Time gentlemen please!

 - and ladies, of course - but mainly the gents as I suspect there weren't any females in the profession when time-based billing was invented.

I'm sat crawling through the 31 March 2012 work in progress report trying to spot work that needs to be billed and wondering why we bother. Virtually no work is billed purely on a time basis these days. Regular bookkeeping, VAT and PAYE are billed on scale rates or as agreed with the clients. Most compliance work, and certainly all new work, is taken on against a fixed fee agreement.

Even where we customarily work on a time basis, you can be sure that this year's fee will be last year's plus a percentage for inflation. When was the last time anyone said to a client: "We had a new chap on your job this year, it took him twice as long as the previous person, so the fee will be twice as much this year"?

Please note, this is not a philosophical point, I'm not trying to argue the ethics of time versus value billing, I'm simply describing how it works in practice.

But of course most of us are trying to reconcile this way of working with so-called 'practice management' software that is nothing more than an old-fashioned time and fees system, but in Microsoft Windows. SQL even. With meaningless colour charts and KPIs that no-one understands or uses. And very little in common with the accounts and tax systems with which it is allegedly "integrated". But I digress.

So my time records tell me what my team has been working on, and if the hours times charge rates produce a high enough figure it prompts me to ask whether we have forgotten to bill something. In most cases the bill goes out with the draft accounts or tax return, but in the case of longer term engagements I like to issue on account bills as we go. Of course, I prefer to bill in advance and collect payment by direct debit, which we do with a lot of fixed fee work, but even in those cases I need a backstop system to ensure that we identify and bill any 'extras'.

So, like most of you, I'm stuck for the moment with the WIP list to achieve that. But in my wildest dreams I live in a timesheet-free environment where work still gets done, billed and paid for - but more efficiently.

Now, let's have a look at those recovery rates ...

 

Comments

I worked at a firm where timesheets were removed...

justsotax | | Permalink

the question was asked what to replace it with.....I am not sure whether an answer was ever reached....but what you bill out has to be the most important thing?.....and if the work has increased then the bill is increased (fixed fee quotes usually come with the caveat that it depends on the records being in such and such a state, turnover between x and y etc etc).

 

Perhaps what should be noted is the time spend marketing the business thru networking, client mtgs (where not directly work related - just a 'chat'), marketing calls etc....

carnmores's picture

i think there was a lady in the profession when

carnmores | | Permalink

time sheets were invented her name was Molly Mannington

MissAccounting's picture

An interesting piece and one

MissAccounting | | Permalink

An interesting piece and one I agree on having came to the same conclusion regarding "standard fees" for a lot of the basic jobs.  I do still however operate timesheets but they are purely for management purposes and to establish if any jobs are not profitable.

Improving job turnaround the key

johnhaylock | | Permalink

The use of timesheets has had a long term negative impact on the culture and financial performance of accountancy firms. Provided you agree and want to stop using timesheets then the question is what systems do we need to ensure better culture and financial performance.

I suggest that accountants need (1) systems to manage agreed pricing on all jobs, and (2) job management systems to ensure quick turnaround.

In New Zealand and Australia (where I largely work) it is now widely accepted that quick turnaround of jobs is a key strategy. Based on ideas from lean manufacturing this involves ideas such as budgeting capacity, scheduling jobs and removing bottlenecks. We have found that the most important KPI of all is minimising the number of jobs underway at once. Reducing WIP enables improved job turnaround while also revealing further opportunities to improve job management processes.

To read more about  how to manage an accountancy firm in this way check out www.absolute-certainty.com for some free articles or get a copy of my e-book "Absolute Certainty" on www.amazon.co.uk

Regards

 

John Haylock

spikecat's picture

I must be one of the dinosaurs then !

spikecat | | Permalink

Well how sad that you felt no females in the profession when timesheets were being used !! havent suffered that sort of chauvinism since attending residential accountancy college in the late 70s/early 80s - yes I am that ancient !!  Have always enjoyed your blog until I read that ..

I was certainly having to fill out 15mins blocks on timerecords many years ago - and believe me how to allocate the tea breaks and chats was extremely timeconsuming - then that 15mins had to be allocated also .

They were very inefficient but resulted in the firm I worked for being able to raise high fees, they would issue a  quarterly bill that just said "work carried out between 1 Jan and 31 March, and a figure calculated by our timesheets at ridiculous charge out rates !

Thankfully we are all a bit more accountable these days and offer a more transparent fee structure, and also not linked to turnover or profit , which again was not really an ethical way of 

charging..

 

 

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