How One Professional Services Firm Increased Profit by $600K Without Growing Revenue

Most professional services firms believe the same thing: if you want higher profit, you need more revenue. It’s a common assumption, especially for owners who don’t come from a financial background. But there’s a growing reality in today’s market — many firms don’t have a revenue problem at all.

They have a visibility problem. 

Without clear visibility into service-line profitability, client-level margins, or labor efficiency, owners end up pushing harder without getting the financial results they expect. The solution is there, ready to be unlocked, with the help of data + system automations.  

Here's how one firm used financial automation to add $600,000 to operating profit — without adding a single dollar in revenue. 
 

The Hidden Profitability Crisis in Professional Services Firms 

“Our revenue is up 2x. The team is working harder than ever. Yet our profitability simply collapsed when growth slowed. What gives?” 

This familiar pattern is playing out in professional services firms across the country — from consulting to business services, agencies to A&E firms.

The culprit isn't pricing, competition, or market conditions.

It's something more fundamental: a complete lack of real-time visibility into what's actually profitable. 

"I worked with a firm recently that experienced this firsthand," says Patrick Sergott, Partner & CFO. "They doubled revenue over two years. Growth was strong, the team was busy, and on the surface, the business looked healthy. But profit didn’t follow the same trajectory. And when the rapid growth slowed, their profitability collapsed." 

The Deeper Problem: No Real-time Visibility  

Inside this firm, the leadership team was spending 80–100 hours every month exporting financial reports, merging operational data, and stitching together spreadsheets from different systems. They were trying to create basic visibility into margins, utilization, labor cost per client, and profitability — but Excel kept crashing under the weight of hundreds of thousands of rows. 

Even with all that manual work, the reports were 30 days old. Decisions were being made on outdated information, and the business continued to drift. 

This is where many firms get stuck. They can’t answer these questions fast enough to course-correct: 

• Which clients are profitable?
• Which service lines drive margin?
• How labor costs differ by team?
• How non-billable time affects the bottom line?
• Why gross margin is declining even when revenue is rising? 

The owner was overwhelmed and frustrated.

The team felt like they were always firefighting.

Everyone was guessing. 

What Financial Automation Revealed About True Profitability 

When we automated their finance workflows and connected their operational and financial systems, the picture changed almost immediately. Automation eliminated the manual data merging and created real-time dashboards.  

Senior leadership could now use that same time on service delivery and management to course correct instead of producing documents. They now had accurate, timely financial and operational data that showed: 

• Revenue per hour per client
• Labor cost per hour per client
• Admin time by employee and team
• Total labor cost per client
• Contribution margin by service line
• Client-level profitability 

For the first time, the leadership team could see the true drivers of gross margin and operating profit. 

And the biggest surprise?

Some clients and service lines were significantly unprofitable.

A few roles outperformed higher-cost positions by a wide margin.

Admin and non-billable time were far higher than expected.

The data didn’t just inform — it challenged long-held assumptions throughout the business. 

Unlocking Automated Insights Into Profitability Levers

Once the firm had accurate, automated insights, decision-making shifted immediately.

By unlocking insights hidden in their data, they could:  

• Reduce non-client admin time.
• Reduce client non-billable time.
• Restructure service delivery to eliminate unnecessary layers.
• Shift focus away from low-margin work and toward higher-value engagements.
• Adjust pricing, both in structure and rate.
• Modify staffing levels to match team-level profitability and performance. 

These are the levers that truly impact profitability in a professional services firm — and they’re nearly impossible to pull without reliable, real-time financial data. 

Within two months, gross margins began to improve. They optimized their processes.  

The Result: $600,000 Increase in Operating Profit While Revenue Actually Fell 1% 

Here’s the part that stands out in today’s efficiency-driven market: 

While revenue declined 1 percent that year... 

Operating profit increased by $600,000. 

The owner told me later, “We didn’t need more sales. We needed clarity. Once we had visibility, everything else fell into place.” 

This is the power of finance automation for professional services firms: 

It helps owners understand what’s really happening inside their business so they can optimize operations and improve profitability without relying on additional revenue. 

Why Real-Time Financial Visibility Is No Longer Optional for Professional Services Firms Today 

The industry is shifting. Margins are tight, labor costs are rising, and firms can’t rely on growth alone to improve profits. Owners need data they can trust — daily, not monthly. They need clarity around client profitability, service-line performance, and labor efficiency. 

When that visibility is missing, even strong firms end up leaving money on the table. 

But when automation removes manual work and provides real-time insights, firms unlock the ability to: 

• Manage labor more effectively
• Price engagements with confidence
• Eliminate unprofitable work
• Make faster, more accurate decisions
• Improve gross profit margin
• Increase EBITDA 

Most firms don’t need a bigger top line.

They need a clearer bottom line. 
 

The Critical Step Before Automation: Foundational Data Quality  

The Problem: Most Business Leaders Think Their Data Quality is Good! (But Isn’t) 

Most business leaders believe their data is in good shape and want automations to do their magic. The problem? They're usually wrong.  
 
"What we often see are inconsistencies that hide in plain sight," says Annie Willett-Thomas, Senior Controller. "Different departments using different naming conventions, projects tracked one way in your CRM and another in accounting, and inconsistencies hide in plain sight — different departments using different naming conventions, projects tracked one way in your CRM and another in accounting, and time entries logged without clear scope breakdowns."

These gaps seem minor until you attempt automation.

Then they become expensive, time-consuming obstacles that no tool can overcome. 
 
The good news: you don't have to live with bad data. By taking a strategic pause to assess and standardize your foundations, you'll unlock automation's true potential. Here's how...

Why an Assessment of Your Data Quality Needs to Happen Before Automation 

Foundational data quality is critical to successful automation efforts. As discussed in the meeting, if the underlying data lacks standardization and accuracy, automation tools may yield unreliable or misleading results.

Poor-quality data leads to: 

• Complex manual reconciliation efforts that make it hard to trust outputs and significantly increase time and labor costs.
• Automation amplifies errors rather than addressing root issues, leading to poor insights and faulty reports. 
  
• Difficulty in gaining historical insights, since inconsistent or incorrect data requires significant cleanup before meaningful trends or costs can be identified.
• Overcomplicated tech stacks, as teams try to patch over data issues with new software instead of fixing foundations. 

In short, automation is most effective when built on standardized, high-quality data. Otherwise, even advanced tools and AI cannot deliver reliable value. It’s essential to pause, assess, and address data quality before implementing automation to ensure sustainable and accurate results. 

Specific Ways to Improve Data Quality Before Automation 

From our experience, these are great places to start: 

1. Standardize Naming Conventions
   Align terminology and project/client names across all systems (e.g., CRM, accounting, time tracking) to avoid confusion and simplify data mapping.

2. Data Clean-Up
   Audit current data for inconsistencies, duplicates, and errors. Correct and consolidate records, especially across departments and legacy systems.

3. Define Core Data Structures
   Determine what data fields are essential (e.g., client, project, service line, scope of work), and ensure consistent use and formatting in all datasets.

4. Establish Data Entry Protocols
   Set clear guidelines for how data should be entered and maintained going forward to prevent new issues.

5. Engage Stakeholders
   Involve operations, finance, and other relevant teams to agree on standards and validate necessary changes.

6. Document Processes and Standards
   Create accessible documentation on naming conventions, data entry rules, and data structures so everyone is aligned.

7. Pilot-Test With a Subset
   Apply the new standards to a sample data set or department to catch edge cases before a full rollout.

8. Implement Ongoing Quality Checks
   Schedule regular audits and reconciliations to catch errors early and preserve quality as systems evolve. 

Each business has its unique needs, so this is one example framework. When you work with experienced accounting and finance professionals, your automation tools will be built on strong, reliable data foundations, making your reporting and analytics far more effective and trustworthy. 

How Data + Systems Automation Builds Real-Time Profitability Visibility 

The transformation wasn't about implementing a single tool — it was about connecting systems that were operating in silos. As a team of accounting + finance engineers, our focus is on building futureproof systems that solve issues, not simply keep score. Here is an example:

Data + Systems Integration Examples    

• Time tracking (Harvest) <> Project management (Teamwork) <> Accounting (QuickBooks)  
• Payroll and benefits data <> Project allocations  
• CRM engagement data <> Financial reporting   

What Automation Eliminated:  

• 80-100 hours monthly spent on manual data exports and Excel reconciliation  
• 30-day reporting lag (now real-time dashboards)  
• Excel crashes from hundreds of thousands of rows  
• Duplicate data entry across systems   

What Automation Enabled: 

• Real-time profitability dashboards by client, service line, and team member  
• Automated labor cost calculations, including benefits and overhead allocation  
• Real-time visibility into the leading indicators that impact profit (budget vs. actual hours on projects, admin time, client non-billable time).
• Drill-down analysis from company-level to individual engagement   
  

This is financial infrastructure that professional services firms need to compete today — not just "nice to have" dashboards. Harnessing your data gives you the insight you need, at speed. 

Common Questions 

What's a healthy profit margin for professional services firms? 

Industry benchmarks typically show 15-30% EBITDA margins for well-run professional services firms, though this varies significantly by service type, client mix, and operational efficiency. Firms with real-time profitability visibility consistently outperform industry averages.  

How do I calculate true client profitability? 

True client profitability requires tracking fully loaded labor costs (salary + benefits + overhead allocation), all non-billable time associated with the client, and any direct expenses. Most firms underestimate the true cost to serve by 20-40% when they rely on basic time tracking alone. 

Can I improve profitability without raising prices? 

Absolutely. The firm in this case study improved operating profit by $600K through better visibility into labor efficiency, reducing non-billable time, eliminating unprofitable work, and optimizing team composition — all before adjusting pricing. 

How long does it take to see results from financial automation? 

Most professional services firms begin seeing actionable insights within 2-4 weeks of implementing integrated financial dashboards. Profitability improvements typically materialize within 60-90 days as leadership makes data-driven adjustments to pricing, staffing, and client mix. 

What systems need to be integrated for profitability visibility? 

At minimum, you need integration between time tracking, project management, and accounting systems. More comprehensive visibility comes from also connecting CRM data, payroll/benefits information, and resource planning tools. The goal is a single source of truth that shows the complete financial picture for every client and service line. 

How Do You Know If Your Firm Is Leaving $600K (or More) on the Table?  

Most professional services firms we talk to have the same initial reaction: "We know we have profitability issues, but we think it's because revenue is down.”  

But when we dig into the data, we uncover a lot more than the owners realize.   

Common patterns we see in profitable-looking firms that are actually bleeding margin: 

• 15-25% of clients are breakeven or unprofitable after fully loaded labor costs  
• 20-30% of time is non-billable but not tracked against specific efficiency issues  
• Pricing hasn't been adjusted in 2-3 years despite 15-20% increases in labor costs  
• High-revenue services are actually low-margin when you account for complexity and rework  
• Admin and project management overhead is 2-3x higher than industry benchmarks   
  

If you're experiencing any of these patterns, we should talk.  

Get Your Professional Services Profitability Assessment 

SPRCHRGR specializes in building financial infrastructure for professional services firms—connecting time tracking, project management, and accounting systems to give you real-time visibility into what's actually profitable. 

In a 30-minute no-cost discovery call, we'll explain how our CFO Assessment can: 

• Review your current systems and profitability blind spots  
• Identify which metrics you should be tracking (but probably aren't)  
• Show you what real-time profitability visibility would look like for your firm  
• Provide benchmark data from similar professional services firms  
• Map out potential ROI based on your current revenue and team size   
  

We’ve helped dozens of professional services firms improve profitability without chasing more revenue.

With the market headwinds, you can’t afford to have blind spots.  

>Schedule Your CFO Assessment today and unlock clear visibility into your firm’s profitability.