Using revenue forecasting
As we discussed (or hinted at) in the Using resource forecasting section, time equals money. I think we have heard this before, right? Time is money, though regardless of the type of contract being worked on in the professional services firm. To accentuate this, let's look at a few contract types and talk about the time equals money axiom. Some typical contract types are outlined here:
- Time and Material contracts: When billed after conducting the work, each hour worked turns into an hour billed. There are variations for tracking Work in Progress (WIP) that help a firm attain Generally Accepted Accounting Principles (GAAP)-compliant financial reporting. Furthermore, revenue may or may not be recognized right away, depending upon other accounting factors. However, you can be assured that over time, time will equal money.
- Fixed-price contracts: When billed out, a fixed-price contract may have revenue billed upfront and/or billed in milestones...
