Timesheets: Uncover their real potentialby
It’s a continual debate in the accountancy profession – to timesheet or not. Alastair Barlow, the co-founder of flinder, explains how some firms are missing out on the untapped potential of timesheets.
There’s a fresh injection of debate going on, possibly sparked off at the Digital Accountancy Show where I said not having timesheets was one of our early lessons learnt. This was further cemented by other talks mentioning the value of timesheets and followed up by various LinkedIn posts from firm owners on the subject.
It’s fair to say, not everyone agrees on which way to go. One thing for sure is that whichever camp you sit in, there’s a lot of passion in the profession on the subject.
Personally, I can see both sides of the argument. But the benefit of which way you go depends on what type of firm you are, your ambitions, maturity, complexity, pace of growth, appetite for operational excellence, culture, service solutions, pricing model, and your overall purpose for using timesheets, among others.
While it’s hard for many to disassociate pricing from the timesheet debate, I think it’s important to do so to get the real value from them. Especially as most arguments against timesheets are based around better pricing rather than selling hours. I’m not going to get into that here – it’s a separate discussion. Although, there’s still a debate about revenue recognition, even in a value pricing world.
At flinder, we thought we were ‘cool’ and vowed not to use timesheets from day one. We largely operate a subscription model and so for the vast majority of what we do, we don’t need time data to invoice. Our theory was it would be easier to attract the right talent without timesheet traditions. It was a reasonable thesis, one where hindsight has set us straight.
This was fine for our first year or so. But, as we grew, it became much harder to maintain the process efficiencies we started with.
As a business that sells data solutions to clients, it felt wrong to be flying so blind and not have the data available to make well-informed business decisions ourselves. We knew we had inefficiencies, and we accepted some of that as a pay-off for fast-growth. But we didn’t accept all of it.
Our growth, combined with the primary focus on delivering value and quality, meant we couldn’t deep-dive into each team member, on each area of the finance function and on each client from a process efficiency perspective. So, we looked for a better way.
We looked to data to better direct us to the right questions, to ultimately make better-informed decisions. But we didn’t have the data we needed. It was time for timesheets.
We don’t care about six-minute increments, or even 15-minute increments, but more look for the data to be directional. We pull our data into an AWS database and look for trends across the data set, across activities, across people, across clients.
Are there activities, people or clients which are outliers? Can we learn from positive trends, can we learn from negative trends and make interventions? Are there common themes we can develop training material for? Is there a business case to develop new technology to eliminate human involvement altogether? This is the huge value you can get from data, and to us, that’s what timesheets are – data to draw insights from, and most importantly to take action.
For me, the number one advantage of timesheets is the data you gather from them to ask better questions and ultimately make better decisions.
As well as running finance functions, we build and transform finance functions for larger businesses. We interview key stakeholders to gain a qualitative perspective on the value of the finance team and work out the effort of the finance function – this involves capturing time involved by person/role, activity and we calculate the total cost of the finance function. We bring the qualitative and quantitative together, along with a bunch of other consulting work to assess how effective the overall finance function is and where there could be transformation opportunities.
The important thing here is, we understand the effort and cost of the finance function in various areas. The finance function in a business doesn’t sell hours rather these hours are part of the input to delivering value. As a finite resource, it’s important to understand how time is being allocated and the value that’s derived from them.
Quantitative and qualitative go hand in hand. It’s not just about the data on its own, it’s about the story around the data. But without the data, at a certain point, you only have one eye open. I would much rather have both eyes open running my business.
Personally, I don’t really care if you use timesheets or not, it’s your business and your choice. But in an age where there’s an emphasis from consultant after consultant to not use them, I think there needs to be a better informed and balanced argument bringing together the progressive value of using them.
It’s gone slightly full circle, albeit for different reasons, to use timesheets and I think there are misleading headline messages from consultants with, what are now, in my opinion, actually outdated views (or certainly a lack clarity around the subject). Many of them don’t work with data the way we do and so don’t’ fully appreciate what operational decisions you can make from having this visibility.
I liken it to the Internet of Things (IoT) where you have sensors and feedback at every stage in a process. We don’t scoff at IoT, it’s the future and we embrace the power of it.
There’s a lot of buzz around data in the accounting world but we’re often missing the complementary and valuable component; operational data adds meaning to the financial data we’re all familiar with. There are a lot of sources of data in any business, and an accounting firm is no different, but when you’re running a people business surely data on your primary asset base is going to be valuable? Let’s be clear, segmented operational data helps make much better business decisions.
Let’s be clear, segmented operational data helps make much better business decisions.
Will we always use timesheets? Possibly not, but right now, the data, insight and actions that come from them are valuable at the stage of growth we’re at. Over time, as we have a much larger base of established team members operating the flinder way, then they will likely become less valuable. For the past couple of years, they’ve been invaluable to us – not to price, but to make better business-wide decisions.
Using timesheets just for pricing is a separate discussion but a blanket message that timesheets is outdated, is quite a simplified and outdated view itself; there are other benefits as I’ve described above. They have their place in the right business at the right stage of growth. We’ve lived and breathed the value of them and evolved our operating model as a result.
This isn’t a topic that’s going to be resolved any time soon but, like many, I welcome the healthy debate to push the profession forwards. I’m looking forward to continuing this at AccountingWEB Live Expo in December…see you there!
Alastair Barlow will be debating timesheets at AccountingWEB Live Expo on 1-2 December 2021, alongside panellists Lucy Cohen, Carl Reader, Reza Hooda and more.
AccountingWEB Live Expo takes place on 1-2 December 2021 at Coventry Build Society Arena, Coventry. Registration is now open. A full content programme will be announced in early October enabling you to register for specific sessions. Please visit the AccountingWEB Live Expo website for full details and to sign up to our newsletter.
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Alastair is founder and Chief Dreamer at flinder. flinder provides accounting, consulting and rich real-time management information for growing businesses. As well as his work with fast-growth businesses and transforming finance functions, he writes for AccountingWeb in a monthly column, sits on the ACCA Practitioner's Panel Network and was...