Growing a service business should mean increasing profits. More clients, more projects, more revenue. But for a lot of owners, the opposite happens: revenue grows, and profitability gets murkier.
The reason isn’t effort. It isn’t demand. It’s accounting.
Accounting Is the Blind Spot
Most service businesses run on bookkeeping that wasn’t designed to answer the most important question: Are my clients and projects profitable?
Typical bookkeeping records transactions, but it doesn’t show you margins by client or project. It doesn’t align subcontractor costs, tools, and overhead to the right workstream. It doesn’t give you reporting that translates into strategy.
That’s why profitability feels like guesswork – because the accounting itself isn’t built to give you the clarity you need.
Why Profitability Gets So Murky
A few accounting gaps show up again and again in service businesses:
- No project-level accounting. Expenses and labor get dumped into general categories, so margins by client are invisible.
- Direct costs misapplied to overhead. Subscriptions, software, and subcontractors aren’t tracked against the work they support.
- Cash accounting vs. accrual accounting. On paper you look profitable, but timing gaps in receivables and payables paint a very different story.
The result: you grow revenue without ever knowing if that growth is helping or hurting the bottom line.
How to Fix It
The fix isn’t more spreadsheets or working harder. It’s rebuilding your accounting so it actually answers the right questions.
That’s where fractional accounting comes in. Instead of relying on a generalist bookkeeper or part-time CFO, you get a full-stack team that:
- Rebuilds your chart of accounts to track profit by client and project.
- Aligns AR, AP, and expenses so margins are accurate and trustworthy.
- Produces reporting that shows which clients fuel growth — and which quietly drain resources.
In other words: you need an expert fractional accounting team that’s built for service businesses, not just “good enough” to close the books.
Profitability Shouldn’t Be a Mystery
If profitability feels like something you only discover at year-end, it’s because your accounting isn’t giving you the right answers.
👉 Free Financial Risk & Readiness Assessment
We’ll help you spot where your accounting is falling short — and show you how fractional accounting for service businesses gives you the clarity, confidence, and control you’ve been missing.
James Wheeler
https://www.linkedin.com/in/jamesdavidwheeler/James Wheeler has 15 years executive financial leadership experience in service and technology companies. He was a San Diego Business Journal CFO of the Year finalist in 2019. James was the recipient of multiple graduate fellowships at the University of California, San Diego, where he earned a BA in economics and an MBA, before complementing that with executive education at MIT Sloan. He has held several nonprofit and for-profit directorships and committee positions over the past 10 years.
