What are professional services? Everything SMBs need to know

Professional services is one of those terms that seem intuitive but are actually quite cryptic. When asked what professional services mean, many people have a hard time coming up with a clear definition.

Since professional services are a $6.38 trillion industry, it may be a good idea for small and medium-sized business (SMB) owners to get a better grasp of it.

If you’re confused about professional services too, this article will help clear the fog. We’ll start by explaining what professional services are, examples of professional services, and how they benefit SMBs like your own. We’ll also cover how to choose your professional service providers and how to pay them effectively.

Understanding professional services

Let’s start with a quick definition of professional services. In broad terms, professional services refer to a company, a department, or an individual who sells not a physical product but a service based on their professional knowledge and expertise in a specific field. 

Professional service providers may include legal experts, accounting and bookkeeping firms, marketing experts, technology consultants, and other external advisors and professionals working with companies or consumers.

Professional services can work under both the business-to-business (B2B) and business-to-consumer (B2C) models. This means that they can service other businesses or work with individuals to help customers achieve their goals. 

Acting coaches, for example, typically provide their services to people looking to pursue a career in the film or theater industries. Social media consultants usually work with businesses to improve their online presence. And, lawyers may work with both companies and private people in need of legal advice or representation. This article will focus on B2B professional services. 

It’s important to note that not every service falls under the professional service umbrella. If a service doesn’t require unique expertise and is more about filling a technical task that requires no specific education or experience—such as dog walking, cleaning, or deliveries—then it usually wouldn’t count as a professional service.

What is considered professional services?

Professional services constitute a diverse industry that touches on many different fields and works for companies in both the private and public sectors as well as individuals. 

Here are some examples of professional services in various fields that are commonly used by businesses.

How professional services differ from other business offerings

Professional service providers don’t sell physical products. What they’re selling is typically their years of experience, knowledge of a particular field, and professional skills. 

They are typically business owners themselves, working as external advisors or freelancers on a project-by-project basis. 

Professional services differ from other services that don’t require specialized knowledge, training, or backgrounds.

Benefits of professional services for SMBs

Hiring in-house professionals isn’t usually feasible or wise for small businesses. Using professional service providers is a great way for smaller organizations to enhance their operational efficiency without overspending.

For example, if you own a small appliance store, it’s unlikely you need a full-time marketing expert. But, ahead of busy times such as the holidays, as well as slower seasons, you may look to leverage professional services for strategic decision-making to maximize sales. 

In other words, the importance of professional services for small and medium-sized businesses lies in the flexibility they allow without compromising on professional excellence. You only pay for the services you need, when you need them, and you can always choose the right professional for each project according to your needs, budget, and expected return on investment (ROI).

Selecting the right professional services provider

The key factors to consider when choosing a professional service provider aren’t that different from choosing any other vendor.

Here are the four main things you need to look out for when commissioning professional services:

Understanding the pricing models of professional services

In addition to the overall cost, you may want to consider the different pricing models of professional services to find the best fit for your project.

Here are the most common pricing models for professional services.

How to pay for professional services

A smooth and efficient payment process for professional service providers helps maintain good relationships with the people you choose to work with. The best way to achieve that is by using a digital business-to-business (B2B) payment platform like Melio.

Here are some of the key benefits of using Melio’s bill pay solution for professional services:

• More choice. Choose the payment method that works for you—ACH bank transfer or card— without affecting how your service provider gets paid. You both get to choose the method that fits your workflows. 
• Scheduling. Schedule payments for professional and business services in advance to optimize your cash flow. This improves efficiency while ensuring payments go out in time, not a minute too soon or too late. 
• Recurring payments. If you agree on a retainer model with your professional service provider, you can set up recurring monthly payments so you don’t have to waste time scheduling them each time. 
• Pay over time. Professional and business services can be strategic investments meant to grow your small business in the long run. As such, they can be expensive. Melio’s financing options allow you to divide large bills into smaller monthly payments. Your service provider gets paid at once, while you get extra time to pay after you begin to reap the benefits.
• Secure transactions. Digital payments come with added layers of security to ensure both your money and payment details remain safe.

Not everything needs to be done in-house

Professional and business service providers can give small businesses a boost thanks to the vast experience and knowledge they bring. 

When hiring a full-time expert isn’t viable or needed, these professionals can act as strategic advisors, guide you on legal issues, or assist with specific projects according to your business needs.

When the time comes to pay for professional and business services, sign up for Melio to seamlessly pay online.