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Five ways to increase billable time

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11th Nov 2010
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Even accountants who are members of the burn the timesheet tendency could benefit from these productivity tips from Brett Owens.
 
AccountingWEB.co.uk has been the battleground for recurring arguments between those who subscribe to Ron Baker’s burn the timesheet ethos, and those who still see the value in keeping timesheets as a management tool.

“I suspect that many accountants undervalue the work they do and the advice they provide. This is especially true when you have a timesheet mentality and focus on an hourly rate and how long each task takes. There is a tendency to think that something that takes just a couple of hours cannot warrant a decent fee,” warned consultant practice editor Mark Lee last year.

AccountingWEB member Paul Scholes belonged to this hybrid camp for several years of this, but ultimately concluded the timesheet is a blunt tool. “In reality, most people just dump non-chargeable time to whatever box feels right.  There are far better ways to manage staff and yourself,” he wrote.

“Not having a spreadsheet to run your life can be really scary,” he added.
   
Leaving this debate aside, every practicing accountant knows that effective time management is key to maximising personal productivity and firm profits. The numbers tell the story and it all boils down to time management.
 
If you bill for your time directly or on an hourly basis, diligent timekeeping is something you must do in order to get paid for all of the work you perform for clients. If you bill on a fixed fee basis, accurate time records will help you identify your most profitable clients and projects. If you are devoting time to unprofitable activities, time records help you recognise it.
 
There is often a discrepancy between the hours accountants want to bill as opposed to the actual hours the put on their invoices. A difference of 50 hours doesn't sound like much, but at a rate of £120 per hour, this could amount to lost revenue in excess of £6,000 every year.

Here are five simple steps you can follow to reduce this figure:
 
1.  Make timekeeping a priority
You must have an accurate account of how you spend your time. Without it, you may lose significant pieces of legitimate billable time. If you performed the work, but were unable to bill for this time because you lost track of it, you just lost some potential profit.
 
Accurate time tracking does more than just crunch the numbers. Given the number of hours you put into a project or client, was the engagement worthwhile? Should you quote a higher price next time? Should you ditch a money-losing client? A solid handle on your time will make answering these questions much easier.

2. Reconcile your time daily
My firm Chrometa recently surveyed more than 500 professionals about their billing and time tracking habits. Respondents who billed hourly estimated they captured just 67% of their legitimate billable time; as a result, they are working three hours for every two they are able to bill. A firm with £100,000 in gross billings could lose as much as £50,000 a year for work the firm performed, but never billed.
 
When asked how often the respondents reconciled their time, the answer was “very infrequently”. More than half the respondents said they usually didn't reconcile their time more than once a week, with some reconciling only monthly. Others didn't reconcile at all.
 
On average, respondents spent more than two hours each week on this reconciliation, searching through sent e-mails, calendar entries, notes, and other items to build a seat-of-the-pants analysis of their time utilisation.
 
Professionals who reconciled their hours more accurately and more frequently were able to account for much more of their time. More accurate time tracking leads to greater revenues.

3. Record time concurrently
Do you remember what you worked on yesterday morning? How about Tuesday of last week?
After the fact, it's very difficult to recall exactly what work you performed. The longer you go without recording your time, the more difficult it is to recall. It's best to record your time as you are working on something. Modern multitasking work habits can make this difficult, but your life will be easier if you can, at a minimum, jot down notes or time entries as you work.

4. Work on one thing at a time
The phone rings… a "reply-all" e-mail comes through… Interruptions are a real time killer! The solution? Look at everything you have on your list and pick the single most important thing. It's amazing how fast you can get something done if that's all you do. Work on it, uninterrupted, until it's completed.
 
It's very easy and tempting to check messages, answer the phone, respond to an instant message, or click on a Web site, but if you can master the ability to focus singularly on one thing, you'll boost your productivity significantly. You'll be able to maximise your productivity by working smarter.

5. Invest in a mobile smartphone
Smart phones have come a long way. Today, Apple's iPhone and Google's Android are great devices that not only improve your productivity, but free you from your desk and office. The ability to read and respond to e-mail anytime, anywhere, can greatly help you stay on top of your inbox.
 
I never realised how much time I lost while running day-to-day errands – even something as routine as standing in the supermarket queue. Now, instead of scanning celebrity magazine covers, I check my e-mail. Best of all, my device automatically synchronises with my desktop e-mail client. Pre-Android, I had to wrestle my large Windows laptop into operation just to get to e-mail. Now, it's right in the palm of my hand.

Find Your Best Solution
The trick to managing time accurately is to find a series of solutions that work for you – not solutions on what someone else in your office does or “best practices” borrowed from other firms.
 
Since most of us take time for granted any differences in “time spent” and “time tracked” leads to lost profits. Keeping tabs on time also leads to a more efficient and productive environment, as well as giving you a truer picture that identifies great clients rather than those who demand too much of your time.
 
This article first appeared on our sister site AccountingWEB.co.uk and is part of a series devoted to practice management productivity techniques. The next article will discuss how to successfully manage a "to-do" list."
 
About the Author
Brett Owens is CEO and co-founder of Chrometa, a Sacramento, CA-based provider of time-tracking software that records activity in real time. Previously marketed to the legal community, Chrometa is branching out to accounting prospects. Gains include the ability to discover previously undocumented billable time, saving time on billing reconciliation, and improving personal productivity. Owens is also blogger and founder at CommodityBullMarket.com and ContraryInvesting.com, as well as a regular contributor to two leading financial media sites, SeekingAlpha.com and BeforeItsNews.com.

Replies (12)

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By Bob Harper
11th Nov 2010 11:03

Short term, marginal improvement

Brett - there may be value/need to recording time (in some situations) but I strongly disagree with...

Every practicing accountant knows that effective time management is key to maximising personal productivity and firm profits. The numbers tell the story and it all boils down to time management. 

Being better at time recording and charging time is at best a short-term/marginal strategy for firms that resist the inevitable.

Profit improvement is not about being efficient but effective. Accountants are not machines that need to be optimised, they are knowledge workers that need to be leveraged. Give the grunt work away and charge for the advice.

Accountants should focus on knowledge, helping clients generate the results they want and creating positive experiences. Link the fee to the outcome and use project management skills to deliver the profit. 

Bob Harper

Portfolio Marketing
 

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Nigel Harris
By Nigel Harris
14th Nov 2010 18:51

Productivity is the key

As soon as I saw there was a comment posted on this article I knew it was going to be Bob! The title was like a red rag to a bull!!

Let's forget the issue of timesheets or no timesheets - time is a scarce resource and we all need to be better at managing it, so thanks Brett for some useful tips. The biggest problem I have with some of my team is their appallingly bad time management. Jobs take far too long, and they spend too much time each day faffing about. I know that from their timesheets, but I would also know that in a timesheet-free environment just by looking at jobs and bills going out the door. What do they do all day? Luckily, we still have timesheets, so I have the evidence! However, timesheets are not going to fix the problem, that's down to mentoring and training - and a bit more hands on supervision.

A former partner of mine fired his secretary many years ago. When asked by her new employer for a reference, his comment was "responds well to close supervision". We all have people like that, I prefer to help them improve rather than fire them.

Incidentally, I'm a big fan of Chrometa - look out for my user review shortly.

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By Bob Harper
14th Nov 2010 21:44

Thanks

@Nigel - I'll take your comments as a compliment! The reason I comment is because it seems the profession is killing itself with direction like this.

The issue is not increasing billable time and I agree timesheets just give you an exact measurement of what you already know. But, measuring what does not matter does not make sense, even if you improve the accuracy. Being 100% right about something that is irrelevant is still a waste of time. 

Your clients do not want a productive accountant. Your clients probably do not want an accountant! Firms need to think about what their clients REALLY want and let this guide them. This will be different for different clients but one example could be more cash in the bank.

If your team focused 100% on this don't you think they have the potential to make a difference? If they do not then maybe you are best charging time! Most of us can always take on more knowledge quickly and add value. Then all the firm needs to do is link fees and pay to the client’s cash you may find the whole team doing things differently. You may find clients talking about you and a stream of clients wanting your firms input.

Then, you start kicking clients out clients who cannot leverage your knowledge because they can all burn your time.

Bob Harper

Portfolio Marketing

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By Bob Harper
15th Nov 2010 08:18

Unconsciously unethical

@Nigel - by the way, I believe you and your team can make a difference. I believe every accountant can and I believe the majority of accountants want to. It is the leadership which is holding firms back and they are doing it without knowing they are doing it. 

This is why I use the phrase unconsciously unethical when a firm uses time to price and manage the practice. For me being professional and 100% ethical is about being in search of excellence; you can not see that on a timesheet. Much better to measure attitudes, behaviours and actions that resulted is measurable outcomes that benefit the client.

This journey in search of excellence is enjoyable for the team and it is makes a firm remarkable. That is when clients remark and spread the word. Happiness is a real driver of profits and I refer to David Maister's research where he found a 15% to 20% improvement in team happiness delivered 42% extra profit. I believe the opposite is true and getting people to do more billiable time is likely to make them less happy.

This mindset is at the heart and soul of marketing. Without it firms are left with fee disputes, a mailshot that doesn't work, a cringe factor networking event or hard sell after a telemarketing campaign. So, yes when someone recommends being better at something that is killing the profession it is a red rag because it is a load of bull.

Bob Harper

Portfolio Marketing

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By justsotax
15th Nov 2010 09:48

Unusually I almost completely agree with Bob....

I will try not to make a habit of it (joke).  Timesheets started to be used in a different 'time'....things have moved on and I cannot help but feel that those accountants still clinging to the timesheets are looking for the wrong things...they spend there days analysing the recovery rates/chargeable time/dealing with write offs etc etc, whilst there staff wonder who they can 'dump' time to, worry about spending too much time on certain jobs and therefore allocate time differently etc etc.....and I have never seen a time sheet with  toilet break or smoking break on it...I presume nobody does these during the core hours.  And what about the unrecorded hours when staff work overtime but perhaps don't record the time.

How much time is spent filling in and analysing timesheets....I am sure this time could be used in a better way.  Quoting a fixed fee to reflect the technical merits of a job has to be the way forward, charging a premium price for the key work and a budget price for the basics.  Yes there are various issues with this....but look at the complex issue we have.....and haven't we all spoken to someone who hates the fact that they are being timed when they pick up the phone to their accountant with the expectation that they will get a bill for £50 just to check what the tax rate is or something...

There are somethings that we must retain as professionals....timesheets is not one of them.

 

 

 

 

 

 

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By Bob Harper
15th Nov 2010 10:30

CIMA report

@Justsotax - "almost completely" - be careful!

Interesting that there is an article from CIMA on this click here, they found tight time budgets inevitably lead to undesirable employee behaviour. 

Bob Harper

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By justsotax
15th Nov 2010 10:45

ok...completely...(I found that really hard to admit!)

and why do we agree....?  Because somethings bring no benefit whatsoever to a business.  I like to think I use a liberal sprinking of old school methods that work combined with new developments/approaches to ensure the best for me and my clients.  Timesheets are just a crude stick to beat staff with, to get depressed over when you have to write off time, and a game for employee's to play who are wishing to look great by charging all of their time.   

Bob, of course in return I am hoping you will agree on some of my views in the future.....(you never know) 

   

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By David Winch
16th Nov 2010 12:51

The Time-Sheet Delusion

People tell me they keep timesheets for the purposes of charging, managing staff, and managing projects.

All of these need to be done but none of these cannot be done better by other means.

Your purpose is to do the best job for your client, that they are prepared to pay you for, so you make a profit for you and your firm.  Your purpose is not to be the best keeper and analyser of time-sheets. 

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By engineroomnz
16th Nov 2010 20:03

Measure the right things

We regularly hear you can manage what can you measure but are you measuring the right thing? Does the fee charged a client truly reflect the hours accrued? Why should an efficient effective senior accountant be charged at a lower rate than a manager - or are they?  These are all reasons the time sheet is wrong - 80% productivity is a pointless measure if it was accrued doing low level work.

For accountants to improve their profitability they need to improve efficiency – the only measure for this is average hourly rate, i.e. fees charged/time taken. So time sheets have their uses but not for charging clients.

Clients want prompt and efficient service and will pay a premium for it.  Charging based on time encourages the firm to be inefficient – the longer it takes the higher the fee!

Imagine if your airline couldn’t calculate what they were charging you for your flight until after they had worked out the cost of your flight and allocated it between passengers. There would be no incentive to ensure the flight was full or even that they fly in a straight line between airports.

The world has moved on – it is time accountants did too.  Set the fee up front and use that to drive efficiency. 

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By Bob Harper
16th Nov 2010 21:03

Not quite

@Engineroomz - it’s more about judging than measuring and effectiveness rather than efficiency.

Bob Harper

Portfolio Marketing for Accountants 

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By morgani
27th Nov 2010 22:26

times have moved on...

 I must agree that using time sheets as the basis of what to bill clients is far too old fashioned (well for me anyway).  I never want to pay anyone hourly when I'm getting work done whether that be a plumber, motor mechanic or solicitor.  I'd rather fix the bill and take the risk that I could have saved a few quid.

Accountants shouldn't be any different and the only place I can think for time sheets is as pointed out above for recording time to see how efficient you have been.  For me being a sole practitioner I decided that I was spending so much time recording my time that it was more efficient to stop recording it all together.  I have worked out a pricing structure and I'm confident that I recover what I want to and most of all I don't have to worry about it by spending all my time recording and analysing time.

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By Bob Harper
28th Nov 2010 08:26

Less time more knowledge

@morgani - by the way, working out how efficient you have been is only important if the firm's strategy is to offer the lowest price option.

Think of your price list as the minimum walk-away and focus on adding value by being effective. Come up with creative pricing that enables you to capture some the of value you create. Value is created by knowledge transfer so think about investing the  time you saved not recording time into developing your knowledge.

Bob Harper

Portfolio Marketing
 

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