Bookkeeping for professional services — built around WIP, retainers, and realization
Professional services run on time, retainers, and realization — not just cash in the bank. Mispar tracks unbilled WIP, deferred revenue from retainers, trust/IOLTA accounts for law firms, and realization rate so you know whether you are actually earning what you bill.
Best for: Law firms, agencies, accounting practices, consultants, architecture/engineering, and B2B service firms.
Billed vs. rate
Realization rate
Billable hrs %
Utilization
Outstanding
WIP days
Outstanding
AR days
Where professional services firm books usually go wrong
- Time billed and cash collected treated as the same thing, so a busy month can hide a slow collection month.
- Retainers and unearned fees booked as income when they arrive.
- Client costs and reimbursements mixed with the firm's own expenses.
- Partner draws and payroll muddled together.
- Professional dues, licenses and insurance recorded in the wrong period.
- Work in progress ignored, so year-end revenue is understated or overstated.
How we book professional services
Industry-specific accounts and categorization, with the reporting scope agreed before work starts.
Unbilled WIP
Time and costs tracked as work-in-progress until invoiced, so revenue and WIP stay accurate.
Retainers & deferred revenue
Client retainers booked as deferred revenue (a liability) and recognized when earned — not as income when received.
Trust & IOLTA accounting
For law firms, client trust funds kept strictly separate in IOLTA-compliant trust accounts, with every deposit and disbursement tracked.
Invoicing & accounts receivable
Time-billed and fixed-fee invoices tracked with AR aging so collections stay on top of mind.
Realization & utilization
Billed vs. standard rate (realization) and billable vs. total hours (utilization) reported so you see true profitability.
Partner equity & distributions
For partnerships, capital accounts, draws, and profit distributions tracked per partner.
Reports a professional services firm can use
- Billed versus collected by client and month.
- Retainer balances by client, showing what is earned and what is not.
- Accounts receivable aging with the oldest invoices flagged.
- Revenue and cost by partner or practice area.
A simple, predictable process
From kickoff to your first clean close, here is exactly what happens.
Engagement & matter setup
We set up time tracking, matters/projects, and a chart of accounts for WIP, retainers, and trust.
Track time & WIP
Time entries and costs accumulate as WIP each period; retainers held as deferred revenue.
Billing & trust
Invoices generated and reconciled; trust/IOLTA movements tracked per client matter.
Realization close
Monthly close with realization, utilization, AR aging, and partner distribution reports.
Illustrative example
A firm takes a retainer in January that covers work through June. Releasing it as the work is done keeps each month honest instead of one large January. This is an illustration of the method, not a customer case or a guarantee.
Professional Services bookkeeping — your questions
Do you handle IOLTA trust accounting for law firms?
Yes. Client trust funds are kept in separate IOLTA accounts and every trust deposit, disbursement, and transfer is tracked per matter — never commingled with operating funds.
How do you treat client retainers?
Retainers are booked as deferred revenue (a liability) and recognized as income only as you earn them — so your revenue reflects actual work done, not cash collected.
Can you track realization and utilization?
Yes. We report realization (collected vs. standard rate) and utilization (billable vs. total hours) each month so you can see whether your pricing and staffing actually make money.
Can you handle retainers and trust funds?
We record retainers as unearned until the work is done. Client trust accounts have their own rules, so we follow your accountant's guidance.
Do you handle partner equity and distributions?
For partnerships and LLCs, we track capital accounts, draws, and profit distributions per partner so K-1s and equity stay clean.
Explore other industries
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Multi-channel reconciliation, FIFO/weighted-average inventory, COGS at ship date, and sales-tax nexus done right.
Learn more →Retail
POS reconciliation, COGS, shrinkage, vendor payables, and sales-tax remittance — clean end to end.
Learn more →Customers slow to pay?
Our in-house collections team calls and emails customers who owe your company money, so you can stay focused on the work.