To improve your time and expense tracking, you need software that provides smart timesheets, receipt capture, reminders, and more.
5 Time Tracking Tips for Accounting Firms
Tracking time can tell you more than just what employees are doing. It is essential to measuring productivity and project profitability.
Whether tracking for only yourself or a team, properly managing time is more than just monitoring minutes and hours. It is also essential to measuring productivity, as well as identifying strengths and weaknesses. For accounting firms, effective time tracking helps in a number of areas:
Determining whether client services are priced appropriately
Developing accurate estimates
Getting invoices to clients promptly
Profitability of engagements
Productivity of staff
1. The Right Tools
There are thousands of websites and books devoted to time-management techniques, such as the One Minute Manager, that are all about blocking times of day for certain activities and delegating tasks. But the first step toward time tracking is to use the right tools.
Effective time-tracking systems should enable users to track multiple projects simultaneously, while allowing them to assign time to projects and clients, and to track that time against budgets to determine productivity.
Having multiple ways to track and enter time is also essential, since users may need to use timers, or also enter time manually, depending on their needs. The effectiveness of your time tracking will depend greatly on whether the time-tracking system is user-friendly since if it isn’t, getting employee buy-in will be harder. In other words: If your time-tracking system is a headache, it won’t be used consistently or accurately.
2. Mobile Apps
In the modern professional firm, having remote access to client and firm data is a must. When it comes to time tracking, staff should be able to quickly and accurately enter time from wherever they are, especially if they are at a client’s location.
Being able to enter time and project information while it is still top of mind increases the reliability and accuracy of the information. Expense tracking is closely related to time tracking, and advanced time-tracking systems will include expense management functions including automatic mileage tracking based on GPS connectivity within the app.
3. Integration with Accounting and Billing
While few accounting firms charge directly by the hour anymore, measuring and tracking time then applying it to projects and client engagements is essential to determining the effectiveness of staff, and the profitability of specific client services. Also, even though clients may be on a flat fee, value billing, or even subscription pricing model, they still want to know what they paid for. A time-tracking system that ties into the accounting and invoicing for the firm allows the data to be included (with edits) on client invoices. Meanwhile, other integrations, such as with payroll or project management, enable greater visibility of data by management.
4. Set Finite Goals
Ok, here I’ll get a little more philosophical. Setting goals is important to any task, but also to the management of teams overall. Let me clarify with two bad examples: It would be incorrect to put the “goal” of a project as “completing a client’s virtual CFO services.” For one thing, that’s a never-ending service. Likewise, it would be useless to set a goal of “completing a client’s 1120S filing,” even though that is an engagement with a finite end.
Completing those functions is a given, whether tracking time or not. Instead, a better approach, and one that makes more sense to the firm’s strategic needs, is: “Improve profitability in tax department by X% this year.” (Or in virtual CFO services.) This is measurable using time-tracking systems, and is achievable when also assessing the firm’s revenues across each department, team, client service type, client and even per staff member.
Some projects and client engagements are larger than others. By setting milestones, team managers can keep projects focused and on schedule, while also offering bite-sized achievable thresholds. At each of these steps, management can also re-examine the productivity and profitability of engagements and staff. This is also a good time to reward high performers.
Time tracking is essential to the smooth running of your accountancy firm but you need to put practices in place to help you track that time effectively.