If you bill for time, the tick of the clock is as valuable as the ring of a cash register. But both are mere metaphors today, as we don’t often hear either of these sounds anymore.
Time and money may be a lot quieter, but they’re still inextricably linked. If you’re still using paper timesheets or spreadsheets to keep track of employee time, it’s almost a guarantee that your business is leaking revenue.
Let’s look at why the traditional timesheet has become a costly artifact and how to transition to a more enlightened approach to accounting for every tick.
Timesheets are old friends — comfortable and reliable but also sometimes frustrating and boring. Timesheets have been a staple in professional services firms for decades. They’re seemingly straightforward. Yet, beneath the simplicity lie undiscovered inefficiencies.
Manual entry is time-consuming and error-prone, and the administrative burden it places on your team can stifle productivity and cause you to lose out on billable revenue. When you’re in the business of providing a service, your potential lies in human capital, and you can’t afford to weigh it down with outdated processes.
The journey away from manual time tracking starts with measuring the impact of what you’re doing now. Otherwise, you won’t have the impetus to make a change.
Look at one or two small errors you’ve caught recently. How might they have snowballed? Sit with your colleagues and managers and quantify the real or potential effects.
Here are just a few examples of what you might discover.
If one person forgets to log two billable hours per week and their rate is $100 per hour, you’re losing $200 per week or $10,400 per year. How many employees might be overlooking time regularly, even if it’s in minutes?
How to dig for the data: Search for activities that people complete without thinking about logging time: quick revisions to a proposal or a few emails between meetings.
There’s also the risk that your employees are logging excess time that you’re not billing clients for. You could be paying out too much. An extra 15 minutes logged daily adds up to over 60 hours of unearned pay per year.
How to dig for the data: This one can take some time and effort to uncover. Comparing project milestones and output with the responsible parties’ timesheets can help you figure out if you need to flag a particular play.
Incomplete timesheets distort your understanding of project costs, which can lead to flawed budget projections for future projects. If you’re estimating based on inaccurate data, you’ll perpetually under- or overquote.
How to dig for the data: Look at the last time few times you went over budget on projects. Was it due to material or other costs, or can you attribute some of it to additional unexpected labor? You might be surprised to learn that inaccurate time entries caused miscalculations of your actual numbers.
When timesheets don’t accurately reflect how much time tasks take, it becomes difficult to allocate resources efficiently. This can result in some of your employees being overburdened while others are underutilized.
How to dig for the data: Analyze collective and individual utilization rates to get a sense of whether these numbers make sense based on output. If they seem off, inaccurate timesheets could be part of the problem.
Errors on timesheets can lead to inconsistencies in billing, which your clients could perceive as unprofessional or dishonest. This is the worst-case scenario, and the impact here is likely to be far greater than any of the above examples. Delayed payments and lost business are tangible costs, but you can’t measure the missed potential of future referrals.
How to dig for the data: Trace the source of a recent overdue payment, client loss or non-renewal in which a client disputed a charge or you had to correct an invoice. How much money did your business lose as a result?
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After this important self-reflection and data gathering, you may be coming to terms with the fact that misuse of timesheets, unintentional as it may be, is the culprit of a lot of avoidable issues.
The problem isn’t just the collective groan every time your team has to submit hours. It’s the impact of even tiny errors that, when compounded, cost your business and your team.
There’s a more efficient path to improve your resourcing — the path to an automation-driven approach to time. Here’s how to go from manual to intuitive time tracking.
Adopting time-tracking software is a major operational upgrade, but its effects can be much more widespread if you consider your overall technological efficiency. Tracking time precisely could, ironically, reveal that your team is spending far too much time switching between platforms.
Before you invest in limited time-tracking software, think about whether you need to consolidate platforms at the same time. We recommend client work management software that has built-in time tracking.
Find out about the added benefits of using a platform like Accelo to recover billable time: Read why the founder of Vector Business Solutions chose Accelo and cut the firm’s non-billable, administrative time in half.
