As a small business owner, a freelancer or team member in a company, your time is often billable, accountable and valuable. You sell your services based on a fixed price or blocks of time. Time is thus your most critical asset, but how much of it is wasted in admin work or on projects and activities that are less profitable than others?
Meet James, a lawyer with license to practice in three different countries, which means he travels frequently and bills in different currencies. His dad was also a lawyer – back in the era when there were dinosaurs, and secretaries using voice recorders to note the beginning and end of client engagements… James, being Next Gen, uses Excel spreadsheets to track his hours, copying details across to an invoice when it’s time to bill. But he is often out and about, and forgets to track many engagements.
Meet Nicola. She heads up a web design firm and has a team of designers that work on projects for a diverse set of clients. She uses email for collaborating with her team members and Microsoft Word template for timesheet entries. She is considering upgrading to an online system that addresses the demands of her growing business.
So let’s take a look at the leading benefits for businesses to use time tracking software:A good way to boost productivity for any professional service business is to start tracking time systematically. This can provide business insights that will help you make better decisions, and generally make life easier for you and your clients.
1. Streamline billing and turn time into money
Be it legal advice, accounting services, web-design or the like – hours spent servicing your customers should translate into money for your business. Time spent on copying hours worked from your Excel spreadsheet to your invoice, or making up the details from memory is costing your business in more ways than one. Ideally, you should be using an integrated project management, time tracking and invoicing system. With all features under one streamlined system you will save time on administrative tasks and no billing activity gets missed.
James has taken the leap into the world of cloud-based software for invoicing and time tracking. He creates a project for each client engagement with agreed billable rate. Tracking time against different tasks is simply click of a button. His favourite part is how his software has flexible options of currency conversions when invoicing clients in other countries, and also adjusts for international number formats and the like. This way he is able to keep track of and invoice for all his billable activities so nothing slips through the cracks.
Nicola now uses an integrated software solution for project management, time tracking and invoicing. She has all her designers dutifully entering timesheets with details about what they spent their time on. She can now quickly review and approve timesheets online and convert them to invoices with just a few clicks. Her customers can pay the invoices online with credit cards improving her cash flow and saving her many valuable hours each week.
2. Key insights on Customer and Engagement profitability
Once you systematically track time spent on different activities, you have your hands on a wealth of useful data including where your profit and costs lie. Which projects are giving you the biggest profit margins and are you spending the right amount of time/resources on them as opposed to less lucrative ones? Which customers should you engage with more often?
Let’s see how Nicola is using her software to get better insight into her business. For every engagement, she sets up a ‘project’ on her system, and allocates tasks to her team. As her team tracks their time on those projects, they categorize their timesheet entries according to the nature of the task. If she budgets a certain amount of hours to a project and her team is closing in on those hours too soon, she can deal with it in a timely manner. Also, if a team is turning in work well before the budgeted timeframe, she can decide what to do with the spare time (or look for future work with that client!).
James now also lists all his cases as projects, and enters his timesheet entries for each project. This allows him to sort and categorize the entries in multiple ways. He has a much more accurate idea of how long it takes him to do various tasks, and can use that info to adjust his billable rate.
3. Better utilisation of staff
Digitising the timesheet process will help you identify more easily and accurately how your staff members spend their time and how much of it is productive for your business. You can calculate staff utilisation rate (a function of hours spent on billable work versus non billable work) and how this impacts your service delivery.
Nicola is a better manager these days. She encourages her team to track all their business activities, whether billable or non-billable, using the timesheets. Instead of analysing tedious log entries of staff members like she used to, she clicks her staff utilisation report that illustrate the numbers with attractive pie charts and graphs. So now she gets a fair idea of who her best performing employees are, and who is struggling with which task. This way she can rectify situations in a timely manner.
4. Helps with accurate quotes and estimates
As you make it a practice to track time on projects, and categorise your entries by the nature of task, it becomes easier to prepare quotes and estimates for future projects of similar nature. This way you also have more chance of ensuring your business’s profitability.
James now knows exactly how many hours he spent on research, taking client calls, travel, time in court etc. on his recent engagements. His software also allows him to track expenses. All this helps when he is quoting and budgeting for new cases.
5. Helps productivity and motivation
Time-tracking has a profound effect on overall productivity of the company. It keeps well-performing employees confident that their work will be noticed and duly compensated. It also keeps laggards in check or brings issues to light in a timely manner. For instance a team member struggling with a particular task. If self-employed, you are able to instil the discipline and professionalism in yourself to grow into a mature company.
6. Allows your business to scale, seamlessly
If you have robust processes in place from the beginning, like diligent tracking of time, professional invoicing practices and the like, it allows your business to scale more easily should you seek to grow your business, whether from freelancing to a small business to a medium sized one. You can use your data to make smart decisions at every turn, and utilize your systems to minimise administrative headaches and concentrate on what you do best.
James has all this extra time to do his ‘lawyering’ – thanks to his efficient software system that has drastically cut short his day-to -day tasks like invoicing and budgeting. Accurate timesheet entries alongside professional looking invoices has made him quite popular with his clients too.
Nicola’s company has gained an indelible reputation for fast turnaround of projects (thanks to her online system that keeps track of all client communication and keeps the team focused on deliverables). She is looking forward to expanding her business overseas, as she has discovered that she can manage remote teams and clients with ease. It’s pretty much a happily ever after.