Why accountants should still be using timesheets
It may be controversial in modern accountancy, but co-founder of de Jong Phillips Pamela Phillips explains why she uses timesheets in her practice and recommends them to her clients.
Winning new business
A year ago we were winning new business - not just compliance work, but also the kind of work that we really wanted, that elusive ‘value-added’ work that we talk about a lot in the accounting community.
We hired two more people to the team to support the pipeline of work we were building. However, it quickly became apparent that this new work wasn’t making much of a difference to our bottom line.
The treadmill of work was starting to hinder our ability to deliver the results we wanted.
We want our clients to have easy access to reliable, up-to-date numbers to help them make good commercial decisions.
As well as being important to our clients, this is essential for us as it means we can offer additional value added services, like management accounts, cash flow forecasts and so on. If our clients numbers aren’t good, then our opportunity to deliver these services fades away.
This is a big promise and it means that daily processing of bank transactions just isn’t enough. We have to do a full month-end balance sheet review to be comfortable that the picture we present to our clients is a complete and accurate one.
Time consuming work
All of this work takes time. So much time that I was unsure what, if any, profit we were making on bookkeeping as a service. In some cases I suspect we were making a loss.
We were working harder than ever but it wasn’t translating into profits and I didn’t understand why.
More worryingly for me was that we were spending so much time on bookkeeping that we were kicking lucrative project work down the road because we didn’t have the capacity to take it on.
Increasing our fees for bookkeeping was not an option until we were confident it wasn’t inefficiencies in our own process that were pushing up the cost of delivering the service.
Was there some slack in our processes that could be tightened up?
As far as we knew, we were doing all the right things. Our clients are all on Xero and use Receipt Bank. We have bank feeds set up and use bank rules where we can.
What were we missing?
This is when we became interested in time sheets.
We’d been recommending that our clients track their time through Harvest for years - so why had we not been using it ourselves?
The truth is that I’d tuned into popular opinion amongst many progressive accountants that timesheets are old fashioned, a chore to complete, inaccurate, and encourage cost-based pricing.
I’m here to let you know that doesn’t need to be the case! Tools like Harvest mean time tracking can be simple to run and easy to review.
By tracking your team’s time you gain useful insights into what is going on under the bonnet of your business. The data helps you spot inefficiencies as well as highlighting where the work you are doing has stretched beyond what you were originally engaged to do.
Oh, and by the way, just because we track our time doesn’t mean we charge by the hour. It absolutely is possible to track your time and still charge fixed fees!
What we learned
When we started tracking our time we could easily see just how much the month-end reviews were costing us in terms of time and money.
We were doing them every month, for every client - whether they wanted it or not! Even for those clients who we knew would never invest in any value-added services or those who, despite plenty of encouragement, were only interested in their numbers when it came to working out their tax bill.
Not only were we doing this work each month, but each job was being reviewed twice. Once by a financial controller and then a second time by a manager.
Since tracking our time, and learning the true cost of this work, we introduced a system where the frequency and depth of month-end balance sheet reviews now depends on the clients size and needs. We’ve not lost anything by way of accuracy of client records, but we have gained time and improved our profit margin!
If you feel that your profit margins are not what they should be and suspect you are over servicing clients or not performing as efficiently as you could, then I recommend you start tracking your time.
My biggest gain is that I now have increased confidence in our pricing and our processes. We’ll continue to use timesheets to learn and adapt and improve.
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Pamela Phillips is the co-founder of de Jong Phillips.
Having worked for over 10 years in large companies such as RBS and PWC, where she qualified as a Chartered Accountant, Pamela knew that big business financial thinking could be used to entirely transform a businesses trajectory, and wanted to offer this level of support to small...