Professional and consultancy practices, where people and receivables are the balance sheet.
Fees may be billed on retainer, on milestones or on time, and the pattern of billing rarely matches the pattern of delivery. Unbilled revenue and fees billed in advance both need to be supported by the contract and by evidence of what was delivered.
Where clients are outside India, place of supply decides the GST treatment, and the conditions for treating a service as an export have to be met and documented, not merely asserted.
Accounting and reporting
- Recognition of professional fees, including retainers and milestone-based billing
- Unbilled revenue, and fees billed in advance of delivery
- Employee and subcontractor costs, and utilisation
- Recoverability of receivables and provision for disputed fees
- Project-level profitability reporting
Regulatory
- GST on services, place of supply, and the conditions for export of services
- Tax deducted at source on fees received and paid
- Foreign exchange rules where fees are received from or paid outside India
Internal controls
- Time and billing records reconciled to invoices raised
- Approval of subcontractor engagement and payment
- Systematic follow-up of overdue receivables
- Engagement acceptance and scope documentation
Questions that arise
- Is revenue recognised in line with the service actually delivered?
- Are unbilled amounts supported by the contract and by evidence of delivery?
- Are the conditions for export of services met and documented?
- Is withholding applied correctly on cross-border fees?