Financial results season is well underway for law firms and accountancy firms. Some numbers have gone up, some have gone down and others have stayed the same. Profit has plummeted for some firms, while for others it's rocketed.

The one thing everyone has in common though is their numbers are, well, frankly, made up.

When firms talk about revenue and income and the like, they're really talking about the total value of invoices sent throughout the year. 

Will all of those invoices be paid? No. Some will be paid  the following year, some the year after and - given how bad some firms are at collecting cash - some the year after that.

Almost every firm I know has a manic last few months of the financial year billing everything they can. The knock on effect is there's nothing to bill for the first couple of months of the following year. They're behind target at the end of the first quarter and playing catch up - and so the cycle continues. 

If this is any way to run a stable business then the J in my middle name stands for Jennifer.

Some years ago certain catchphrases became ubiquitous in professional services - "revenue for vanity profit for sanity", "cash is king" and the like.

The irony is that when it comes to reporting their financial results, no-one seems to mention cash.

I know of one firm where a particular team hardly ever actually sent out bills for their work. If they did, they hardly ever chased to get them paid. 

At the end of the quarters and the year they still demanded to receive their profit share though. Despite not having the cash available, the firm ended up taking out bank loans to pay the partners.

Be afraid - be very afraid...