Practice Tip - Standard unit charging

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It's a truth universally acknowledged that people lie to their time sheets.

And it's a fact that everyone who relies on time sheets for billing know that this is the case.

But it's also the case that a lot of people who charge fixed fees have no ideas about the cost of supplying their services.

All of which presents a conundrum. If time sheets are to be the basis for billing, what good is that if the data used is knowingly wrong? And if fixed fees are to be the basis what chance of a good profit if there is no cost control mechanism in place?

It so happens that both Nigel Harris and the West Country Practitioner seem to have hinted at these issues in varying ways of late. Let me add my tuppence worth, based on experience.

I readily acknowledge I lied to my time sheet for years. And then I use...

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Engagement letter
Interesting article Ricahrd with useful ideas. Just out of interest what does you engagement letter say about how you charge?

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Thanks for the comments
Two interesting comments

When I ran a much larger firm we had our own database built for us to accommodate ideas like this - nothing available in the 90s covered the option.

Now I am a sole practitioner life is easier on such things - and I use the time module in MYOB for such purposes - and can thoroughly recommend it to any sole practitioner. I suspect it has uses way beyond the one man band too.

With regard to my engagement letter - it says I bill on the basis of time expended. But - and I always make this clear to clients in discussion, the charges are based on what is in effect a menu system. I also encourage them to discuss concerns and will always make my time records available to any client who asks - which has satisfied almost any query I've ever had. This, by the way is true even when a fixed price is quoted - because I don't like anyone to think I'm unreasonably abusing such arrangements so time records are still mainatined whatever the agreed basis for billing because I do use the system for costing in that case - and it's invaluable.

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Software
Richard,

What software do you use to record the standard unit times - is it one of the usual suspects or is it one geared to link the standard unit times directly to billing?

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