The FinOps Playbook: Closing the Gap Between Finance and Ops

Revenue is up, but profits aren’t.

If that sentence feels familiar, it doesn’t mean there’s a problem with the work itself. The problem usually lies with how the people running the business are working together.

This shows up most clearly in a disconnect between finance and ops. Instead of working side by side, they’re solving different puzzles in different rooms. And most likely using different data sets.

That gap in collaboration is how margin leaks can go unnoticed. FinOps (short for financial operations) closes that gap.

By getting finance and ops to work from the same numbers, meet frequently instead of scrambling at year-end, and build commercial awareness across the business, the FinOps approach helps you get ahead of profit losses and stop new ones from happening.

Where the profit leak actually hides

You lose the most money in the gap between what your ops team does and what your finance team sees.

A client asks for one more round of edits. A “quick” request comes in and the team just does it, without checking scope. Every instance is understandable, but ops never sees it. There’s no moment where someone with a view of the budget gets to say “that’s out of scope” or “put a junior on it.”

So none of it shows up on the invoice. The project ships, the client’s happy. Finance, reconciling the month, sees a budget that doesn’t add up. But that’s a month too late for ops to do anything about it.

Overservicing is just one leak. Nobody checking the numbers while the work is still live is another.

When we surveyed 303 professional services firms, only 13% of respondents said they used data to make project decisions while work was ongoing.

Source: “The Maturity Gap.” Firms self-assessed with a 25-question operational maturity quiz.

And this lack of accurate, live data creates different problems for everyone. Problems that drop your margins: 

• Founders don’t know which clients to walk away from, so unprofitable work keeps getting sold
• Ops leaders can’t defend staffing decisions, so headcount goes up or down based on gut feelings instead of evidence
• Finance can only explain the shortfall between target and actual margins after the books close, they can’t reconcile it ahead of time
• Team members don’t understand why their extra hours don’t translate to revenue, but overservicing still keeps happening 

These all contribute to what we call the “Maturity Gap:” the distance between growing revenue and actually keeping more of it.

Every ops decision is a financial decision

Every resourcing call and scope change has a direct line to your P&L. But most ops leaders make those decisions without seeing what they cost, because nobody’s translated the operational numbers into financial ones.

Three numbers make that link visible: 

• Utilization
• Recovery
• Work in progress (WIP)

Ops reads these as “are we busy, is the work done.” Finance reads them as “are we covering costs, is there margin, is there cash.” Same numbers, two different readings. 

FinOps just means getting both teams to read them together while the work is still live. Early enough to change something. Wait for finance to close the month and all you can do is explain what already happened.

Utilization

Utilization is how your team’s available time gets used, split in two: billable (client work) and non-billable (internal meetings, training, admin, new business).

When leadership says “utilization,” they’ll likely mean billable utilization. The share of time on client work. That’s the slice that pays for the team.

There’s no universal target; it depends on the role. A mid-weight designer, mostly delivering, might be expected around 80%. A senior strategist who also sells and manages people, closer to 60%.

The trap is reading a packed schedule as a productive one. You can be flat out all week and still be barely billable. 

As Rich Brett, FinOps consultant and co-instructor of “The Missing Finance Course,” puts it:

“You might feel like you haven’t stopped all week… but if most of that time wasn’t on client projects, your billable utilization could still be low.”

So ops and finance should read it together, and early. A full calendar looks “busy,” but the billable figure only lands when finance closes the month. Too late for the resourcing call that should’ve happened in week one. Look while the work’s still live, and you can still act on it.

Recovery

Recovery is how much of the time your team put in the project’s fee actually covers. It’s not cash in the bank and it’s not what you invoiced. It’s the value of the hours you worked, measured against the revenue you can recognize for that work. 

Put in 100 hours but the fee only stretches to cover 80? Recovery is 80%, and that missing fifth is margin you gave away.

That’s also why recovery only holds up when two things underneath it are solid: accurate timesheets, so you know the hours you really spent, and proper revenue recognition, so you know what the work actually earned.

Which way the number bends tells you different things:

• Under 100% — you spent more time than the fee covers. You’re overservicing, and margin is leaking. At 80%, one in every five hours your team worked isn’t paid for.
• Over 100% — the fee covers more than the hours you put in; you came in under the time budget. That can be genuine efficiency, but it isn’t automatically a win. 

When Rich sees a project at 173% or 202%, he reads it as one of two warnings:

“Either timesheets are incomplete and the team actually spent more time than was recorded, or you’re recognizing more revenue than the work delivered justifies.”

So a low number and a suspiciously high one both mean the same thing: go look. Recovery flags where the problem is, not what it is. Working that out takes both sides — ops knows whether the work actually happened, finance knows whether the revenue was properly earned.

Work in progress (WIP)

Work in progress is the value of work your team has delivered but hasn’t invoiced yet.

A bit of it is normal. But when WIP grows, you’re delivering faster than you’re billing. That means you’ve paid your team to do the work, and you haven’t billed yet, so you cover delivery yourself.

Like the other two, WIP turns into a problem when ops and finance aren’t talking:

• Ops sees finished milestones and deliverables and reads them as success. So it keeps operating as if cash is fine.
• Finance watches the cash slow down and can’t see why.

The fix is to keep billing in step with delivery. Where you can, invoice upfront; otherwise bill as the work progresses, so an invoice always covers what you’ve actually delivered. Never let progress outrun the invoices. And because work slips through, ops, resourcing and finance run a weekly WIP check so every piece of delivered work is booked and billed before it stacks up.

Finance and ops can’t just team up at year-end

Finance shouldn’t be the team you call once something’s already gone wrong. But that’s how most firms run. 

As Rich puts it, “most businesses don’t know the numbers until the end of the year.”

When you’re small, nothing forces the monthly habit. The misses are small enough to absorb, so most firms don’t build it until they’re big enough that skipping it clearly hurts. 

And waiting for year-end means you only find out whether you made money once the year’s over. Too late to fix the overservicing, resourcing, or pricing behind it. And the habit is far easier to build while you’re small than to bolt onto a bigger team later.

Fixing that takes more than a shared spreadsheet. Rich calls the solution embedded finance:

Rich calls the solution “embedded finance”:

The best businesses are probably supported by a finance team who are embedded in the business… being the person who holds the credit card is actually someone who knows the people in the business, knows what their problems are, and tries to solve them and works with them rather than just pushing against ’em the whole time.

Here’s how to build it:

• A monthly review of actuals with senior leadership, ops, and finance. Compare what you spent and earned against budget — for the month, the quarter, and year to date. The value is the operational context behind the numbers: “Why did performance finish where it did? Is there overservicing on a particular client? Is a role or department consistently underutilized?”
• A weekly WIP check between ops, resourcing, and finance. Cover capacity, bottlenecks, and whether every pound of delivered work has been recorded as revenue and invoiced — so nothing you’ve delivered is sitting there unbilled. The point isn’t that WIP goes unchecked otherwise; it’s getting the three teams on it together every week, so nothing hides until close.
• Check the data against what the team’s telling you. If the P&L and the people say different things, something’s off — either the numbers are wrong or the team’s read is. Put the two side by side and the gap points you straight at what to look into: a client that’s quietly overservicing, a role that’s underused, revenue that isn’t being recorded right.

These changes add up, and they shift finance from just reporting on the business to helping run it.

Commercial awareness has to be built, not hoped for

Commercial awareness doesn’t trickle down from a finance meeting. It has to be built into how the whole org talks about work, success, and what “good” looks like.

Right now, in most firms, that understanding stops at the top. As Rich puts it:

“Most of the time, it’s just the owner and a couple of senior leaders who are touching the numbers.”

So people keep making decisions that hit the P&L—saying yes to an out-of-scope request, putting an extra person on a project, shaving the quote to win the work—without any real sense of what those calls cost.

The fix is to be open about the numbers, the good and the bad. Rich’s rule:

“Transparency works both ways. It can’t just be, we only talk about the good stuff, we’ve gotta talk about the bad stuff as well.”

Connect the numbers to what people actually care about: career growth, job security, and whether the business can invest in their team. That’s what takes the fear out of finance and lets people across the org see how their work shapes the bottom line. Keep it clear and keep it simple, though. No one should leave thinking, “oh, we’re screwed, I’m gonna go look for another job.”

As Rich says, someone who understands how their role affects the numbers is “gonna be a much more important part of that business than someone who just does one thing.” Break it down simply: “Timesheets matter because they fund the team. Utilization matters because it decides whether we can hire.”

Then use the FinOps modules to build financial knowledge across roles:

• Individual contributors need the basics to protect margins: accurate timesheets and the confidence to ask “is this in scope?” or “what’s the budget for this?” (FinOps Essentials)
• Managers and delivery leads need to read utilization and recovery well enough to answer one question: is this project paying its way for the time it’s taking? (FinOps for Delivery)
• Leaders need to work with the real numbers and the story behind them: what happened this month, why, and what to change next (FinOps for Leadership)

Build this into the company culture and people start operating as true partners in the bottom line. Especially as they move up.