How Professional Services Controllers Can Enhance Visibility and Data Accuracy in Their AR Environment

From projects in progress that stall billing to payments caught in stakeholder approval chains, the invoice-to-cash cycle in professional services is rarely straightforward. Yet that’s the reality controllers and other finance leaders face in this industry. 

It’s up to them to find a way to cut through those complexities, creating financial standards that enable accurate and secure reporting, a clean financial close, and records that hold up under audit. But that’s just the start. Controllers and other financial leaders—directors, VPs of finance, and CFOs—also need to find a way to speed up payments, create a more streamlined customer and payment experience, and collaborate with clients to build more reliable cash flow.  

Yet many still use manual processes to accomplish those goals, without the benefits of accounts receivable (AR) automation. 

Working at the nexus of financial and operational decision-making, controllers own the budget and final sign-off of operational expenses. They analyze the return on investment, risk level, and cash flow impact of every financial decision. 

Yet in a professional services setting, controllers must do all of that amid complex billing environments that can include hourly rates, project-based billing, and retainers—as well as blended combinations of any of the above. Asked to reconcile billing structures that were never designed for consistency, they face unique accounts receivable challenges, including:  

• Partially completed retainers
• Milestone invoices waiting on multiple client sign-offs
• Hourly billing that generates disputes over time entries 

These challenges, when left unresolved, can cloud visibility of cash flow and working capital, while making financial close harder than it needs to be.  

To overcome these challenges, teams need an accounts receivable environment that supports their unique complexities. AR automation can help provide that.

When billing is project-based and communication is fragmented, it can be difficult to maintain visibility into account statuses and payment requirements. And without real-time visibility into every open invoice, both controllers and customers are left in the dark.

• Controllers need visibility that doesn't depend on chasing project managers to understand project statuses, whether an invoice has been viewed, or whether the account is at risk of non-payment. But when project data is spread across enterprise resource planning systems (ERPs), spreadsheets, and other payment or receivables systems, delays and disconnects are standard. Our data shows that 58% of professional services finance teams cite tracking invoice status and customer communication as a top receivable friction point.
• Clients also require transparency into time tracked, payments owed, and expenses accrued, to understand each invoice clearly. Without it, scope changes, billing errors, and client questions can slow down payments and cause customer disputes. By providing transparency across the invoice-to-cash cycle, finance teams speed up payments and streamline the collections process. 

• A secure self-serve customer portal allows clients to access invoices and supporting documentation, so they can stay up to date on payments due and have a direct link to receivable teams if they have any questions.
• A customer portal also makes it easier for finance teams to see real-time payment activity, such as when invoices were posted and viewed, and when payment is expected. Collectors can also better understand the status of their client accounts to prioritize outreach and follow-up. 

In the complex invoicing environment of service-based businesses, cash application can be the reconciliation pressure point for controllers. According to our data, 52% of finance teams in the sector see applying payments and reconciling accounts as a top point of friction. Retainer payments, milestone releases, and partial payments all land in the same bank account with minimal remittance data, leaving controllers to manually sort through each.

Manual matching in this environment adds further issues, including: 

• Errors throughout the month, leaving controllers to root out misapplied payments and incorrect credit holds at close.
• Inaccuracies that can extend into financial reporting, leading to potential compliance issues.
• Damaged client trust when payments are misapplied and collections notices are sent to already-paid accounts.

Controllers require cash application capabilities that handle the complexity and irregularity of retainer and milestone payments without manual matching. Manual cash application is also time-consuming, slowing down payment processing, delaying cash flow, and extending days sales outstanding (DSO).

• Cash application tools enabled by artificial intelligence (AI) and machine learning (ML) can read both digital and paper transactions—including wire transfers, ACH, and checks—to reconcile payments automatically, continuing to get smarter with each transaction for ever-improving accuracy. The best solutions ensure 90%+ straight-through processing rates.
• Customer payment portals allow customers to make payments directly against invoices, matching payments and reconciling accounts automatically, to ensure accuracy while speeding up cash flow.

Accurate financial reporting is critical for controllers in general—and particularly vital for professional services controllers. When payments are calculated on an hourly basis or at project milestones, clear reporting is necessary to track work in progress and ensure billing is prompt, forecasts are accurate, and revenue continues to keep up with costs. 

Controllers want ​​a financial close that reflects what’s actually been collected—not estimates. Yet an excess of overdue invoices can mean less reliable reporting—leading to unreliable forecasts and less predictable cash flow. When your controller has a clear picture of what’s actually collectible, on the other hand, that accuracy flows directly into better cash flow forecasting and more trustworthy financial statements.

To ensure more accurate reporting, controllers require more efficient payment processes, as well as clean reconciliation and clear visibility into payment risks and current collections.

• Collections management software can help automate collections, predict delinquencies, and prioritize high-risk accounts for more reliable cash flow.
• Accounts receivable reporting software can track metrics like DSO and average days paid, monitor collections trends, and give controllers the power to identify and act on payment risks.

Built for the complexities of professional services billing, Versapay’s AR automation platform streamlines the payment process and accelerates cash flow, whether you're working with hourly rates, project-based payments, retainers, or a blend of all three.

Pre-built integrations with ERPs let you connect data sources and automate billing, creating real-time visibility into business-wide data, while a customer portal extends payment visibility and self-serve capabilities to the client as well. AI-enabled cash application tools, automated payment reminders, reporting software, and collections management software cut through the complexities in the invoice-to-cash cycle, improving accuracy and creating a more efficient accounts receivable environment.