Sector field report
Accounting for Professional Services Firms in Malta
Time-based billing, work in progress and partner drawings — the parts of a practice’s books that never fit a template.
The sector in focus
A practice sells time, which means much of its value at any moment is work already done and not yet billed. Whether that work in progress is recognised, how the owners draw income, and which clients are genuinely profitable once write-offs are counted are three questions a standard set of accounts does not answer for a firm like this.
Sector signals
The details that change the accounting
Unbilled work missing from the picture
Time recorded and not yet invoiced is real value, and a firm ignoring it understates both its position and its profit.
Write-offs treated as normal
Time written off at billing is a cost, and where it is never measured nobody knows which clients or which work absorbs it.
Drawings mixed with profit
Amounts drawn during the year and the profit they come out of are different things, and blurring them obscures both.
Accounting routes
Services shaped around this sector
Working model
How the work is organised
Work in progress recognised
Unbilled time valued and carried at each period end, so the firm’s position includes work already done.
Recovery measured per client and per matter
Time recorded set against time billed, so write-offs are visible where they happen rather than absorbed into an overall margin.
Drawings kept distinct from profit
Owner drawings tracked separately from the results they are taken from, and reconciled through the year rather than at the end.
The outcome
What becomes clearer
The clients that actually pay
Profitability per client and per matter after write-offs, which is usually not the same order as fees billed.
A position including unbilled work
Work in progress recognised, so the firm’s value is not understated between invoices.
Drawings on a known basis
A clear view of what has been taken against what has been earned, agreed rather than reconstructed at year-end.
Across the practice
Related sectors
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