Anyone who had to do timesheets in an accountancy firm probably remembers how much time they spent/wasted recording their time to the nearest 6 minutes. Then trying to make sure that the hours balanced. What did you do with the extra hour you worked but didn’t get paid for? And what about the 7 hours on the job that was already over budget? And then being beaten with a big stick (not literally) for dumping everything to admin.
Most businesses, with the notable exception of lawyers, now charge fixed fees rather than hourly rates so timesheets are rarely used for billing. So, what purpose do they serve?
They are a mine of management information.
That over budget client was undercharged for years because nobody was honest about how long the job actually took. One staff member took twice as long to do jobs as another because they hadn’t been trained properly. And the amount of time genuinely spent on admin justified investment in some automated systems to speed things up.
So, what is the compromise?
We keep timesheets to the nearest 15 mins with the exceptions of phones calls and ‘quick’ emails which are recorded as a minimum of 10 minutes because of the disruption to other work. If I do some work on the train to a meeting, then I may double record the time as part of the meeting time AND the job I worked on on the journey as otherwise it would have had to be done in the office.
This means that I know roughly how much time (our most expensive resource) is spent on each job so I can ensure that our fixed fees cover this as well as a share of the automation and overheads. What I really need is reporting by exception. What jobs are taking significantly longer than expected so that I can see what the holdup is and how to improve. This doesn’t need 6-minute reporting. And it doesn’t need a timesheet balanced to the official working day.
Before implementing timesheets think about WHY you want them and make sure that they will give you the information that you need. You may find that the recording process doesn’t need to be too onerous. I use the Xero project app on my phone, but Toggl is another free resource.
What are your payment terms? Do you even have stated payment terms?
Most businesses seem to opt for 30 days from the end of the month of invoice which means that the wait an average of 45 days to be paid.
But accounting systems are far faster now than when I joined the workplace 30 years ago so surely it’s easier to register, approve and pay invoices much faster now than all that time ago? Personally, as a small business, I find it easier to pay invoices as they arrive to minimise admin time. But not everybody is in such a strong cash position.
My standard payment terms are 7 days from invoice so an average of, well, 7 days. And most of my clients pay me by direct debit which costs a few pennies but the integration between Gocardless and Xero means that it does all the bookkeeping entries to so saving me precious time.
When speaking at conferences I’m always paid the full amount before I travel to the event as organisers like to take a few days off afterwards rather than fuss over invoices.
Is it time to review your payment terms to improve your cash position and, in turn, to pay your suppliers faster?
Cloud is now old hat. Even before the Corona Virus caused many of us to work from home most modern businesses were going paperless and using cloud based software*
So what software do we use with most of our clients?
- Receipt bank – to get your data into Xero as simply as taking a photo or forwarding an email. Optical character recognition does the rest
- Xero – to link directly to your bank statements so that your accounts are as up to date as possible for those important business decisions and loan applications
- Xavier – which helps us to check the quality of bookkeeping. We use it to check our own bookkeeping and for the few clients who insist on doing their own.
- Fluidly or Futrli – to keep track of cashflow which is so vital at the moment
- Clarity – to help you improve your business through tracing 7 key indicators.
While the software in our tech tool box does the heavy lifting we can then help you to CHANGE your numbers with our free monthly Money Matters webinars and our online Flyby review sessions. We might recommend other software depending if we think that it will make your business run more efficiently and help you to create more profit for the hours that you put into your business.
*If you’re not already using cloud based software then we can help you to migrate. If for some reason you don’t want to use the software that we like then we’ll be happy to introduce you to accountant colleagues who use other software