Track billable hours better with cloud software
How you can grow your professional services business with effective time tracking
On any given day, for any professional service business, the ability to effectively track billable hours can be met with a number of challenges.
Employees are working quickly, often moving between projects as they communicate with different clients and address incoming questions or feedback. A shift in focus to a different project for any period of time can easily be forgotten and later go unaccounted for.
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There are three important consequences of unaccounted-for time, all of which directly impact your business and overall profitability:
- The time never gets billed to the client, resulting in a loss of income despite the fact that the work was still being done.
- Your company isn’t able to see the total hours spent on the project, providing an incomplete picture of the time required to carry out that type of work.
- There is limited visibility into the hours being spent on a given project, making it difficult to determine if it is taking too much time – or too little.
The whole point of tracking billable hours is profitability – ensuring you or your company receive appropriate compensation for the work you’re doing. However, many professional service organizations have yet to adopt an effective time tracking solution for billable hours, and continue using legacy methods to record hours spent.
Shavings make a pile, as they say, and a few hours here and a few hours there that are never billed to the client can result in big income losses for your business over time.
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If it isn't automated, it isn't working:
The problems with legacy time tracking solutions
In the professional service world, a primary challenge is understanding how to run an effective and efficient business with multiple employees working with multiple clients on multiple projects – all within agreed-upon project timeframes.
Let’s take a law firm, for example, where each lawyer is spending time out in the field meeting with several clients each day. During those meetings, they might take a call from another client, or spend some available time fulfilling a different client request. Any of that unplanned client-related work needs to be billed, but without an automated solution, it becomes much harder to ensure accurate time tracking.
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Consultant time tracking
Time tracking methods that rely on spreadsheets or other manual processes leave a lot of room for error
In fact, a 2020 report by Market Research Future found that the U.S. economy loses 50 million hours in productivity per day due to unrecorded work activities, which equates to a loss of about $7.4 billion dollars per workday.
And let’s be honest – most employees track their time more begrudgingly than enthusiastically, as it is generally viewed as an extra hassle in an already busy schedule. Manual time entry processes just make the situation worse. Employees might wait until the end of the day or week to record their time, and the more space between the actual work and their time entry, the wider the margin of error.
Important to note is that it isn’t just under-recorded or unrecorded time that can affect your bottom line. Over-recorded time can be a problem as well. If employees are quickly entering their time at the end of a busy day or week, they might round up their hours for convenience, or record more time than was actually spent.
This practice has the somewhat incriminating title of “time theft”, but even if unintentional, it can provide an inaccurate picture of the time required to complete a certain project or, worse, cause your business to exceed agreed-upon hours for a client project.
Spreadsheets and other manual processes used to track billable hours are simply not able to deliver optimal business productivity and profitability.
5 reasons to track billable hours with an automated, cloud-based solution
Using cloud software for tracking billable hours allows employees to log time and expenses from anywhere, makes approvals a snap, and provides complete visibility into time spent and hours billed.
Solutions like Professional Services Automation from FinancialForce, which is built on the Salesforce platform, provide visibility into a number of key business activities; but for the purposes of this post, we’ll focus on the time tracking benefits of this type of solution.
1. Maximize productivity
Effective tracking of billable hours allows you to gain visibility into some critical aspects of your business that all impact productivity:
- The amount of time and effort that goes into completing a certain project
- How much a certain project costs your business to complete
- Any gaps in productivity or efficiency when it comes to how work is being done
- Employee workload – is an individual swamped? Can they take on more work?
- Whether you are pricing client work accurately, spending more time on a project than necessary, or not spending enough time
2. Expedite billing cycles and time tracking maintenance
When time is being logged accurately and in real-time, your organization can conduct clearer forecasting, allowing you to streamline client billing cycles and spend less time sorting out hours spent vs. work completed.
3. Gain visibility and control over costs
Configure a time tracking and expense logging interface to fit your business needs and the needs of each employee, and review, update, or approve time and expenses all in one place.
4. Avoid revenue leakage
Unaccounted-for time equals lost revenue. When you track billable hours accurately, you’ll be compensated for the work you do. It might sound like a no-brainer, but it’s a step that’s often overlooked or poorly executed.
5. Streamline projects and operations, and deliver a better client experience
On-time project delivery, profitability, return on investment, and revenue growth are among Forbes’s top 15 business metrics to track in 2021. Tracking billable hours in real-time with an automated solution ensures you’ll meet or exceed your goals for these metrics – and more.
Delivering a project on-time vs.
The time the project takes to complete
Any professional service organization strives for on-time or ahead-of-schedule project delivery. Everyone feels good when expectations are met or exceeded. But there is a difference between on-time project delivery and understanding how long it took to do the project.
This all ties back to productivity and understanding how your team – and overall organization – are performing.
The amount of time it takes to complete a project can be impacted by several factors – some are expected, such as research or versioning, but other factors can be prevented. Only by automating your billable hours tracking process can you identify those preventable issues and effectively analyze and forecast projects.
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Using an automated, cloud-based solution to track billable hours gives you visibility into repeat issues that can be addressed and resolved. For example, if numerous employees are losing significant time each day dealing with project management software glitches, that’s a problem that may not have been identified through manual time tracking processes.
You may be thinking, “if we’re delivering projects on time and billing for the time we use, why does it matter if we’re not on top of every issue that crops up during a project?”
Here are the primary reasons why you want to be aware of those issues and make an effort to resolve them:
- You have a cog in the wheel. Your employees might treat their project management software issue as another eye roll-worthy IT problem and simply deal with it day after day without saying anything. However, now you have a process issue going unaddressed that will continue to be a roadblock to productivity.
- Your perceived output is incorrect. We are reminded again how shavings make a pile, and even a small amount of time spent each day on preventable problems skews your understanding of how long a project takes to complete.
- The time could be better spent. Resolving time-consuming issues allows your team and organization to allocate that reclaimed time elsewhere, increasing productivity and billable opportunities.
- Employees gain empowerment. Automating the tracking of billable hours creates transparency around time spent and improved performance analysis. Your team will clearly see how they are spending their time, and even learn and improve by reviewing their level of performance and how their total hours billed compare to total available hours or time spent on similar projects.
- You can plan more effectively. Disjointed data makes it difficult to accurately forecast projects and gain visibility into projected revenue month-over-month. Automation allows you to better plan for projects, assign the right resources, and maintain more accurate financials.
Get your financials in order - Yup, time tracking software does this, too
Tracking billable hours with an automated, cloud-based solution can provide a full view of your entire organization’s financial health.
Think about it. Manual tracking processes lack a holistic view and don’t create a single source of truth for the critical data driving your daily business operations. If you’re tracking billable hours using an automated, cloud-based system, however, the visibility over your financials can’t be matched.
- Revenue, budgets, backlog, billing, and rates are all available in one place and accessible anytime.
- Easily view project profitability by comparing the time allocated to work completed and revenue coming in.
- Automate billing and customize it to specific clients and projects.
- Analyze all financials, including profit margin, expenses, hours billed, and bills processed and paid.
- Track profit margins as projects progress.
- Control budget approval and requested changes, and monitor actuals in real-time against the agreed-upon budget.
- Easily see what has been billed, what is ready to bill, and what has been invoiced.
The fast pace of work requires a solution that can keep up
Running an efficient business isn’t just about doing one thing efficiently. It’s about managing your team, your customers, your projects, and your financials seamlessly and with complete visibility into how one impacts the other.
Automating time and expense management empowers professional services teams to be accountable and aware of how they’re spending their time and how they execute on projects and client engagements. And being in control of projects and timelines allows you to identify issues and make adjustments to keep customers happy and your team productive.
Contact us today to learn more about how you can use the Salesforce cloud platform to streamline your operations and put your customers at the center of everything you do.