Margin arrives after the engagement ends
Loaded labour from payroll, subcontractors from AP, expenses from cards, revenue from the ledger. Four systems, one spreadsheet, produced at closeout when nothing can be changed.
ERP by industry
Consulting economics are decided inside the engagement, not at the invoice. A fixed-fee project trending eighteen percent over at week five is a scope conversation you can still have; the same project discovered at closeout is a write-off and an awkward renewal.
Send an engagement list, timesheets, and a ledger export. We will produce true margin by engagement.
The problems
Consulting has the same shape as professional services generally, with two aggravating factors: heavier subcontracting and more fixed-fee work.
Loaded labour from payroll, subcontractors from AP, expenses from cards, revenue from the ledger. Four systems, one spreadsheet, produced at closeout when nothing can be changed.
Revenue on a fixed-fee engagement is earned on progress, not on the invoice schedule. Where the two diverge — and they always do — the difference sits unexplained.
Contractor invoices arrive weeks after the work and are coded to a general account. By the time they reach the engagement, the margin conversation has passed.
You discover the bench in the quarter after it happened, which is exactly too late to sell into it or to avoid the hire.
Hours accumulate against an engagement whose scope nobody re-baselined. The change order conversation happens after the work rather than before it.
Ageing slips because the person with the relationship is the person who would have to make the call, and they would rather not.
Where the money goes
A representative shape for a consultancy between $10M and $60M. Subcontract and write-off are the two lines that move most between good years and flat ones.
A consultancy that flexes capacity through subcontractors has a cost line that can swing by five or six points of revenue between quarters, and it arrives in the ledger weeks after the work. Committed subcontractor cost — from the signed statement of work rather than from the invoice — is what makes engagement margin true while the engagement is still running.
Your stack
Delivery teams keep the tools they chose. What changes is that finance stops reassembling them by hand at closeout.
Benchmarks
Drawn from our own engagements with consultancies between $10M and $60M. The bar is a typical erp.io customer after two quarters; the marker is the segment median.
The entire value of engagement margin is timing. The analysis at week five and the analysis at closeout are arithmetically identical; only one of them can change the outcome.
What makes the week-five version possible is committed cost — subcontractor statements of work and open purchase orders counted before the invoices arrive — plus approved time landing daily rather than weekly. Neither is difficult and both require the data to be in one place.
On a fixed-fee engagement, revenue is earned as the work progresses and billed on whatever schedule was negotiated. Those two almost never align, and the difference is unbilled revenue or deferred revenue depending on which is ahead.
Most firms this size compute it quarterly in a workbook. Driven directly from approved time against an agreed budget, percentage-of-completion becomes continuous — and it is the number an auditor probes hardest when a firm approaches a transaction or a covenant test.
Utilisation reported after the quarter tells you what happened. Utilisation projected from committed engagements, staffed allocations, and the pipeline tells you what is about to happen, which is when a bench is still solvable by selling rather than by cutting.
The projection is not sophisticated — it is committed hours against available hours by person and by week. What makes it hard is that the three inputs live in three systems.
If you need resource optimisation across complex staffing constraints — solving the assignment puzzle rather than reporting on it — that is a different product category and we do not build it. Firms with heavy international statutory obligations across many countries should look at NetSuite. And if your primary need is proposal and pipeline management rather than financial visibility, a CRM investment will return more than we will.
Questions
Same arithmetic, different date. One of them is still a scope conversation.