Bookkeeping for firms that bill expertise.
Law firms, consultancies, engineers, architects, agencies and recruiters. Your revenue is time and judgement, billed by the matter and the project - and books built for selling widgets will quietly lie to you about it. Weekly reconciliation, honest WIP, clean boundaries.
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What professional-firm books have to get right.
Six things distinguish a professional practice's books from everyone else's - and each one is cheap to keep right and expensive to reconstruct.
Matter & project profitability
Revenue and direct costs tracked by matter, project, team or principal in Xero, with overhead allocated on a basis agreed before anyone sees the result. The work that actually makes money is frequently a surprise.
The office/trust boundary
For firms holding client money, the trust ledger stays in your practice software where the law puts it. We keep the office side reconciled against it, transfers matched to invoices, and the file external-examiner-ready all year.
WIP, retainers, disbursements
Unbilled work made visible, retainers held as unearned until worked off, and disbursements coded correctly for GST - agency payments and recharges are different animals, and the difference compounds across every matter.
Practice software to Xero
LEAP, Smokeball, Actionstep, Clio, or the job platform your consultancy runs on - connected or exported to Xero on a schedule, then reconciled weekly so the two systems never drift apart quietly.
Payroll, run properly
Salaried professionals, bonuses, allowances and payday super on every run - with employees kept cleanly separate from the consultants and counsel the firm engages.
A month-end partners can read
P&L by team or principal, WIP alongside it, and the questions flagged rather than buried. Ten minutes at the partners' meeting instead of an hour of archaeology.
Who this is for.
If the business bills for judgement or time, these books fit. The firms we keep most:
Law firms and barristers' chambers
Management and IT consultants
Engineering practices
Architects and design studios
Marketing and creative agencies
Recruiters and labour hire
Surveyors and town planners
Training providers
Financial services professionals
Medical and allied health practices bill differently again - Medicare, gap payments and practitioner splits - so they have their own page. And when the questions turn structural - profit allocation, PSI, payroll tax on contractors - that's the accountants' side of the house: LINK Advisors' professional services page covers it.
What this looks like in practice.
A twelve-person consultancy billing on a mix of fixed-fee and time-and-materials.
Case study · Professional servicesSix months of unbilled work, sitting in somebody's notebook.WIP out of the notebook and into the ledger, and the trust boundary written down. See what changed
The background
A well-regarded firm with more work than capacity, run by two directors who both still did client work. Revenue was growing and the bank balance was not, which the directors put down to timing.
The challenge
It was timing, but not the kind they meant. Work in progress lived in a spreadsheet one director maintained and reconciled to nothing, so nobody could say what had been done and not yet billed - and the answer, when it was finally worked out, covered most of two quarters. Disbursements paid on clients' behalf were coded to expenses and never on-charged, so the firm was quietly funding its clients' searches and filing fees. Invoicing happened when somebody had a clear afternoon. And because fixed-fee and time-and-materials engagements were reported in one line, nobody could see that the fixed-fee work was being delivered at roughly twice the hours it had been priced on.
The approach
None of this is exotic. All of it had been deferred because the firm was busy, which is the condition that produces it in the first place. The fix is a ledger that carries WIP and disbursements as the assets they are, and a billing cycle with a date rather than a mood.
How the work ran
Weeks 1–4
Get WIP and disbursements into the ledger
Unbilled work was rebuilt from timesheets and matter notes, agreed with both directors, and brought onto the balance sheet where it could be seen. Disbursements moved to a recoverable account so an unrecovered one shows up as a balance rather than disappearing into expenses.
Weeks 5–8
A billing cycle with a date on it
Invoicing moved to a fixed fortnightly run with a named owner and a pre-bill review the directors could approve in twenty minutes. Nothing about the work changed; what changed is that finishing a matter and billing it stopped being two unrelated events.
Weeks 9–16
Separate the two businesses inside the business
Fixed-fee and time-and-materials engagements were reported separately, with actual hours against each fixed-fee job. The gap between priced hours and delivered hours became visible for the first time, which is a pricing conversation the directors could finally have with numbers in front of them.
What changed
- Work in progress
- a spreadsheet, unreconciledon the balance sheet
- Disbursements
- coded to expensesrecoverable, and recovered
- Invoicing
- when there was an afternoonfortnightly, owned
- Fixed-fee vs T&M
- one blended linereported separately
- Hours against fixed-fee price
- unknownmeasured per job
Professional firms rarely have a profit problem. They have a measurement problem that looks like a cash problem: the work is done, it is good, and it has not been written down anywhere the ledger can see it.
A worked example, built from the pattern these engagements follow in professional services. The business is composite and unnamed; the mechanics, the sequence and the order of work are the ones we use. Talk to us about your own numbers.
Frequently asked questions.
Do you do law firm trust accounting?
We keep the boundary honest, which is what your external examiner actually wants. The statutory trust ledger lives in your legal practice management software under the Legal Profession Act rules, and stays there. What we keep is everything around it: the office account reconciled, transfers between trust and office matched to invoices, and the records the examiner asks for ready rather than reconstructed. A bookkeeper who offers to run the trust ledger itself is offering to hold a risk that belongs with the practice.
How should disbursements be treated for GST?
It depends on whether the payment is truly made as your client's agent - filing fees and counsel's fees paid on their behalf sit differently to photocopying and searches you recharge as your own costs. Getting the split wrong quietly compounds across every matter and surfaces at BAS time. We map your common disbursement types once, code them consistently, and the question stops being a question.
Can you show profitability by matter, project or partner?
Yes - it's the main reason professional firms move their books to us. Xero tracking categories carry revenue and direct costs by matter, project, team or principal, and shared overhead gets allocated on a basis agreed in advance. The month-end pack shows which work actually makes money, which is frequently not the work everyone assumed.
Which practice management software do you work with?
For legal practices, LEAP, Smokeball, Actionstep and Clio come up most; for consultancies and agencies it's usually a job or time platform feeding invoices across. Some connect to Xero directly, others need a scheduled export. As with every integration we run, the connection matters less than the discipline at the Xero end: billings land in the right place, get reconciled weekly, and the two systems are never allowed to drift apart quietly.
How do retainers and unbilled work sit in the books?
Money received before the work is done isn't income yet, and work done but not yet billed is invisible to a cash view - a firm reading raw bank balances will misread both. We keep retainers as unearned until they're worked off and give you a WIP view alongside the P&L, so the partners see the position, not just the bank.
Can you run payroll for professional staff?
Yes - salaried professionals, support staff, bonuses and allowances, with payday super on every run and clean separation between employees and the contractors or consultants the firm engages. If contractor arrangements raise payroll tax questions, that's structural and we hand it to the accountants - your file will already be consistent with whatever they find.
Get your firm's books onto a weekly rhythm.
Matter-level clarity, a clean office/trust boundary and a month-end the partners can read. The first conversation is free.