How Boring Timesheets Improve Profitabilityby David Walton (No Comments )
Timesheets may often be seen as boring and dull, but selecting the right timesheet tool cuts costs and improves profitability. I’m sure you’ll agree that there is nothing boring or dull about that!
I recently read the funny story of the Spanish worker who went on sick leave for 6 years on full pay but no one noticed until he was asked to attend a long service award. Only then did someone clock –forgive the pun – that he hadn’t been working.
If a so called ‘boring’ timesheet system was used, one with basic alerts, it would have highlighted issues like this and someone would have realised what was happening. Although, this example was in the public sector, a good timesheet system should drive value for both private and public sectors.
Before we look at ways a timesheet system can drive value, it does depend on selecting the system that is right for you and your organisation. It is true that many organisations will have different and possibly ling lists of requirements. Whatever this list of requirements there are 2 very important requirements that you must consider when selecting your system.
Number 1 – It has got to be easy to enter time, administer and approve timesheets.
Number 2 – Check where the data, much of which may be deemed personal data, is stored. If your organisation is in the EU, make sure your data is stored in the EU and / or conforms to EU data protection regulations. Many timesheet systems are based outside the EU and may not comply to EU data protection laws.
Now let’s look at ways boring timesheets can drive value.
More Accurate Invoicing
If you are a contracting organisation, professional services firm or any agency that bills clients then those invoices are based on time booked. Manual timesheets or excel spreadsheets are prone to error. People can book time to the wrong job or project; rate changes are not picked up resulting in wrong invoices being presented.
Worse case scenario is that the invoice amount is under what should be charged and this loss is never picked up. Or, the client spots an error in one line of a 20 line invoice and rejects the entire invoice. This leads to delay in payment and potential cash flow issues.
“A timesheet system like pm3time assigns people to job codes or tasks that they can book time against. They are not able to book time against the ‘wrong’ task. This in itself drives more accurate invoicing. If the timesheet system is able to produce the invoice from the time booked this will also lead to more accurate invoicing.”
Reduction in Fraud
Fraud is a notoriously hard crime to uncover and this type of crime is on the increase. Many fraud detection systems rely on scanning data for anomalies as these can be an indicator of fraud.
“I worked at a large consultancy a number of years ago and a consultant had been getting away with good utilisation figures by booking 30 minutes to lots of different jobs, none of which he was actually working on. The finance manager did not pick out these incorrect timesheets as the timesheet system was Excel based. Only when a ‘proper’ database system was implemented was this anomaly (fraud) uncovered.”
If you are a consultancy or any service firm that bills on time, there is one measure that if improved should increase profitability. Assuming rates are not reduced an increase in utilisation (number of billable days / number of available days)*100 will increase margin and, all other things being equal, profit.
Consultants and chargeable staff usually have utilisation targets and like any target if the weekly timesheet shows how close you are to your target it can be an incentive for consultants and billable staff to increase their utilisation. Utilisation reports are key to any COO or finance manager of a professional services firm.
“With a simple timesheet system you should be able to run off utilisation reports by person, by grade and for any time period. This is essential management information for any professional services firm.”
Reduction in Admin Costs
If you have more than 15 chargeable staff, the administration costs can start to become burdensome. I met a director of a contract agency recently who was printing out 300 timesheets every Monday. It is not a very green approach and it is also costly compared to a simple timesheet system.
They may appear quite dull but an easy to use timesheet system can not only save administration costs but can help drive increase margin and profits. It does, however, need to be simple to use and administer.
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