What is PSA Software?

PSA Software Definition

Professional Services Automation or PSA software is specialized software that automates the essential operational tasks for professional services, such as service delivery, resource planning, financial management, project delivery, and business performance.

Within those categories, professional services need the tools to support:

• Managing resource allocation - through assigning resources across multiple projects you’ll be able to ensure your staff are appropriately utilised.
• Logging billable hours - essential for tracking the time spent providing billable services to your clients, so that you can be accurate in your invoices.
• Forecasting revenue - how you’ll be able to ensure you’re going to remain profitable, which is an important report for every professional services firm.
• Handling time and expenses - managing how you’re going to cover your costs and assigning them to the correct project allows you greater control over your profitability.
• Sending invoices to clients - all professional services need a good invoicing system to make sure they are paid for their hard work.
• Managing annual leave for your team - having a full view of your staff's leave in front of you when resourcing your project will reduce the chance of any nasty surprises pushing you past your deadline.
• Generating reports - all professional services need to monitor their operational and financial standing, this is also essential for keeping stakeholders informed.

Through ease of use and connectedness to other software you’ll decrease manual work and errors, enabling your team to focus on providing high-value services to clients. We see first-hand the impact professional services have on the world when they aren’t held back by disjointed systems.

Who is PSA software for?

Professional services automation software is clearly for professional services - but what does that mean?

Professional services companies or firms sell their service/skill/expertise to clients, rather than physical products. For them to do this, they need a platform to plan and record their time. They will then be able to charge clients for the service delivery they are providing. The best PSA software helps services businesses stay productive and profitable by providing functions, controls, and reports for finances and operations.

Professional services include most businesses that sell services based on a skill that requires special training. Here are some of the more well-known industries within professional services:

• Engineering
• Software development
• Management consulting
• Architecture

What are some of the common PSA features?

Now that you understand the basics, let's explore what a PSA platform usually includes and how these tools can benefit your business.

Time tracking

In professional services, keeping a precise record of billable hours is vital for billing clients. PSA tools streamline this by making timesheet collection a breeze, which ensures accurate invoices for your clients.

Invoicing

Invoicing on PSA software is a breeze as it is designed for billable projects. You can use the T&M data gathered from timesheets to generate invoices for clients or use other customizable billing options, such as fixed-fee, percentage-based, or stage-based, to get accurate payment for your work.

The top challenge in North America for project management is manual business processes causing timesheet and billing/payroll errors (33.3% of all PSFs surveyed). Deloitte, Global Payroll Benchmarking Survey Report

Expense management

PSAs simplify employee expense management by giving both employees and managers one platform for handling expense claims. Top software options allow managers to choose billable expenses, add mark-ups, and tax options for better expense management.

Resourcing projects

One of the most challenging parts of a Project Manager's job is keeping track of the people working on their projects. PSA tools allow resource managers to see who is available, at capacity, or over-allocated at a glance. They can then resource staff across multiple projects to ensure they are appropriately utilized.

Revenue forecasting

At the end of the day, professional services need to remain profitable to continue providing high-impact work. Revenue forecasting allows firms to see what they can expect to be paid by clients based on billing preference (T&M or fixed fee). Your revenue forecast will then compare this information against costs and your budget.

31% of Professional Services Firms believe that they face issues with forecasting, future projection and resource planning. Replicon, The New Normal: what does it mean for services businesses?

Reporting

Reporting to stakeholders is an essential task for all Project Managers. However, it can be a time-consuming task to gather and display your data in a way that tells the story of your project.

Since PSA solutions are designed for professional services, they often come with inbuilt reports that capture the data you need, in a way your stakeholders will appreciate.

Leave management

You want your people to use their annual leave, but you don’t want it to derail your projects.

PSA software will allow your team members to submit leave requests and have them approved in one system. This data will then flow onto your resource planner. You’ll then be able to assign hours to staff knowing your resourcing will be accurate.

Understanding key metrics

An important part of running a professional services organization is knowing how you stack up on key metrics. This is beneficial internally to identify where you can optimise your operations, but also externally to help understand how you compare to industry benchmarks.

Since PSA software is designed specifically for professional services it has the built-in functions to see key metrics without having to do extensive data manipulation. Here are some of the most important key metrics for professional services that PSAs can help you monitor:

• Forecasted revenue
• Project budget burn
• Resource utilization
• Net profit margin

It’s essential your PSA software connects with other software

Without a doubt, the connectivity of your PSA software with other tools is not just a feature; it's a non-negotiable necessity. A strong integrated PSA system enables you to connect with popular accounting, CRM, task management software, and more through an open API.

To get an idea of how this might benefit your firm, this is an example of information that could be passed from accounting software to your PSA:

• Invoices
• Reimbursable and planned expenses
• Payment records
• Leave balances
• Approved leave to payroll
• Time entries from hourly workers to payroll

This deep level of connectedness is where the magic happens. No more double-handling financial data, or entering time on 2 platforms. When all your software works together, you'll save time that you can spend on providing world-changing solutions.

“Professional services firms can future-proof their businesses against the next wave of disruption by making the right investments today, starting with taking a holistic approach to digital transformation”. PwC, Professional Services Firms: A view from 2025.

Why is PSA software the best option for professional services?

When businesses are looking to upgrade software they might already be using a few point solutions or spreadsheets. As they begin to grow, using this combination can become unnecessarily painful and time-consuming.

PSA software works differently to point solutions, as it encompasses all the essential tasks of a professional services firm, plus offers advanced reporting to improve your visibility into the operations of your business. With these insights, you’ll be able to make actionable changes and accurately track the process.

What is the difference between an ERP and a PSA?

While researching new software for your business, you may come across the term ERP or Enterprise Resource Planning software. ERPs are designed to help you run your entire business - finances, human resources, manufacturing, supply chain, services, procurement, and more.

While suitable for larger enterprises, some find ERPs overwhelming for professional services due to unused or confusing features making PSA software for small businesses and most professional services firms a more reliable choice. With a PSA solution, you can start with a system that provides the core functions you need and then expand as you need with integrations and many PSA software companies offer a free trial.

What are the benefits of using PSA software?

It will support your firm's purpose

Professional services automation enhances business efficiency and gives businesses extra time and profit which they can then use towards the high-impact, socially responsible projects that professional services organizations provide.

When it comes to engineering teams working on stainable transport initiatives or human service teams informing welfare solutions for children foster care, professional services cannot afford to waste time battling disparate spreadsheets.

The financial return

PSA software is designed to help businesses identify where they can increase revenue and lower unnecessary costs to ultimately improve their margin. It does this by giving businesses the visibility they need to identify risk and opportunity, and the tools they need to make actionable adjustments.

For example, with a revenue forecast, you’ll be able to see your expected revenue based on your resource plan, which takes into account the cost of your employees and the amount you’ll be charging clients for their time. With this tool, you may identify that you’re going to go over budget in 3 months' time or have too slim of a margin by the end of your project. You can then go into your resource planning and move around employees so that you can balance your costs while still bringing in enough revenue.

According to SPI Research, companies that use professional services automation software have a better employee billable utilization rate of 70.9% compared to those that don’t use a PSA solution at 68.3%. SPI Research, 2019

How to evaluate PSA software?

If you’re looking to evaluate PSA software, you can take our quiz and fill out the accompanying ebook here.

PSA Software Examples?

After identifying the features you need in a professional services automation (PSA) solution, the next crucial step is selecting the best fit for your company. While there are many strong contenders in the market, the key is finding the right match for your firm. To assist you in making an informed decision, we've compiled a list of ten excellent PSA tools to consider.

Explore our detailed guide here.

The top choice for professional services

PSA software stands as a transformative option for professional services businesses. Through automating tasks and minimizing errors, it empowers teams to concentrate on delivering high-impact services.

The advantages of PSA over traditional tools are evident in its streamlined operations, connections to other software options, real-time collaboration, and specialized tools essential to tracking key metrics at a services business.

This not only enhances workplace efficiency but also has a broader impact, fostering positive employee morale and facilitating contributions to socially responsible projects.

PSA software is not just a technological solution but a catalyst for meaningful change and innovation within professional services.