Co Founder and MD de Jong Phillips Ltd
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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.

24th Nov 2020
Co Founder and MD de Jong Phillips Ltd
Columnist
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istock_timesheets_MariiaReshetniak

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. 

Good numbers

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?

Time sheets

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!

Gain confidence

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.

Replies (9)

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By Paul Crowley
24th Nov 2020 19:43

They used to be called lie sheets
We still have them as they work both ways. Real time on clients for 'easy' work
More important, fictional time by cr4p staff

Furlough time a revelation

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Replying to Paul Crowley:
Pam Phillips
By Pamela Phillips
25th Nov 2020 17:19

I don't even like to think about the amount of time spent on furlough!

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By Justin Bryant
25th Nov 2020 09:07

A much better story would be "Why accountants should not still be using timesheets".

Any business owner should be able to price a job pretty accurately for a fixed or capped fee (which clients prefer anyway). The time wasted on doing time sheets can then go straight to the bottom line profits.

When you realise that you realise that the only reason you waste time on time sheets is coz you don't trust your staff. There are better ways to solve that problem in my view than timesheets (a simple back of fag packet monthly net profit calculation (with linked staff bonuses - remember profit related pay?) may be enough if you concentrate on how to avoid hiring dud staff in the 1st place - which will also result in better quality work etc.).

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Replying to Justin Bryant:
Pam Phillips
By Pamela Phillips
25th Nov 2020 17:08

I can absolutely confirm that the reason we use timesheets is nothing to do with trusting our staff!

It is simply not possible to see the impact of all the work that your firm is doing when that work is spread across a number of different people / teams in your business.

Having time sheets just shines a light one where the time is being spent and gives you the chance to consider whether it is being spent valuably!

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By Arcadia
25th Nov 2020 11:30

You need to keep time sheets because if there is ever any serious dispute over fees, the Institutes and Courts absolutely love them, and the client doesn't have a leg to stand on in terms of the work you did.

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By jon_griffey
25th Nov 2020 12:04

The timesheet is an essential costing tool.

If a client bemoaning their bottom line said that they generate income by selling goods/services but they didn't know how much the cost of an individual sale was and so didn't know if/where they made a profit or loss, then surely any accountant would tell them that it is essential to implement a costing system. This is a basic internal control.

Why does this not apply to accountancy practices?

We have all been there. Two clients may have identical businesses and an identical fee, but one will take double the time of the other. It is essential to be able to identify where the profits and losses are being made.

You may be able to get away without timesheets for a one-man-band sole practitioner, but once you have staff, you will not know exactly how high maintenance the client is, how one staff member is much more productive than others, how extra services/billing opportunities (e.g. auto-enrolment, furlough calcs) are creeping in.

Also how do you value your year-end WIP without any records? You basically have to guess it.

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Replying to jon_griffey:
Pam Phillips
By Pamela Phillips
25th Nov 2020 17:20

100% agree with you!

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By Malcolm Veall
25th Nov 2020 12:37

I think the words are causing the negative comments - timesheets - definitively not - they are the after-the-event works of fiction. Real-time time tracking - that gives you the real information. Harvest, toggl, clockify - never an excel timesheet.

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Replying to Malcolm Veall:
Pam Phillips
By Pamela Phillips
25th Nov 2020 17:18

I agree, there are a lot of negative views about timesheets and yes, you are right, it is the real-time time tracking that can bring great insights to any business. We use Harvest, never a spreadsheet!

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