Matter Profitability

Losses hidden inside profits is our favourite saying here. Many firms suggest because they have a seemingly healthy Gross or Net profit, even at office or department level, that they are profitable and more granular analysis is not required.

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We see this differently. Clearly what the healthy Gross and Net profit tells us, is that 'on balance' there is a success. But at engagement level, it's possible, even probable and highly likely, that there are a number of loss generating engagements. Obviously by identifying these and tuning the engagements going forward accordingly, overall profits will improve, probably within the same volume of activity and scale.

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For matter profitability to be of value it has to be timely and consistent. That means it has to be rule driven and automated, not some manual process that is done historically and (like much accounting) is telling us what happened, not what's happening. If it's happened, there's not a lot we can do to change it, but if it's happening, we have some things we can do.