Time Management Revisited
Time is money has been said by a whole lot of people for a long time. How you track the time expended for work done – audits, tax returns, consulting, education and so on is very important. It is most likely that you have used one or more methods of record keeping for time and billing and accounting. Automated timekeeping systems have been around for several decades. If you do not currently use some form of automated recordkeeping, stop right now and get some help. Perhaps you can pursue the secret to time travel to return to the days of your beginning and start anew.
There are lots of time tracking systems that have been used by CPAs and professionals. This article will not focus on a specific vendor compare as anyone can do a Google search and start to determine what works best to support current and future needs. To assist with gathering information on many of the time tracking applications, the following web pages have reviewable lists and can provide a starting research point:
http://www.accountingsoftwarenews.com/advanced_solutions/time_billing/tb1.html
http://en.wikipedia.org/wiki/List_of_time_tracking_software
http://www.softscout.com/software/Accounting-and-Finance/Timesheet.html
21st century company management, demands the extension of time tracking systems to provide knowledge and information beyond simple bookkeeping functions. The term most commonly used is “knowledge management”. What this represents for the CPA is to take the data that is collected from the combination of hours, billing rates, personnel, clients, work categories and analyze the information to help direct the future of your business activities. What this means is that while gut reactions are good, it is absolutely necessary to perform analyses of the time transactions and other information surrounding your business transactions.
Time Tracking Components
For any review of professional oriented time tracking systems, it is important to first seek some answers to basic questions.
What kinds of time are managed?
Most often this relates to the type of services that are offered along with the methods that are used to determine billing for the various services, such as:
Audits that are delivered on a fixed or variable fee
Consulting services that are billed on a project or hourly basis
One-time projects such as web site development, billed as a fixed fee
What is the volume and frequency of time entries?
Are entries made daily, weekly or in a unique summary form at the end of task?
How may employees, partners and others submit data?
Are the time keepers working full time or part-time?
When the data is collected, what is done with data?
Client billing and accounts receivable
Employee payroll and contract payments
Management of the business
Nothing
Solution Thinking
When seeking solutions it is important to understand both the similarities and the differences of time tracking systems that have been targeted at each of the professional groups – Accountants, Lawyers, Consultants, et al. Any professional that uses time as a basis for obtaining business revenue can properly use most time tracking systems. The key element of difference is the lexicon used to describe work done. Accountants have audits, tax, financial services, etc. Lawyers have client matters. Architects have design and development projects. How the individual professional firms use the time that is entered is important to the employees and managers and partners and owners of the business. When viewing potential solutions, it is important to determine how the time data maps to the manner in which your firm collects information about work done.
Fundamental basics of all 20th century time tracking systems include collection of hours and billing rates and employees and client activity to support both billing and payroll processes. Today the differences are how the data can produce usable analytical information reports that will positively assess and assist the delivery of services, support the staff and provide usable information for a much more effective organization.
Curt Finch, Founder and CEO of Journyx, has observed the evolution of time systems over many years. He states that he is “…absolutely convinced that companies do not understand their costs, how people waste their time, and that all work that is done contrary to the strategy of company is playing into competitor’s hands.” This strong statement has to be mapped to the needs of your business operation. Every business, professional and corporate, have competitors that would like nothing more than to increase their business by absorbing clients and customers of other organizations. It is clear that all accounting firms attribute some percentage of their growth to accepting new clients that had previously used other accounting firms. Understanding how the time tracking system can support growth is essential.
It is not so much that one system fits every possible business. Rather it is critical to understand the data that is entered into the system has value. Twenty years ago, I was responsible for IT operations at the 14th largest CPA firm. The firm had its own time tracking system that gathered all the usual information from timesheets. We decided on doing some analysis on the mass of data that was in the system. One such analysis produced a simple report that identified how 80% of all billing revenue over the past 12 months was generated by only 200 of the firm’s 1,600 clients. This analysis further showed the volume of work performed for each major category of audit, tax, business services, etc. The problem in the 1980s was that the firm’s managing partners did not know how to digest and act upon this information.
What firms need to do today is to develop statistical analyses that can highlight business operational data to support future decisions. According to Mr. Finch, “Strategic information can identify the profitability of a client by project.” This can lead to making decisions as to whether to expand or contract work with a particular client or to consider dropping or increasing entire lines of business such as government work or IT consulting. This is more than payroll automation, this is good business management.
It is entirely useful for firms to analyze clients, employees and work done to determine what to do next. For example, the construction of future bids for audits or special projects need to be supported by the experience of what has been done before. Moreover, having a current and accurate time tracking system can provide information as to the budget and profitability of an ongoing work task. The system can be set to ring alarms when certain milestones based on time, billing or dollars received fail specific targets. This knowledge can be effective in resetting ongoing work to original targets or force the changing of the target before the surprise of losses is occurs.
The process of time tracking needs to be viewed as critical. Too many professionals decide that the back of the envelope occasionally filled in can provide enough information to support the enterprise. Some sole practitioners can function this way. When the numbers start to expand, envelopes become less useful. It is essential to understand why you win and where you lose. Football teams watch films of past games to dissect why things worked and did not work. The “film” of professionals starts with time tracking. This includes developing sets of usable data that can viewed and analyzed to support the construction of future bids.
Selecting a System
There are lots of questions to ask when considering which is the most appropriate vendor of a time tracking system. As nothing is perfect, it is significant to approach your decision process with the idea of arriving at a very good choice. There is no single best solution.
Of course, doing it yourself using database systems like MS Access or spreadsheets like MS Excel are options. Typically these choices reflect a smaller volume and infrequency of data entry. Depending on your technical resources, these systems can support sole practitioners with minimal functionality. The major issue is to compare the features, reports, ease of use and stability of data that is provided by the purchased application with the home-grown.
Today there are options for how a system can function:
- On an internal computer, accessible by one or more locally attached computers
- A custom application through a web based service, accessible on the internet
- A web based vendor application that is providing the Software as a Service (SaaS)
Going forward, Software as a Service will expand. Everyone will have broadband connections and various lap sized and hand sized devices that enable the linking with any web based application. It should be noted that Microsoft has made substantial strides in getting ready to provide most, if not all, of its applications as a web service. This next level of connectivity will include the integration of cellular phones, PDAs of all sizes, along with office, home and mobile computers. Features will include integration of typing, text messaging, voice recognition with applications and data libraries.
The last question here is: Can one system fit all or does each business need a tailored solution?
The appropriate answer is buried within how your firm functions.
- How are time records kept today?
- Is the information current and usable?
- Is time wasted managing hours worked data?
- Do multiple people work on multiple projects or is it everyone for themselves?
- Are time records maintained over multiple years?
- Are their multiple applications where the same data has to be reentered?
- Are there recordkeeping errors?
- Is the work done for clients profitable?
- What additional effort is required to process payroll data?
- Does the hourly information need to be integrated within accounting records?
The answers to each question should be evaluated by the people who have responsibility and accountability for making forward thinking decisions. This process requires some hard thinking and a hard assessment of your time and billing needs. Appropriate time-tracking will lead to both tangible gains and cost reductions. Time tracking enhances operational control, facilitates compliance with various employment and regulatory regulations, reduces costs, and improves efficiency. After all, most firms want to reduce costs, errors, management time, and consequently increase firm-wide effectiveness. With an appropriate time tracking system, there may even be some time left over for personal events, such as a vacation.
About Author:
Richard Oppenheim, CPA.CITP, has used and written about technology for more than four decades. He currently provides advice through the Oppenheim Business Group. He can be reached at richopp@oppenheimgroup.comor through his Web site, http://www.oppenheimgroup.com .
Curt Finch can be reached at curt@journyx.com
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