Full Utilization. Margin Below Cost.
A platform consultancy hit every utilization target and still could not fund its own growth. How tying utilization to margin and resetting cost structure surfaced $726,000 in annualized value.
Technology Consulting — Platform Implementation Services
Full Utilization. Margin Below Cost.
A technology consultancy delivering platform implementations had a full pipeline, a busy delivery team, and performance metrics that were consistently green. It also could not fund its own growth. A Financial Discovery Assessment identified $726,000 in annualized value, most of it hiding inside metrics the firm believed it was already managing.
A utilization target that is not tied to margin will be met and will not help.
Consulting firms run on a deceptively simple equation. Bill enough hours at a high enough rate to cover the cost of the people billing them, plus everyone who does not bill at all. Most firms measure the first half of that equation carefully and the second half not at all.
This firm had done the hard work of building a real delivery practice. Clients renewed. The technical reputation was strong enough that work arrived without much selling. Leadership had established performance metrics for every consultant and reviewed them regularly.
The problem was what the metrics measured. Utilization was tracked as hours booked against hours available, and every consultant met it. That number was never connected to whether the hours were billed at a rate that covered their fully loaded cost. A consultant could be fully utilized on work priced below what it cost to deliver, and the scorecard would still show the target met.
Underneath that, the firm's employee cost rate had drifted above what its billing rates could sustain. This happened gradually, through individually reasonable compensation decisions made without a model of what the delivery economics could support. Administrative payroll had grown alongside it, on the same logic, for roles that never appeared on a client invoice.
None of it was visible from the reports leadership was reading. That's when they called us.
The Assessment
What we found when we rebuilt the metrics around margin instead of activity.
The firm was not underperforming. It was measuring the wrong things carefully.
Performance metrics that measured activity and ignored outcome
Consultants were measured on hours booked against hours available. The metric said nothing about whether those hours were billed, at what rate, or against what cost. Work delivered below cost registered identically to work delivered at a healthy margin. Rebuilding the scorecard around effective bill rate and contribution per consultant, and setting targets against fully loaded cost rather than availability, identified $312,000 in annualized margin recovery.
Projected Annualized Margin Recovery: $312,000
An employee cost rate the billing rates could no longer support
Compensation had risen through a series of individually defensible decisions, none of which had been tested against what delivery economics could carry. The cumulative result was a cost rate above the level the firm's own rate card could sustain at target utilization. Modeling the relationship between cost rate, bill rate, and utilization gave leadership a defensible compensation band and a rate card aligned to it, identifying $196,000 in annualized value.
Projected Annualized Value: $196,000
Administrative payroll growing on the same untested logic
Non-billable roles had been added as the firm grew, each justified on its own terms, without a ratio governing administrative cost against delivery revenue. Establishing that ratio, benchmarking it, and restructuring the non-billable organization around it identified $148,000 in annualized value while preserving the functions the delivery team actually depended on.
Projected Annualized Value: $148,000
A billing gap opened by a staff transition
The person responsible for billing had moved on, and the process moved with them. Invoices went out late, some engagements were billed incompletely, and no one held the reconciliation between work delivered and work invoiced. Documenting the billing process, assigning clear ownership, and reconciling delivered against billed work identified $31,000 in annualized value and recovered revenue already earned.
Projected Annualized Value: $31,000
Commissions paid on booking rather than collection
Sales commissions were earned and paid when an engagement was signed, well before the client paid. On longer engagements this put cash out the door months ahead of cash coming in, and it rewarded booking work regardless of how it collected. Restructuring the commission policy around collection identified $26,500 in annualized cash flow value and aligned the incentive with the outcome the firm needed.
Projected Annualized Value: $26,500
Nearly all client payments arriving by card
The overwhelming majority of client payments came in by credit card, on invoices large enough that processing fees were a real line of cost. No alternative had ever been offered as the default. Introducing bank transfer as the standard method for invoices above a threshold, while keeping card available, identified $12,500 in annualized value with no change to payment terms.
Projected Annualized Value: $12,500
Utilization tells you your people are busy. It does not tell you the business is working. Those are different questions, and only one of them shows up on most consulting scorecards.
Is This Your Firm?
If the team is busy and the cash is tight, the metrics are measuring the wrong thing.
A Financial Discovery Assessment rebuilds the picture around margin, not activity, and puts a number on the gap.
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Agencies & Professional Services
Realization, utilization, and effective bill rate for firms that sell their people's time.
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Financial leadership for technology businesses scaling past the systems they started with.
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Financial Discovery Assessment
A structured diagnostic that separates activity from profitability.