Professional Services Automation

Service-based professions like legal and accounting firms, IT service providers, consultancies, and creative agencies all rely heavily on project and resource management to deliver projects on time and within budget. Professional services automation (PSA) software is an organizational tool that helps these businesses do just that.

What is Professional Services Automation?

At its core, professional services automation is a technology platform used to streamline project delivery and resource planning for professionals offering their services.

Examples of service-based professions that use PSA software include:

  • Lawyers
  • Auditors
  • Accountants
  • IT service providers
  • Consultants
  • Creative agencies
  • Marketing account managers

PSA software helps these businesses better manage and track customer engagements, resources (people and capital), projects, and financials, including billing and invoicing.

It automates manual processes like smart contract creation, time tracking, forecasting, expense report creation, proposal generation, and client communication.

The end result for professional service organizations—which often lack a formal structure—is real-time visibility and greater control over their operations.


  • PSA software: Software service-based professionals use to manage their clients, projects, and resources.
  • Services automation: A form of process automation specifically for professional services organizations.

Business Challenges in Professional Services Companies

Professional services companies face unique challenges that most other organizations don’t.

  • Balancing resource allocation and utilization
  • Juggling diverse client needs
  • Maintaining an accurate financial outlook
  • Maintaining high-quality service delivery
  • Maximizing profitability
  • Retaining and attracting top talent

Benefits of Professional Services Automation

PSA software helps companies navigate the above issues by addressing the underlying operational challenges they face. The result is improved efficiency, better visibility into key performance indicators (KPIs), and increased customer satisfaction—all of which ultimately lead to higher profits.

Higher Employee Retention Rates

Employee retention largely depends on how effectively an organization can create structure and value for its team members. If they are burnt out from haphazard project management and a lack of streamlined processes, they’ll leave.

According to a study from the University of California, six factors contribute to burnout.

Two of these factors—demand overload and a lack of control—are directly addressed by professional services automation.

Project and resource management elements of PSA software help teams optimize their workloads, prioritize tasks, and stay on top of deadlines—all while giving them the autonomy they need to do their best work.

Improved Project Delivery

Especially for time-sensitive projects (e.g., taxes, legal contracts), providing a consistent level of quality across varied clients, tasks, and needs requires a lot of planning and precision.

But each client has different immediate and long-term requirements.

Service work’s unpredictable and multifaceted nature makes it difficult to create consistent company wide processes.

When employees and management use PSA software, back-and-forth communication takes place in real-time, tasks are tracked and logged, and events are planned weeks in advance.

Accurate Billing and Invoicing 

Clients pay invoices late 60% of the time, with an average delay of 4.3 days.

Aside from being unprofessional, errors in the billing process reduce professional service companies’ likelihood of getting paid at all.

Common errors like incorrect invoices, late payment reminders, and overcharging can easily be avoided with an automation system that manages finances for you.

From creating accurate estimates to automating the dunning process, PSA software ensures clients are billed correctly and on time.

Service-based businesses also have unique revenue recognition requirements—payments and services rendered don’t always occur in the same month.

PSA software helps companies manage this complex process with features like deferred revenue tracking, recurring invoicing, and integrated payments.

Lower Project Cancellation Rates

Clients value professionals that are clear and transparent about their services, pricing, and contract terms.

Product pricing is easy to comprehend in the context of SaaS, consumer products, and other fixed-price goods.

But professional services contracts are complex and open-ended, making it difficult for customers to understand the cost breakdown.

Additional costs add another layer of complexity to pricing, especially when they aren’t communicated promptly.

PSA platforms automate time tracking and task management, so clients can see the full breakdown. Any time a client incurs additional expenses, the software will reflect it in the financial overview.

Customer dissatisfaction and project cancellation rates—two of the biggest reasons services companies lose money—decrease when service providers can be upfront about extra costs and customers have visibility into their projects.

Lower Revenue Leakage

Billing and invoicing clients, managing expenses, analyzing internal financials, and other administrative financial tasks often take the back seat when service providers are busy with client work.

When errors in these processes are ignored, the end result is revenue leakage—an issue that drains as much as 5% of a company’s revenue.

PSA software solves this issue from multiple angles:

  • Automated time tracking prevents employees from undercharging for their services
  • Financial visibility and real-time analytics help companies identify problems quickly
  • Customizable workflows make it easy to follow up on late payments, prevent duplicate payments, and more.

Higher Resource Utilization Rates

Finding the sweet spot between assigning the right people to the right projects and keeping everyone engaged is the ultimate challenge for most service businesses.

When dealing with multiple projects and pressing deadlines, striking the right balance is crucial to avoid delays, burnout, and unhappy clients.

Project managers use PSA software to assign employees that are best suited to each task, track costs on the fly, and adjust plans to ensure that resources are best utilized.

Improved Project Margins

The end result of PSA software implementation is bottom-line growth.

The above benefits add up to higher profits over time and improve the overall efficiency of a services business.

Professional Services Automation Solutions

Professional services automation software is designed to meet the needs of specific verticals, company sizes, and budgets.

Features to Look for in a PSA Solution

Your PSA solution should include the following features:

  • Account management and CRM
  • Sales automation
  • Service ticketing
  • Expense management
  • Proposal and quote management
  • Project management
  • Contract management
  • Accounting integrations
  • Real-time asset and time tracking
  • Dashboard reporting and analytics
  • Mobile and desktop apps
  • Implementation and ongoing support

The nuances of PSA software vary depending on the niche and specific provider, but these core features should be the starting point for your search.

Components of PSA Solutions

Automates Expense Tracking and Time Tracking

Top PSA software platforms manage expenses with approval workflows, employee reimbursement, and integration with payrolls for seamless payment processing.

They also track billable hours, downtime, and travel time, allowing for precise time management, goal monitoring, and project accounting for contractors and employees.

In addition to streamlining the above, professional services automation must integrate with accounting software (such as QuickBooks or Xero).

Measures Financial Performance

Through accounting integrations, business intelligence, and advanced analytics, PSA software measures financial performance in real-time.

Software users can track project costs and revenue streams and evaluate complex financial processes from a single dashboard.

Lifecycle Forecasting

Opt for a platform that aggregates customer data from invoices, project values, and upcoming arrangements to generate project lifecycle forecasts and determine customer lifetime value (CLV).

For businesses using a recurring revenue model, a PSA should also have automated renewal tools and revenue forecasting capabilities.

Professional Services Automation Integration

Aside from built-in features, PSA software should fit into a company’s existing tech stack.

Customer Relationship Management (CRM) Integration

CRM integration centralizes data for a single source of truth and creates a visible customer journey from the first touchpoint to the final invoice.

As project statuses are updated in PSA, an equal update should happen in the CRM.

For example, when an organization completes a project phase for one of its clients, the information should be sent to the CRM and added to that customer’s profile.

CPQ Integration

PSA and CPQ integration enables organizations to use CPQ for sales and a PSA tool for operations.

CPQ software handles the pricing and quoting aspects of the sales cycle seamlessly.

PSA software can generate proposals and keep track of company finances, but it needs to integrate with CPQ’s sales configurator to maximize efficiency.

Combining the two processes on the same platform provides the benefit of connecting them.

For instance, reaching a particular stage of the sales cycle or a certain level of confidence in the potential close date of an Opportunity can trigger the creation of a record.

This record can be utilized by the operations team to forecast several months in advance without requiring sales to perform any additional actions.

This ensures that the operations team is informed about the potential work that might come in.

Subscription Management Integration

Subscription management is crucial for retainer-based services and productized offerings.

The right PSA software should have the capability to manage subscription billing, provide insight into customer churn, and help forecast future revenue.

Agencies offering digital services like advertising, SEO, and branding benefit most from these features.

Even if they use success-based pricing, tracking revenue metrics and attributing them to specific projects are still essential to success.

Billing Platform Integration

There are several reasons to use a different billing software:

  • To work in the same interface as accounting software
  • To process payments outside of the customer’s country
  • To accept multiple currencies

Although billing is a function PSA typically offers, it should be able to integrate with a company’s third-party billing platform to handle invoicing and payment processing as well.

People Also Ask

What is the difference between PSA and ERP?

Although PSA and ERP both comprise similar sub-modules, PSA focuses on the management of professional services while ERP includes many other departments.

ERP covers inventory management, order fulfillment, production planning, sales, marketing, and accounting.

PSA is typically used by service-based organizations to manage their internal operations (which include some of the above).

What is a professional services automation tool?

A professional services automation (PSA) tool is software designed to streamline and automate operational processes in a professional services firm.

PSA can help streamline operations, track customer communication, manage projects and resources, generate invoices, and more. It also provides visibility into organizational performance metrics such as profitability and utilization rate.

Who uses professional services automation?

Several types of companies use professional services automation:

* Marketing and creative agencies
* Software development companies
* Consulting firms
* Accounting and legal services
* IT service businesses
* Auditors
* Medical practices
* Architectural firms