Notes for owners · Industry-Specific Software Guides
Where a Consulting Practice Loses Money, and How to See It
Most consulting money leaks through overruns never put to the client, project work done inside a retainer, and travel spent on a client but not recharged. Each leak shows once hours, scope and expenses sit against the engagement. GullySystem’s Expense Management Software tags each claim to a client. A solo consultant may not need software.
Ganesh HS, Strategy and Technology, GullySystem · · 4 min read
Overruns that nobody raised with the client
A proposal says three months. The work runs for five, and the extra weeks are absorbed. Nobody decided to give them away. The overrun was simply never measured while it was happening.
To see it, hours have to be logged against the engagement and the milestone by whoever worked them. Compare the hours used with the hours the fee assumed. When a milestone has used most of its budget and is half done, raise it with the client then.
Partner time is the most often missed. Partners run the workshops and take the calls, then record none of it.
Project work done inside the retainer
A retainer covers a defined set of calls, reviews and advice. Then a client asks for a pricing study or a new process map. It feels small, so it gets done inside the month.
The fix is a written scope for each retainer and a habit of checking requests against it. Work outside that scope gets its own short proposal, or an agreed extra line on the invoice. Keep retainer scope and project scope on separate records.
- List what each retainer includes, in plain sentences
- Note every request that falls outside that list
- Agree with the client whether it is billed or declined
- Review the list before each monthly invoice
Client travel and expenses never recharged
Consultants travel to client sites, stay in hotels and pay for cabs. Many engagement letters allow some of this to be recharged. Often it is not, because the bills reach accounts too late.
Each expense should carry the client and engagement it was spent on, at the moment it is claimed. The month’s rechargeable spend can then be listed by client before the invoice goes out. Untagged bills drift into general overheads and stay there.
Trip advances need the same care. An open advance with no bills against it is money nobody can explain.
Invoices raised late, or not at all
A milestone is signed off in the middle of a busy month. The invoice waits until someone remembers it. Sometimes that is the next quarter.
Tie each invoice to an event: month end for a retainer, a signed milestone for project fees. Keep a list of signed milestones with no invoice against them. Read it every week.
Track what each client still owes, oldest bills first. A polite reminder sent early is easier than a hard one sent late.
- Milestones signed but not yet invoiced
- Retainer months not yet billed
- Rechargeable expenses not yet added to a bill
- Invoices unpaid beyond your usual terms
A simple monthly check before any software
None of this needs a large system at first. A sheet per engagement with hours, scope requests, expenses and invoices will show most leaks. The habit matters more than the tool.
Software starts to help when several consultants share clients and hours have to tie to billing. It also helps when staff spend on client work every week. Until then, a careful sheet reviewed monthly is honest enough.
Engagement leak worksheet
One row per active engagement, with columns for hours planned and used, requests outside scope, client expenses spent and recharged, and milestones signed but not invoiced. Fill it in at each month’s end. Any column that keeps growing is where the practice is losing money.
Open a blank worksheet to printQuestions owners ask
Does expense software record our consulting hours?
No. Expense Management Software records what staff spend, with the bill photographed and the client tagged. Hours against an engagement are a separate record, kept in a timesheet or an engagement tracker.
Can travel costs be charged back to a client automatically?
Not on its own. Expenses can be tagged to the client and listed for the month. Whether they are recharged depends on your engagement letter, and someone still adds them to the invoice.
Which leak should a small practice fix first?
Usually late invoicing, because it needs only a list and a weekly habit. Scope and hours take longer. They depend on everyone recording their time.
Is a spreadsheet enough for a solo consultant?
Often, yes. When one person spends, records and bills, a sheet and a folder of bills can hold it. The case for software arrives with more people and more clients.