Why are Timesheets important to Professional Services Firms

This article explores why timesheets are important to professional services firms and how they can improve their time management processes. Below we look at the importance of timesheets from four different perspectives within the firm.

 

Principals and Managers

Principals are often the worst offenders for entering time, but at the same time are the ones that should care the most because poor timesheet practices negatively impact the company’s billing cycle, cash flow and revenue.  To see this impact, all a principal must do is calculate what the utilization rates must be to meet revenue targets. Inconsistent and late timesheets usually result in billable hour waste. Often this waste ends up in overhead because people can’t recall everything they did on the project when time entry is delayed. When a principle does the analysis and sees how much waste is costing the firm, the principal will be more motivated to enforce timely timesheet submission.

Project Managers

Are your Project Managers consistently relying on old project information for analysis on the job? Are they frequently having to write off work-in-progress (WIP) due to a lack of visibility into project entries or potential variances from pre-defined scope? If this is the case, ensuring that teams enter timesheets on time should be important to them.

When timesheets are entered frequently and on time, Project Managers get a better picture of project status, and can see much quicker when people are doing things outside of the original project scope.  If this is the case, it gives them time to negotiate change orders and additional services with the client.  If they don’t have this visibility due to timesheets being entered late, the result is often “scope creep”. Often scope creep results in additional hours being worked that the firm is not getting paid for if they can’t renegotiate as additional service revenue.

Accounting staff

No one has to remind the accounting team about the importance of timesheets.  They are usually the ones reminding everyone else to submit timesheets on time. They know firsthand that it improves the billing process and the firm’s financial performance.

Technical staff

The Technical staff usually follows management lead.  But to do so they need to be clear on their role, understand why time entry is important to the company, and have a clear understanding of what they need to do to comply with management’s expectations. This will help build staff accountability and lessen the work load on project managers.

 

Other important Timesheet Considerations

Good timesheet management software provides the option of enforcing “Notes” or that additional information be added to timesheets under certain circumstances. So when should you require your staff to add notes to timesheets?

For example, for additional services completed outside of the original project scope. Basic services already stipulated on the project usually will not require notes.

Notes are also useful when:

• You have clients that tend to question charges on invoices. Notes can serve as a reminder and provide supporting backup.
• You work on a fee-basis and are often get requests from clients for things outside of scope. Notes can help you build a case for charging as additional services.

Good timesheet management software is built to enable you to enforce notes to be added to timesheets under certain circumstances. Now that we have explored some practices to improve timesheet processes, here are a few ways companies can improve the timesheet submission and review process:

• Emphasize the importance of timesheets for Resource Planning and Billing
• Ensure staff are properly trained on when and how they should enter time
• Simplify the timesheet process as much as possible through automation
• Set up alerts in the system to notify individuals and their supervisors when timesheets are late
• Start a friendly competition and give a prize to the individual or team that has the best timesheet submission record.
• Make timesheet submission part of the annual review discussion, and tie it to performance related achievement and rewards.

Ensure you are using a timesheet management system that allows staff access to enter their time at any time, from any device and from anywhere – as long as they have an internet connection.

For speed and accuracy, ensure your timesheet management system is part of your project-based ERP system and not a standalone system.

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