When time is money, as the old saying goes, there’s no room for mistakes. Untracked time costs service-based business owners money every single day. Unfortunately, many small businesses and medium-sized companies lack a uniform or standardized way to track their billable time. Worse, they rely on pen and paper or clunky desktop software to capture their billable hours throughout the day.
The results? Under-reported and miscalculated hours leading to lost time that you can’t resell.
Not surprisingly, study after study indicates the primary reason for poor time tracking is that the process is too cumbersome. The methods related to tracking billable time haven’t evolved much over the last couple of decades. Most professionals are still required to remember how much time they spent working on particular projects for a variety of clients, and then enter those hours manually, often days after they did the work.
Most timesheet applications available in the market currently are part of multi-use business software. This means that IT helpdesk technicians, support team members, accountants or other service professionals often need to go out of their way to access and enter their billable time. This disconnect makes it difficult to capture billable time accurately and costs professional services companies millions of dollars each year.
Research has identified three significant billable time capture challenges inside professional service companies. These include:
● Email - Reading and answering email takes up a large portion of the day, especially for a professional services firm as they engage in conversations with multiple clients. Unfortunately, time spent on email is largely ignored in most timesheets.
● Meetings - An average of 15.5 hours a week are spent in customer meetings and a majority of that time is not captured. That’s almost 40 percent of the work week that is going unrecorded.
● Memory Leak - The frequency of time entry has a direct impact on leakage. Waiting too long to enter billable time means forgetting what was done. Entering time as tasks are completed can double the accuracy and help you get paid earlier and more accurately.
A 15-person professional services firm with an average billing rate of $150 per hour could add another $1.4 million to their top-line every year just by capturing the leaked revenue from emails, customer meetings, and memory loss. Even if you are not a 15-person shop, merely closing the time capture gaps in your process could save you an extra $100,000 per employee this year.
So what’s the best way to do it? Here are some ideas to get you started:
● Make time capture work inside your business - If your employees are managing tasks, projects, issues or other client work, you need to make it easy for people to enter their time as they go about their work. Using a professional services automation platform that includes time and expense tracking like SherpaDesk keeps it simple and easy.
● Track billable time and non-billable time - It may not always be clear what is billable and what’s not. By accounting for all the time – 8 hours/day, 40 hours/week – you’ll be able to know if you’re leaving money on the table.
● Monitor utilization - The best professional service firms run at a rate of 80+ percent utilization. Chances are if your firm has plenty of clients, but utilization is down you are leaking time.
Time leakage is a significant problem for professional services firms – with over 38 percent of potential billable revenue lost to untracked time. If you are one of them, address the issue by putting the processes and technology in place to support better time capture. You’ll see happier employees and a revenue boost quickly.
*We gathered statistics from the Bureau of Labor Statistics and Infocomm for this post.