results. Map out how much time you anticipate spending (especially if you are billing hourly) or give a cost range, and be sure the client’s expected outputs are reasonable and make sense given the costs they’ll probably incur.
- Have a Clear Statement of Work. Have a clear scope for each engagement that outlines what the firm will be doing and the expected outputs or known deliverables. Where applicable, you should also outline what is not included, and what you expect the client to provide in the way of resources or time. This acts as a safeguard against scope creep and ensures you’re on the same page with day-to-day expectations.
- Put Ongoing Feedback Mechanisms in Place. Happy clients pay and come back, so embed structured feedback mechanisms to get a clear sense of client satisfaction levels. For long-term relationships, use “pulse surveys” (surveys that ask the same questions at regular intervals – e.g., every six months) to gauge ongoing satisfaction and identify rising issues before they escalate further. Actively listen to this feedback, address concerns promptly, and use the insights to enhance your offerings and service delivery.
- Articulate Responsibilities for Client Relationship Partners. It’s surprising how few firms actually spell this out. There’s an unspoken assumption: if you brought in the client, you must know how to manage the relationship. But relationship management is a skill, not a given, and it’s rarely aligned across partners. Firms should define what they expect from relationship leads: how often to communicate or update, and how to show up for the client (from quarterly check-ins to strategic dinners or even a Yankees game). Then pressure-test these expectations with your top rainmakers to make sure they actually reflect what builds long-term value and have a consistent and solid approach to maintaining (and growing) your client relationships.
3. Time Value and Utilization Issues
Even with strong client management and scope controls in place, another silent profit drain remains: time. The most valuable resource in any firm is hours, but they’re only as valuable as they’re used. And when high-value professionals aren’t focused on high-value work, the firm pays the price.
Time is often misallocated, underutilized, or outright wasted. The best firms go beyong basic timekeeping to analyze where time is going and ensure that high-value professionals are focused on high-value work.
Ways you can take control:
- Audit Where Time is Actually Going. Use weekly or monthly time reports (even for flat-fee work) to pinpoint inefficiencies. Are senior professionals stuck in low-value tasks? Are teams over-delivering beyond scope? Use this data to shift work accordingly.
- Enforce Delegation Discipline. High-value professionals get stuck too often in low-value tasks. Implement a delegation matrix that clearly outlines what tasks should be handled at each level (from admins to partners/MDs) so expectations are consistent and scalable. This is as much about efficiency as it is about protecting margin. Define who does what, then train teams on how to delegate effectively and hold them accountable when they don’t. The bonus? When your senior people aren’t bogged down in execution, they have the space to be in the market, deepen relationships, and drive top-line growth too.
- Don’t Let Time Slip Through the Cracks. Professionals need to understand that time tracking is revenue, not just an admin task. Teach teams to enter time contemporaneously and accurately. Slippage adds up, and late entries tend to be vague or undervalue the work. Incentivize consistency with spot bonuses for support staff who help keep time on track, and set expectations at every level.
- Teach What “Good” Looks Like. Vague entries don’t get paid. A strong time entry reflects impact and outcomes. For example, “revised draft” doesn’t carry the same weight as “refined client’s argument to add additional facts on xyz theory.” Show teams examples of what strong entries look like. Build training into onboarding and make sure the whole team sees time entry as a tool to communicate value. Partners only have so much time to spend reviewing bills; make sure they’re spending it refining the value narrative and thinking strategically about next steps (not line editing).
The firms that own the value conversation early don’t find themselves defending their pricing later.
4. Billing and Collections
Time is only profitable when it’s properly captured and billed. Even firms that manage time well still struggle with another major leak: getting paid for the work they do. Weak billing and collections processes turn hard-earned revenue into a waiting game.
How you can take control:
- Don’t Sign “Unworthy” Clients. Firms shouldn’t take on clients without knowing their ability to pay. Use replenishing retainers for individuals or small businesses. Run credit checks on new or high-risk clients. For internal referrals, add a short risk screen: Is this our core work? Is the client current on bills? Better intake is your first line of defense.
- Assign Real Ownership. Collections can’t be a group project. Finance should own reminders. Relationship partners should own escalations. Define who does what, by when, and track it. A/R doesn’t get better by hoping someone else will follow up.
- Train Partners to Hold the Line. Many partners sidestep tough billing conversations because they don’t know what to say or they feel like it’s someone else’s job. It’s not. Firms should train partners on how to handle pushback, talk about money without flinching, and offer payment plans that lock in cash flow without eroding trust.
5. A Long-Term Approach to Cost Efficiency
Once firms take control of revenue leaks, the next step is ensuring your overhead dollars are used strategically. Cost efficiency isn’t the same as cost cutting; efficiency means making sure money, time, and talent are fueling the right priorities and invested in what actually drives profitability.
Key areas to evaluate:
- Workforce Optimization. Think about the right model that gets you the talent you need at a price point that makes sense for your business.
Fractional Help: Bring in senior expertise part-time instead of hiring full-time executives. A law firm could use a fractional CFO or growth strategist, or a creative agency could engage a high-level strategist only when needed.
Outsourcing Non-Core Functions: Offload non-revenue-generating work. Most smaller firms don’t need in-house social media management, IT support, or admin-heavy functions when they can tap expert outsourcing.
Lower-Cost Talent Options: Use offshore teams for back-office work or contract-based professionals for overflow projects to keep core teams focused on high-value tasks.
- Real Estate and Operations Efficiency
Smarter Space Use: Firms don’t need sprawling office footprints. Implement hot-desking or hybrid collaboration hubs. Importantly, this should feel more like “hoteling” than “moteling,” meaning higher-quality and clean offices that may not be home but offer a different kind of comfort and convenience.
Culture Beyond Real Estate: Instead of forcing in-office culture, invest in high-impact team-building retreats and meaningful collaboration touchpoints.
- Smarter Marketing and Business Development Spend: Big, anonymous campaigns aren’t landing like they used to. Clients are overwhelmed with noise and tuning out anything that feels generic. The firms getting traction aren’t the ones with the biggest booths or flashiest ads. They’re the ones showing up in smarter, more focused ways.
Content Over Ads: Invest in thoughtleadership and owned content instead of expensive paid marketing.
Targeted Events Over Mass Conferences: Host salon dinners or curated panels instead of attending industry-wide conferences where you compete for attention among your competitors.
Conclusion
Firms looking to increase bottom-line performance need better systems and execution. The firms that succeed aren’t the ones chasing endless revenue growth while letting profits slip through the cracks.
At Maior, we help firms build profitability through better strategy, execution, and discipline. And if you need help taking control of the hidden profit leaks in your business, we’re here to help.
