If history sets a precedent, maybe the most notable profit drains of business profitability are unbilled expenses and time. For many years, inefficient and outdated methods of tracking time and expenses have cost professionals such as accountants, designers, architects, lawyers, and consultants millions in uncaptured profits.
At times, the losses can be huge because, a significant percentage their input – collaborating, consulting, etc. – is usually invisible, despite its significance. Thus, professional service organizations that invest in time tracking software are not only in a position to capture those wayward bucks, but also generate extra customer loyalty in the process.
That’s not enough though. Below are other ways on how time tracking can help professionals radically improve their practices.
Maintain high-profit margins
Profit margins are usually thin in professional services organizations. Time tracking help boost profitability by optimizing two primary operating metrics – realized billing rates and billable utilization. For instance, if you can monitor in real time, the number of hours being billed to a specific project, and you discover that billing is running lower than anticipated, you can intervene straight away before the issue escalates and severely impacts your overall profit margin.
Professional service organizations need to make necessary adjustments in real time, when they can still manage to control a situation, as opposed to waiting till the project is completed, when it will likely be too late. Evidently, professionals who have no modern time tracking software in place cannot get that type of end-to-end visibility into profitability and billing.
Bill clients accurately
Time tracking is no child’s play when you work across sub-projects and multiple projects. You just can’t accurately capture all the time you spend on every project using manual time input techniques. With time tracking software, every detail makes it into the system – even “hidden” billable hours spent on travel, overtime and project communication. Nothing is misrepresented or misremembered, and you can effortlessly export your data into invoicing software for payroll or client invoicing purposes.
Professionals who keep sending erroneous invoices make their clients to doubt their level of professionalism. Over time, this can cause the clients to look elsewhere for help. Thus, if you wish to preserve your reputation, it is prudent to take invoicing and time tracking seriously.
Improve project estimates
When you precisely know how long different tasks take your team to complete, you can set more reasonable estimates for future work. In short, this means, being able to come up with minimum requirements for a gainful return, understanding which projects and clients are really worth your time, and setting effective fixed or hourly rates which cover all your project expenses.
By measuring the accurate allocations of project time, you can always make an educated guess and only take on tasks that deliver.
Easily prioritize projects
With a time tracking software in place, you can use the milestones, staff allocation, and calendar features to make realistic adjustments to schedules. This helps you to shift deadlines and reallocate hours for high priority projects easily.
Your team can see the projected number of hours for every stage of a project and precisely where that project/assignment is in the pipeline. Talk of accountability and visibility in one neat system.
Check the status of a project at a glance
We can never emphasize enough about the significance of a project’s visibility. As soon as an assignment leaves the managers desk, it tends to vanish into a black hole. With multiple people working on different project’s parts, it can be hard to know the status of every task.
This is not the case if you are using time tracking software. Just log in, and at a glance, you can check the status of every single project. You can confine your view to a particular type of job or department, and if your software is cloud-based, you can even see this information from anywhere in the globe.
Nothing is as comfortable as knowing that when a client inquires about the status of a project, every detail can be quickly relayed!
Raising your rates/fees
As a professional, how do you know it’s time to increase your hourly rates? Do you raise your rates because your competitors have done so? Or do you do it because you want to take advantage of an specific client’s financial strength? Ethically, that is very wrong.
You can use the data collected from your time tracking system to come up with a fair fee for a particular project. Thanks to a time tracking system; a look at the hours spent on each assignment and your overall profit associated with a project, should easily give you a sign if your charges are fair.
Correctly report hours for compliance
Even for professional service organizations, hours worked by their staff are needed for compliance and reporting issues. This can be a daunting task at the end of each quarter or month to compile and send off.
However, professionals who use time tracking software can effortlessly export and share reports and other relevant data with government agencies, external stakeholders, funders, and board members for compliance purposes. Note; professionals who do not comply with these regulations, are susceptible to lawsuits and fines.
To sum it all up
Some professional services organizations are living in the 80s in regards to time tracking technology and are paying for it dearly. For a sector that employs millions of people nationwide, it is the high time they adopted modern ways of doing things or risk losing substantial revenue through lost time each year.
From effortless project management to accurate invoicing, there are numerous reasons why modern time tracking tools makes sense. That said; the time tracking system you choose matters a lot. It is supposed to be intuitive and easy to use. Above all, the system should be cloud-based to allow you to quickly and easily enter time wherever you are, and on any device.
Think automatic tracking of time could benefit your firm? Try AccountSight’s 30-day free trial and let’s know what you think.