Let’s Talk Time Recording
Richard Brewin • December 19, 2019
Timesheets! The bane of the accountant’s life. When a swell of opinion grew in the 1990’s towards binning timesheets in favour of fixed price or value-based billing then it’s no surprise that many jumped at the opportunity and continue to exclude them today from their firms.
My challenge to firms who’ve followed this path is to question whether they’ve ceased using timesheets for the right reason and whether they’ve lost a valuable practice management tool as a result.
In 1993, when my partner and I set up our first firm, we took two actions from the outset:
We retained timesheets but stopped recording non-chargeable time
We put all clients onto fixed price agreements
The thinking was straightforward: Fixed price agreements brought clarity and certainty to the client whilst recording our client related work enabled us to track the effectiveness of our own processes and the profitability of those agreements.
To use timesheets in this way required us to view them differently to how they were most commonly being used at the time. For many firms they were the basis for billing the client and for assessing the team. Neither of these approaches were fair or right but the drive should have been to move away from the misuse, not the tool itself.
A timesheet is a tracking tool, not a billing tool. It enables a firm to track the work it does for a client, the resources it uses on that client and the accuracy of the service and pricing model in respect of that client.
A timesheet is a resource management tool, not something to beat the team or yourself around the head with. Like it or not, we are a time based business. We have to track it in order to understand where our resources are being applied, our profits being made and our inefficiencies and losses occurring. Just because we don’t use timesheets for billing doesn’t mean that they don’t have huge practice management and client analysis benefits.
As we’ve proved form 1993 onwards, you can run both value based pricing and fixed service arrangements as the external model for your clients whilst using timesheets internally as your tracking tool to better understands the dynamics in your firm.
Now the painful bit. Yes, timesheets do bring accountability. If someone can explain to me why that is wrong in a commercial business then I’m willing to learn. The pain comes not from the timesheet process but how business leaders allow it to be applied. If your team are scared to accurately record their time then that is a cultural issue, not a timesheet one.
Of course, time recording has moved on. It has never been easier to efficiently record how the time resource within your firm is being used. What you learn avoids missed billing, under-pricing, client abuse of your services, production inefficiencies, training failures, communication failings…the list goes on.
I find it ironic that professional football has dramatically improved its performance through the use of player stats, quite literally recording every breathe that they take, and yet our profession has ripped up the very same approach.
Something to think about maybe?
Look at any accounting firm website and there is a fair chance that the word ‘proactive’ will be prominent. Ask some business owners and taxpayers whether they consider their accountant to be proactive. There is commonly a gap between the two, between the intent of the accountant and the expectations of the client.
The tag ‘Trusted Advisor’ gets bandied around a lot. Without trying to be deliberately contentious, I often challenge its use. Undoubtedly, accountants were once the trusted advisor to their clients. When I came into the profession 44 years ago now, the older partners, especially, were seen by their clients as their trusted advisor, their ‘go to’ person on any issues, business, family or personal, that were troubling them. Without the filing deadlines of today, these clients were with their accountant primarily because they valued the relationship rather than the products.
All accountants are the same! We’ve all heard it said. It’s nonsense, of course, but, when you are asked what it is that your firm does that differentiates it from other accounting firms, it can be a challenge to come up with something tangible. Accounting firms tend to offer similar services, that’s what makes them accounting firms. Differentiating from competitors based upon services provided is therefore an issue.