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Time and Billing Software Fundamentals for Professional Service Firms

Sep 16, 2019 | By Steven Burns, FAIA | 0 Comments

Topics: Financial Health

Ask a professional what is the least enjoyable part of their job and you will invariably hear them say something like “filling out my timecard.” It’s no wonder, for decades, firms have been demanding their billable staff submit weekly timecards in order to help them invoice their clients.

The typical scenario is this: Friday rolls around, and like clockwork, office managers across the country act like church bells beckoning worshipers; “hand in your timecards, hand in your timecards” they chime. And staff starts scrambling.

In too many firms, those without any time and billing software, employees launch archaic Excel spreadsheets and try and fill in the rows and columns recreating their week. In other firms, where they’ve invested in a time tracking application, employees log in and essentially do the same weekly dance. In both cases, we witness extraordinary inefficiency and inaccuracy.

Just imagine if I were to ask you to tell me about all the things you did 4 days ago and furthermore, accurately tell me how long you spent doing each of those things. Frankly, I can hardly recall what I had for lunch two days ago, and if I also had to tell you how long I spent eating that mysterious lunch, I would likewise be lying.

But this is what business is like for the great majority of professional service firms. Employees guess what they were doing and for how long. While this might not seem so egregious to you, day after day, week after week, this incorrect accounting creates a false depiction of where your staff spends their time and how much you should be billing your clients.

For those of you who are now sniggering that this doesn’t apply to you because you don’t bill hourly, you have fixed fee services; don’t be so smug. You’re not out of the woods. Without a clear understanding of what you earn compared against what it cost for you to do the work, you're likewise, flying blind.

If that isn’t injurious enough, this horrible process is repeated 52 times/year. And for those firms that think they’re smarter by asking for timecards every two weeks in order to match the rhythm of your payroll, you’re probably in worse shape, since asking someone to tell you what they did and for how long 10 days ago is just impossible. We all know these employees are not filling out their timecards daily unless you have a truly vigilant office manager.

There’s another breed of firms that are more evolved and have implemented some type of time and billing software. Of course, this is far more beneficial since this integrates two abhorrent processes: capturing the staff’s time and billing the clients.

However, not all time and billing software solutions are created equal. For example, most solutions have very little intelligence and simply provide employees with a master list of projects and activities. It has no way of monitoring the project budget and letting the employee know if they are even supposed to be working on the selected project and activity, or notifying the project manager as to the real-time performance of their project based on the time their team is putting towards it.

Most time and billing software solutions in use today aren’t smart enough to allow the billing system to inherently know that employees can have different billing rates when they work on different projects, or even within the same project when they work on different activities. In addition, these inadequate systems also have no way of understanding complex contract types such as billing hourly with a cap, or billing a fixed fee and using a percentage complete value to calculate how much to invoice. These are often handled manually by the people responsible for using these unintelligent systems to generate invoices.

My advice to every professional service firm is to stop all this repetitive, manual work that is not only inefficient and unprofitable but as meaningful as spending time on social media. Look for native, cloud-based software solutions that are designed for your business. If you’re an accountant, don’t use a system recommended by your dentist. If you’re an architect or an engineer worried about change, think more about how your time could be better used and whether your firm is really meeting its profit potential.

Want to learn more about best billing practices? Click the link below for a free eBook on 5 billing mistakes you should always avoid.

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The Author

Steven Burns, FAIA

Steven Burns, FAIA, spent 14 years managing his firm Burns + Beyerl Architects. After creating ArchiOffice®, the smart office and project management solution for architectural firms, Steve brought his management expertise to BQE Software, where he is perfecting the business strategy and product development.

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