There’s gold to be found in your firm’s timesheets. 

That might sound hard to believe, given many accounting professionals find timesheets to be time and resource sinks.

But when used properly, timesheets can improve your firm’s profits significantly, noted Jean-Guy Talbot, a practice management specialist and the founder and CEO of Winnipeg-based accounting firm Talbot & Associates. Talbot was speaking at a recent Caseware webinar called Turn Your Timesheets From Pain to Gain.

Some firms use timesheets simply as a way to track the time staff spend on projects. That’s a mistake, Talbot said. You need to invest in quality time/billing software so you can run your practice effectively and find out what’s happening under the hood at your firm.

There are three key features you should look for in time/billing solutions, Talbot explained. The software should be able to:

• generate a work-in-progress summary so you know what you should bill for a project
• display work details, making the information that  went into the preparation of a file readily available
• provide detailed employee efficiency reports

The last feature is particularly crucial, Talbot noted. To boost your firm’s profits you need to be able to track utilisation and realisation for each employee. Utilisation is the percentage of an employee’s time that is spent on chargeable tasks, while realisation is the revenue an employee is generating per hour billed to clients. It’s important to note realisation rates are different from the actual charge out rates you bill.

Improving utilisation

Employees should have different expectations in terms of utilisation rates. “I refer to people on my team as finders, grinders or minders,” Talbot said. Finders are the ones who bring in new clients; minders mind the practice and include people like your human resources person and receptionist; and grinders are the employees handling most of the client work. 

Grinders should have utilisation rates around 90 percent, Talbot noted, while, at the other extreme, a receptionist at a large firm might have a utilisation rate of 20 percent.

Talbot offered a few tips to improve your employee utilisation rates if they’re too low:

• Train your team to record as much chargeable time as possible – “Let’s say an employee receives an email,” Talbot said. “It’s quite common when people implement time and billing software that they’re going to put all their time reading and responding to email as non-chargeable. But who is the email from? If it was from a client, should it not be chargeable?”
• Encourage your grinders to delegate non-chargeable work to the admin team – The admin team is usually more efficient at doing non-chargeable tasks, so your grinders should always be asking themselves if a non-chargeable task is worth their own time, Talbot explained.
• Check the time of junior team members closely – “If I have a junior grinder that’s under 90 percent utilisation, I’ll examine their non-chargeable time. And I usually look at items that take up more than two percent of their overall time. I’ll usually find that time was in fact chargeable.”
• Watch for too much time spent on meetings.
• Keep an eye out for time billed to computer problems – If you find an employee with a lot of time billed to computer issues, it can be a sign it’s time to replace that person’s computer. If all your employees have a lot of time billed to computer problems, it may be a sign you need a better IT team or a new IT solution for your office.

Realising higher profits

To maximise realisation for your firm, Talbot said the key is learning value billing. You need to generate as many pounds as possible for the services you render.

Some easy ways to boost realisation are:

• Invoice quickly – You want the client to remember the service you provided. “The best time to give an invoice is when the tears of appreciation are still wet on their face,” Talbot said.
• Invest in marketing – “The longer the lineup outside your door seeking your services, the more leverage you have to increase your fees,” Talbot noted.
• Discuss fees with your client before starting the work.
• Don’t give away any services for free.
• Provide a timely service – Clients are much more likely to pay higher fees if you get the work back to them in a reasonable time.
• Give lower-value work to junior staff – Senior staff with higher charge-out rates should delegate lower-value services to junior staff. “If I have a charge-out rate of £120 per hour, you can bet your boots I’m not going to be doing any bank reconciliations because we have people with a charge-out rate of £40 per hour who can do a bank reconciliation as fast as I can, at a much lower charge-out rate,” Talbot explained.
• Train clients to give you organised information. 
• Always do what is best for your clients – You want to make sure they know how much they mean to you.

Timesheets can help boost realisation if they’re set up properly, Talbot said. The key is to break down all your services by codes. That way you can evaluate each employee to see what services they’re best suited for. Employees who deliver write-ups for services are able to generate value for your firm above your hourly charge-out rate. And those who deliver write-downs are delivering less than your charge-out rate.

If an employee is consistently delivering write-downs on a specific service, you can either stop giving them that kind of work, or you can train them to become better at it, Talbot said. And if they’re consistently delivering write-ups you can give them more of that type of work.

If you have an employee who shines in a particular area, you can consider bumping up their charge-out rate for that particular service, Talbot said. “It’s not uncommon for any one of our employees to have a standard charge-out rate, but also have a bunch of services that have a charge-out rate that’s higher than their standard rate,” he explained.

Talbot noted some people think having detailed timesheets is overkill, but it’s the detail that helps you identify your team members’ strengths and weaknesses. Doing so helps you maximise your revenue.

“Most times when I mentor clients, I’m able to boost their realisation by about 10 percent,” he said. “And that’s by simply implementing proper evaluations and practices.”

Find out how Caseware solutions can set your firm up for success. Book a demo today.