What is professional services automation (PSA) software?

A PSA covers six jobs that many firms spread across separate tools: contracts and quotes, projects, resource planning, time and expenses, invoicing, and reporting. Each job feeds the next. One approved hour updates the project budget, the margin report and the next invoice at once, and nobody has to copy it across.

Contract and quotes

The contract sets what the client pays for: a fixed fee, time and materials, a retainer, installments or milestones. In a PSA, each contract line carries a budget and a rate. Every hour logged later is measured against what was sold, so you get a warning while the budget still has room.

Read more about contract management in a PSA.

Project Management

Projects, phases, tasks and deadlines, as in any project tool. The difference is that a PSA project knows its money. Planned hours, actual hours and budget burn sit next to the task list, so a project manager sees drift while there's still time to act.

See how project management works inside a PSA.

Resource and capacity planning

Who is free next month, who is overbooked, and which skills you'll need when pipeline deals close. A PSA plans people against real projects and real availability, instead of a spreadsheet one person keeps up to date.

Read about resource and capacity planning.

Time and expense tracking

Everyone who works on a project, from specialists to project managers, records hours and expenses against a project, a task and a contract line. A manager reviews and approves them. Because each entry carries a rate, an approved hour is a cost, a budget update and a billable line at the same time. A late timesheet holds up every report and invoice after it.

See time and expense tracking.

Invoicing and billing

Approved hours, expenses, milestones and installments become draft invoices. Someone checks and approves them. The PSA then transfers the approved invoices to your accounting software, which issues the final invoice and records the payment. Because the billing rules live with the project, finance no longer rebuilds them from exports each month.

Learn how invoicing from project data works.

Reporting and operations

Because everything above sits in one system, reporting stops being a monthly project. Utilization, margin per project and client, work in progress and revenue still to bill all come from live data. Leadership and project managers see the same numbers.

"PSOHUB helps me have all the information about my projects on one platform, understand time usage and client attention, and with fast and reliable dashboards, it improves my management as a Project Manager."

Carolina Z., Marketing Automation Consultant (G2 review)

A PSA sits in the middle. Your CRM owns the deal until it's won. The PSA takes over from there and owns the project, the people, the hours and the billing rules. Your accounting software owns the final invoice, the ledger and the payment. Each system keeps its own job, and data moves forward once.

Flow diagram of PSA software between the CRM and the accounting or ERP system: a won deal in the CRM becomes projects, people, time and billing in the PSA, the final invoice and payment sit in accounting, and payment status flows back to the PSA

At a typical services firm, the work moves through seven steps:

1. The deal is won. Sales marks the opportunity as won in the CRM.
2. The project is set up. The PSA creates the project from the client details, contract lines and budget agreed in the deal.
3. The team is scheduled. Operations assigns people to the project based on their skills and availability.
4. Time and expenses are recorded. Team members register their hours and expenses on the project, and a manager approves them.
5. The invoice is prepared. The PSA turns approved work, milestones and installments into a draft invoice, which finance reviews and approves.
6. The invoice is issued. The approved invoice is transferred to the accounting software, which issues the final invoice and records it in the books.
7. Payment is tracked. The payment status syncs back to the PSA, so each project shows what has been invoiced and paid.

Digital Reach, a digital marketing and rev ops agency, runs this flow with HubSpot and Xero. Its Chief Revenue Officer, Mandy, describes the first step: "I can deploy the contract from HubSpot so that it automatically creates the project in PSOhub." From there, invoices go to Xero on schedule and reconcile back once they're paid. Read the Digital Reach story.

Dave Hofferberth, who first mapped PSA as a category, put the reason in one line in a 2020 interview:

"The secret sauce is that everything is information-driven, so if you don't have the information infrastructure, you're never going to be able to be successful."

Dave Hofferberth, founder of Service Performance Insight (full interview)

If your deals live in HubSpot, this walkthrough of how a HubSpot deal becomes a project shows step 2 in practice: the company, contacts and deal amount carry over without retyping.

Each tool owns a different stretch of the same client relationship. A CRM owns the sale. A project management tool owns the tasks. An ERP or accounting system owns the books. A PSA owns delivery and its economics: the people, hours, budgets and billing rules in between. Knowing this tells you where each piece of data belongs.

PSA vs CRM: where does the handover happen?

The handover happens when the deal is won. Until then, the CRM is the right home for the client, the promise and the price. After that, the work needs things a CRM wasn't built for, like rates per role, approved hours and budget burn. Connect the two, because retyping the deal is where scope and budgets first go wrong.

PSA vs ERP: does a PSA replace your ERP?

No. An ERP runs the business around the work: the general ledger, payroll, tax, compliance and reporting across entities. A PSA runs the work itself. A firm can run a PSA next to plain accounting software and add an ERP later, once multi-entity finance becomes the bigger problem. Our comparison of PSA and ERP for professional services covers which should come first.

PSA vs project management software: what's missing from a project tool?

Money. A project management tool tracks tasks, owners and deadlines well, but it doesn't know what an hour costs or how much budget is left, so firms build spreadsheets on top. A PSA includes project management and adds rates, budgets, approvals and invoicing, which is why it's sometimes described as professional services project management software.

The main benefit is earlier, more reliable numbers. With hours, budgets and billing in one system, you see margin while a project is still running and fewer hours slip through unbilled. Independent research points the same way, though most of it is self-reported.

The alternative carries its own risk. Raymond Panko's review of spreadsheet field audits found errors in at least 86% of the spreadsheets checked in the more rigorous audits. Planning and billing from spreadsheets means relying on files that are usually wrong somewhere.

ITSEC, a cybersecurity and compliance consultancy, had time tracking, financial data and planning spread across different tools. After moving them into one PSA, ITSEC reports that timesheet completion reached 99% within four months. Data for monthly reviews that used to take days to pull together is now ready in seconds. Its CFO, Sebastien, says: "Without PSOhub, we would struggle to maintain visibility into project performance and margins." Read the ITSEC story.

You need a PSA when the gaps between your tools cost more than the tools themselves: hours arrive late, invoices are built by hand and margin appears after the project has closed. You don't need one yet if a few people run a few projects and one person still holds the whole picture.

Signs you've outgrown spreadsheets and separate tools:

• Won deals get retyped into a project tool.
• Timesheets are chased every week, and invoices wait for them.
• Planning lives in one person's spreadsheet.
• Project margin is only known after the month-end close.

"PSOHUB has solved the problem of disconnected business processes between our CRM, time tracking, and invoicing. Before PSOHUB, we had to manually move data across multiple platforms, which led to administrative errors and wasted hours. Now everything flows automatically from one step to the next."

Ikram Muh. A., Security Analyst (G2 review)

It can also be too early. In the same 2020 interview, Hofferberth's rule of thumb was that a five-person firm can manage in Excel, but at around 20 people it gets too hard to do everything well. A firm that bills few hours or runs a handful of simple projects may do better with a good time tracker and its accounting software. The right moment comes when coordinating people, projects and billing turns into a weekly struggle.

If you're past that point and comparing tools, the PSA buyer's scorecard gives you a weighted way to do it.