1
Fixed costs
People, rent, software, other running costs. Move slowly month to month, but are the basis of every profitability analysis.
Cost control process: how do we keep costs and liquidity under control?
In professional services firms costs spread across many projects and departments. teamspace connects fixed costs, project costs, contribution margins and liquidity planning in one view, with early warning instead of quarter-end shock.
Three layers of cost control
2
Project costs
Costs directly attributable to a project: hours, materials, travel, subcontractors. Drive contribution margin.
3
Liquidity
Cashflow as inflows minus outflows, planned over months. Reveals bottlenecks before they hit.
Cost control process structure
- 1
Cost planning
Annual planning of fixed costs, staff costs, investments and variable project costs. Distributed across months and cost centres.
- 2
Cost capture
Incoming invoices, travel cost, expenses and hours are booked directly to the project or cost centre, ideally digitally.
- 3
Plan/actual analysis
Planned vs. actual cost per period and cost centre. Deviations are scored with thresholds.
- 4
Contribution margin calculation
Project revenue minus direct project cost equals contribution margin. Aggregated per client, service and business area.
- 5
Liquidity planning
Planned inflows minus planned outflows, rolling 3 to 12 months. Early warning on upcoming bottlenecks.
- 6
Actions and forecast
Deviations trigger concrete actions (dunning, investment shift, sales focus). Forecast is continuously updated.
Key cost KPIs
1
Contribution margin (total)
Sum of project contribution margins per period. Tells you what remains after direct project cost.
2
Average project contribution margin
Contribution margin divided by number of projects. Shows the quality of the project portfolio.
3
EBITDA and EBIT
Classic profitability KPIs with breakdown by cost type and business area.
4
Liquidity / cashflow
Are we financially stable? Green: 2 to 6 months of fixed costs covered, red: below 1 month.
5
Days sales outstanding (DSO)
Average time from invoice to payment. Directly hits liquidity.
6
Plan/actual variance per cost centre
How well do we hit our cost plan? Thresholds per cost type, individually configurable.
Liquidity
Four weeks of caution beat one day of shock.
Most liquidity issues do not erupt suddenly, they build over weeks. A rolling liquidity plan over three to twelve months exposes the trend early, before the bank balance gets tight.
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Inflows from forecast
Expected payments from open invoices, contracts and pipeline. With DSO as smoothing factor.
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Outflows from plan
People, rent, software, tax, investments. From the cost plan, plus one-offs.
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Net with thresholds
Weekly balance, cumulative. Warning when a bottleneck looms, with lead time for counter measures.
Cost control maturity
Level 0: unplanned
No systematic cost planning. Profitability surfaces once a year at the accountant.
Level 1: manual
Cost plan in spreadsheets, plan/actual after year end. No multi-month liquidity planning.
Level 2: structured
Cost types, cost centres and plan/actual defined. Data from accounting and spreadsheets is merged manually.
Level 3: assisted
Controlling system with monthly plan/actual. First contribution margin reports.
Level 4: largely automated
Live plan/actual, automatic contribution margin per project and client, rolling liquidity plan.
Level 5: fully automated
Real-time profitability, 12-month forecast, early warning with suggested actions, integrated investment planning.
Classic cost control vs. teamspace
| Feature | Classic (accounting + spreadsheets) | teamspace cost control |
|---|---|---|
| Cost capture | In accounting, delayed by weeks | At project and cost centre, daily |
| Contribution margin | Annual or not reported | Live per project, client, service and area |
| Liquidity planning | Bank balance, guess for next weeks | Rolling 3 to 12 months with forecast |
| Plan/actual | Quarterly from spreadsheets | Monthly or weekly, automatic with thresholds |
| Early warning | Manual, often too late | Thresholds with action suggestions |
Relevant teamspace modules
1
Incoming invoices
Digital capture and approval, with project and cost centre assignment.
Learn more 2
Digital receipts
Receipt approval, OCR, cost centre, handover to DATEV.
Learn more 3
Travel expenses
Trips, expenses, receipts per project. Handover to billing and payroll.
Learn more 4
Project controlling
Plan/actual, margin, early warning per project and client.
Learn more 5
DATEV export
Posting records, cost centres and tax codes to accounting.
Learn more 6
Invoicing software
Receivables and dunning, basis for DSO and liquidity.
Learn moreWhy cost control is hard in professional services
Unlike manufacturing, cost in services is largely people-related and spreads across many projects. Traditional accounting groups by cost type and delivers quarterly numbers with delay. For operational steering that is too slow and too coarse.
A structured cost control process connects cost planning, project-level cost capture, contribution margin calculation and liquidity planning in one data model. Profitability becomes a continuous management view, not a year-end revelation.
Maturity in cost control: honest scoring
Score honestly using four questions: are costs fully distributed across projects and cost centres, are plan/actual and contribution margin available monthly or more often, is there a liquidity plan covering at least three months, do deviations surface automatically with thresholds?
If the answers are mostly ‘no’ or ‘partially’, you are typically on Level 1 or 2. The jump to Level 3 or 4 usually pays off in two areas: fewer quarter-end surprises and sharper investment decisions.
Target picture: liquidity as a daily leadership topic
A high-maturity cost control process turns profitability and liquidity into daily figures, not annual reviews. Leadership sees margin per project, cashflow over the coming months and plan/actual variance per cost centre, on the same data set operations produces. Cost control shifts from reporting to actual business leadership.
Frequently asked questions about cost control
Accounting already runs cost. Why have cost in the steering system too?
Accounting meets tax obligations, often delayed by weeks. Cost control needs current data at the project and cost centre, ideally daily. Both worlds complement each other but are not identical. The DATEV export keeps the bridge without double work.
Is a spreadsheet-based liquidity plan not enough?
Up to a point. As the firm grows with more contracts, projects and staff, spreadsheets become an error source. A rolling plan from forecast and cost plan is more reliable and, above all, current at a button click.
What is the difference between contribution margin and margin in percent?
Contribution margin is absolute, in money, and equals revenue minus direct cost. Margin in percent is relative, the contribution margin divided by revenue. Both matter: margin shows efficiency, contribution margin shows absolute value.
How does cost control integrate with delivery?
Effort happens in projects, hours are booked there, travel and incoming invoices are tied to projects. The same data drives project margin in delivery controlling and cost control at company level.
Which KPI should we monitor first on a regular basis?
Cashflow and average project contribution margin. Cashflow shows short-term stability. Average project contribution margin shows whether the business model holds. Both belong in every leadership meeting.
Other processes
How reliable is your liquidity plan today?
In a 15 to 30 minute requirements call we score your cost control process against the maturity model and pinpoint the largest current risk.