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Time running out for timesheets | accountingweb
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Is time running out for timesheets?

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For generations, we have been slaves to our timesheets. Is all that about to come to an end?

6th Mar 2023
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Almost anybody who has worked in the profession will, at some point, have cursed the person who invented timesheets.

Back in the day, the labour involved was much worse. Then timesheets had to be filled in by hand and, accountants being accountants, would typically be left until late on Friday afternoon (or even the last working day of the month) by which time your mind was in the pub and resented the bodily requirement to remain in the office, writing down numbers that were supposed to represent work that you couldn’t recall.

Presumably, if one goes back far enough, there must have been some poor clerks who were employed to collate handwritten timesheets into handwritten ledgers generating handwritten fees, which is a horrible thought.

Nowadays, with computerisation and the change in mindset, the completion of the timesheet process is considerably easier. Even so, for those involved in small projects or reviewing work, it can still be a bind. That will certainly have been the case for partners in practices who were frantically looking at dozens of tax returns in the last weeks of January.

Works of art

While ostensibly timesheets were supposed to be a work of science, in practice they were quite often more a work of art.

At one firm a couple of decades ago, a tax partner adamantly stuck to the belief that all of his time was valuable. As a result, he insisted on charging clients for thinking time in the shower. Perhaps sensibly, he didn’t tell them that.

While I am happy to pay good money to listen to certain people singing, my preferences would lie more with the likes of Maria Callas, Bruce Springsteen or Rhianna than an accountant enjoying himself under a steaming flow of water.

Another colleague asked their secretary to complete timesheets based on copies of correspondence, charging quarter of an hour to any client that had the misfortune to receive a communication.

Time for change

Times have changed. It is likely that many practices are at least questioning the need for timesheets, if they haven’t dispensed with them already.

If a practice does nothing other than prepare tax returns for a fixed fee, they are already redundant.

Going a step further, many clients now demand a fixed-fee arrangement for advisory work and seem unwilling to budge, regardless of their failure to deliver on time. They also love one of our favourite bugbears, mission creep, whereby they keep asking for add-ons with no intention of paying for them.

While small firms will find that timesheets are time-consuming and bring little benefit, the same may well be the case at the other end of the scale.

Questionable value

If recent leaks are to be believed, even managers in the Big Four practices are now charging out at around £1,000 per hour, at least in theory. The problem that then arises is a desire to achieve a recovery rate in excess of 30% to 40% and even that may be optimistic on many large-scale audit projects.

Once again, the value of the timesheet in such cases is questionable.

Gone are the days when the average client would demand to know the hours taken on a job before agreeing to pay. That is largely because the fee has usually been agreed upfront but also because an unhealthy obsession with time taken has become a thing of the past.

An hourly count multiplied by a randomly constructed rate can still be useful. In particular, where an accountant wishes to charge a client a higher fee than that referred to in an engagement letter, it can be useful to point out that in addition to the 20 hours spent on the agreed work (even though 15 were budgeted) another 10 have been applied in relation to those irritating extras.

Effective value

The other benefit of timesheets is as a means of ascertaining the value of staff input and, indeed, staff themselves.

Now that so many accountants are working from home for 50% or more of the time, it can be difficult to get a handle on how effective they are proving to be.

If a principal can see that colleagues are managing say 30 hours of chargeable input every week and this can be recovered at 80%, then he or she will almost certainly be deliriously happy.

On the other hand, if you can see that one of your employees has chargeable hours that are dipping sharply and, even then, the recovery rate is below 50%, perhaps it is time to wave goodbye to someone who might well be spending more time maintaining his or her social media profile than benefiting your firm.

Replies (19)

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Red Leader
By Red Leader
06th Mar 2023 10:41

This story has been running for - what? - 10 years? 20 years?

Thanks (4)
Replying to Red Leader:
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By D V Fields
06th Mar 2023 17:41

Bereft of ideas.

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By dennywren1
06th Mar 2023 11:13

Timesheets are for Neanderthals.

The amount of time required to complete process and then write it all off is amazingly dull/

We had a partner once in charge of non productive time.

Ludicrous

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Tornado
By Tornado
06th Mar 2023 12:39

"While small firms will find that timesheets are time-consuming and bring little benefit"

I completely disagree. I usually charge for all the time that I and others have spent on a client's work based on the time records, but I may use my discretion as to whether to charge all of the time or not.

Timesheets are also useful if the client questions what you have done and especially useful if you need to take action to recover fees. Fortunately I have only needed to threaten legal action in a very few cases recently as with Timesheets to fall back on, there is no real defence for the client.

'Mission Creep' is eliminated of course.

Fixed Fee work seems like an unnecessary risk to me.

I suppose the bottom line is that I don't particularly want to work for nothing and also want to ensure that the work carried out by staff is properly paid for too. It also seems more ethical to charge people for what you have actually done.

Thanks (13)
By ireallyshouldknowthisbut
06th Mar 2023 14:14

I don't keep any track of time for anything we can do in a day. As I know how long it took and its all fixed billing. I find client will pay a lot more per hour for fixed fee than hourly. My metric is largely "what have we billed this week/month?"

For anything else, I keep a record. For example the big job which has been over the past 4 weeks on and off, total time will be 10-12 days between me and no.2. That is getting recorded, albeit not to the 6 minute interval. I do it hourly. However at the end I will still take a view on the total bill ,

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By Hugo Fair
06th Mar 2023 19:03

The only truth IMHO (at least in my experience) is hinted at in:
"An hourly count multiplied by a randomly constructed rate can still be useful. In particular, where an accountant wishes to charge a client a higher fee than that referred to in an engagement letter, it can be useful to point out that in addition to the 20 hours spent on the agreed work (even though 15 were budgeted) another 10 have been applied in relation to those irritating extras."

But you don't need to charge on that basis (or even to maintain detailed timesheets) ... like dummy CCTV it it the *threat* that suffices.

Any client who was prone to mission creep (and ignored one warning of this) was given a budget of hours/month for their planned work and told that they had been 'put on timesheets'.
In reality employees only recorded chargeable hours for *those* clients and, even then, fairly approximately at the end of the week.
It became easy to demonstrate that the hours & cost of planned work were in balance (usually slightly in the client's favour - as they all 'love a bargain') ... and hence the 'extras' were indeed extra. QED!

So no real need for timesheets ... but never throw away your old toolkit in case you need them in the future.

Thanks (1)
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By Winnie Wiggleroom
07th Mar 2023 07:32

Have we suddenly gone back in time 20 years? BORING!

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By Mr J Andrews
07th Mar 2023 10:03

No mention of the sharp practice of allocating the week's shortfall to A.N.Other - he/she who could afford it. Nor the spiralling charging of completing a timesheet to clients !! Perhaps this was the same partner referred to in the shower. A really sad case.

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By Self-Employed and Happy
07th Mar 2023 10:08

The only reason you'd use time sheets nowadays is to performance manage someone out of a job.

You know your staff budget, you know your office budget, you know your fee income at the start of the year, as long as all the work is completed in relation to that fee income you'll know roughly (give or take a few clients leaving / joining) what will be left at the end.

If people aren't pulling their weight then other staff will soon let you know if you don't know already, it's a very antiquated system that has different expectations from firm to firm, leaving my first role into my second and third they were astonished that 100% recovery is a realistic target and that they had a shed load of lazy staff.

I don't think there is any need for it.

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By Paul Dunn
07th Mar 2023 10:09

Oh no ..... surely not this again!

My friend John Chisholm said it this way just recently: "Maybe someone-anyone- could explain to me how a billing model that is inaccurate, non transparent, retrospective, and uncertain is somehow ethical?"

No one has tried yet!

John — after years of frustration of getting the message across put it this way: The billable-hour model is, frankly, just dumb!

Thanks (1)
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By Ardeninian
07th Mar 2023 10:37

I mercifully only had a few years' experience of timesheets early on in my career, and have always considered them a scourge for principals and staff alike. My creative writing skills have certainly nosedived since, however.

One memorable highlight: I was working for a small firm whose three partners insisted on 85% recoverability. Unfortunately, this meant that when invoices were raised (incidentally by the wife of one of the partners) she assigned only sufficient time to meet this target, leaving the rest on the book. Result: happy partners, at least until the firm went into administration - and unhappy buyers when they realised that hundreds of thousands of pounds of WIP was unrecoverable!

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By ABC12
07th Mar 2023 10:40

When I used to work for a firm who made staff keep timesheets I HATED it. And as mentioned in another reply here, if the partners felt too long had been spent on a job they moved some of the time to another client -so what was the bloody point?!
That was 15 years ago when I left to go out on my own. I think no longer keeping timesheets was one of the most refreshing things in that change!

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Tornado
By Tornado
07th Mar 2023 11:29

Many of the replies here relate to the misuse of time records particularly the immoral if not illegal transfer of time from one client to another. This takes some of the discussion about the use of time records outside the scope of this topic.

I have used the time record system for decades and my clients are used to this and generally do not query my invoices, and for some clients, such as other professionals in Probate and similar matters, a copy of the timesheet with my Invoice saves a lot of questions.

I also have the freedom to do a job properly without the need to cut corners as I am not constrained by a budgeted cost. This alone helps to eliminate the later, possibly very expensive, consequences of making an error when trying to do something in a rush.

There will always be a debate about the use of time records and clearly preferences will vary according to circumstances but I think smaller practices in particular can benefit from knowing just how much time they are actually spending on individual clients and whether their charges are truly reflecting that time.

Thanks (7)
Replying to Tornado:
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By tedbuck
07th Mar 2023 14:28

Tornado - Couldn't agree more and it allows you to pick up the one-offs that might otherwise be missed.

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By Kieran Burns
07th Mar 2023 11:36

The customer is only interested in Output - however Accountants often give away valuable advice for nothing and often include it as part of an agreed fee that is often underquoted compared to the service and value given In my view fixed fees should only be given for repetitive accounting, payroll or bookkeeping work.

I think it is unfair to dismiss Time Sheets as a Management Tool as they are useful for measuring productivity and efficiency. If some one takes 24 hours to provide a service and the fixed fee is based on someone doing the job in two days (15 hours) , then this requires monitoring of the staff or monitoring of the customer - as the latter may have underestimated the volume of transactions to get the cheaper quote.

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By Kieran Burns
07th Mar 2023 11:36

The customer is only interested in Output - however Accountants often give away valuable advice for nothing and often include it as part of an agreed fee that is often underquoted compared to the service and value given In my view fixed fees should only be given for repetitive accounting, payroll or bookkeeping work.

I think it is unfair to dismiss Time Sheets as a Management Tool as they are useful for measuring productivity and efficiency. If some one takes 24 hours to provide a service and the fixed fee is based on someone doing the job in two days (15 hours) , then this requires monitoring of the staff or monitoring of the customer - as the latter may have underestimated the volume of transactions to get the cheaper quote.

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By mkowl
07th Mar 2023 12:01

12 years and counting without said tyranny - first thing I eliminated on taking over the day to day management of the business. But when staff made up the data each month and it was never used as a management tool what was the point in continuing

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By Geoff56
07th Mar 2023 14:21

It's interesting that despite (I think it's fair to say) the generally negative attitude to timesheets displayed in the responses to date, Tornado's two pieces which are both in favour of time recording, have garnered by far the greatest number of 'Thanks'.

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Replying to Geoff56:
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By ABC12
08th Mar 2023 09:36

Well if you're counting there's more negative posts than thanks to that post....

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