|
Monitoring profitability is a crucial component of effective practice management. Profitability Manager is just the tool to determine which segments of the firm are most profitable and which less-profitable segments need attention. Use Profitability Manager to monitor the profitability of the firm, offices, departments, engagements (matters), groups of engagements, timekeepers or groups of timekeepers measured against allocable expenses for a given period.
Areas of profitability are increasingly important as professional services firms move toward alternative billing structures. The Elite system provides the database and tools to effectively turn data into valuable information for managing your company.
Advantages of the Elite Profitability System
Profitability Manager provides a variety of fully integrated tools designed to facilitate multiple levels of profitability analysis, including:
- Multiple cost rates per timekeeper
- Support for direct, indirect and alternative cost structures
- Budgets for worked, billed and collected figures by timekeeper
- Multiple rate structures for analysis purposes
Profitability Manager allows the calculating of expenses based either on budgeted or actual costs for a defined period. Expenses can also be calculated depending on the type of expense, and automatically allocated to individual timekeepers according to a formula that may differ for each category.
Automated Calculation of Timekeeper Cost Rates
The cost per hour rates calculated for each timekeeper are used to efficiently assess profitability at the level of each engagement (matter) and timekeeper. To calculate cost rates, the allocable expenses are categorized into types of expenses; for each type of expense, a method of distribution is also defined. For example, expenses might be defined under the general categories of Salary Costs, Other Compensation, Occupancy, Library/Research Costs or Other Direct Costs, and then allocated based on Head-count, Square Footage Use Ratios, etc.
Elite Profitability Components
Profitability measurements can be analyzed on a Worked, Billed or Collected basis and may include several of the following items:
- Worked/Billed Values
- Worked/Billed Standard Rate Values
- Direct Cost of Timekeeper(s)
- Indirect Cost of Timekeeper(s)
- Cost of Hard/Soft Expenses
- Rate Premiums/Discounts
- Unbilled Fee Write-offs
- Unbilled Expense Write-offs
- Billed Fee Write-offs
- Billed Expense Write-offs
- Carrying Costs of Unbilled Fees and Expenses
- Carrying Costs of Accounts Receivable
- Firm-defined Custom Calculations
Reporting and Data Warehousing
The Standard Profitability Report provides a solid overview, including fees billed collected, less costs of timekeepers and expenses, separately itemized to arrive at a net contribution to profit calculation at the specific level of the firm being analyzed. In addition, many firms elect to use Elite's built-in Data Warehousing functions to electronically store these details for future reporting requirements.
Balanced Scorecard Performance Measurement
In addition to profitability calculations, organizations today are looking for more sophisticated and broad-based performance measurement techniques; techniques that not only measure, but can also assist an organization in communicating strategy and mobilizing people to fulfill the firm's mission. The Balanced Scorecard, from the Harvard Business School, is the latest management tool created to meet these objectives.
The Elite system offers a series of database tables for storing key elemental data for a Balanced Scorecard implementation. Firms may define their key objectives, goals and specific targets to be measured against. Instead of just the typical lagging indicators that encompass primarily financial data, leading indicators may be established for review as well.
With a well-planned set of objectives for the Balanced Scorecard, the Elite system is able to effectively communicate strategy throughout the organization and ensure that it is implemented properly for success.
For more information on Thomson Elite, please complete our sales request form or call +44 (0) 20 7369 7379.
TOP
|
