Jul 22nd 2010
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By Brett Owens
How many hours do you bill in a typical year? Better yet, how many hours would you like to bill in that same year?
For various reasons, there is often a discrepancy between the desired number of hours an accountant wants to bill versus the actual hours billed. While a difference of something like 50 hours doesn't sound like very much, at rates of $250/hour, this adds up to potential lost revenues of $12,500 per year!
Every practicing accountant knows that effective time management is key to maximizing personal productivity and firm profits. The numbers tell the story and it all boils down to time management.
If you bill for your time directly or on an hourly basis, diligent timekeeping is something you must do in order to get paid for all of the work you perform for clients. If you bill on a fixed fee basis, accurate time records help determine how profitable specific clients and projects really are – and if unprofitable, time records help you realize the viability of a client for the long term.
How can you increase your billings?
1. Make Accurate Timekeeping a Top Priority
You must have an accurate account of how you spend your time. Without it, you may lose significant pieces of legitimate billable time. If you performed the work, but were unable to bill for this time because you lost track of it, you just lost some potential profit.
Accurate time tracking does more than just crunch the numbers. For example, you can gauge the profitability of a given project, client or both through fixed fee engagements. Given the number of hours you put into a project or client, was the engagement worthwhile? Should you quote a higher price next time? Should you ditch a money-losing client? A solid handle on your time will make answering these questions much easier.
2. Reconcile Your Time Daily
Chrometa recently surveyed more than 500 billing service professionals about their billing and time tracking habits. This group included many accountants.
Respondents who billed hourly estimated they captured just 67% of their legitimate billable time; as a result, they are working three hours for every two they are able to bill. This means that a firm with $200,000 in gross billings could lose as much as $100,000 a year for work the firm performed, but never billed.
Unfortunately, when asked how often the respondents reconciled their time, the answer was "very infrequently." Over half of the respondents said they usually didn't reconcile their time more than once a week, with some reconciling only monthly, and others didn't reconcile at all.
On average, respondents spent more than two hours each week on this reconciliation, searching through sent e-mails, calendar entries, notes, and other items to build a seat-of-the-pants, somewhat inaccurate analysis to reconstruct their time.
Professionals who reconciled their hours more accurately and more frequently were able to account for much more of their time. The result? More accurate time tracking leads to greater revenues.
3. Record Your Time Concurrently
Do you remember what you worked on yesterday morning? How about Tuesday of last week?
After the fact, it's very difficult to recall exactly what work you performed.
The longer you go without recording your time, the more difficult it is to recall. It's best, then, to record your time as you are working on something. However, based on the urge to multitask, this is easier said than done. Yet, life will be easier if you can, at a minimum, jot down notes or time entries as you work.
4. Work on One Thing at a Time
The phone rings … a "reply-all" e-mail comes through. Interruptions are a real time killer!
The solution? Look at everything you have on your list and pick the single most important thing It's amazing how fast you can get something done if that's all you do.. Work on it, uninterrupted, until it's completed.
It's very easy and tempting to check messages, answer the phone, respond to an instant message, or click on a Web site, but if you can master the ability to focus singularly on one thing, you'll boost your productivity significantly. You'll be able to maximize your productivity by working smarter.
5. Invest in a Mobile Smart Phone
Smart phones have come a long way. Today, Apple's iPhone and Google's Android are great devices that not only improve your productivity, but free you from your desk and office. The ability to read and respond to e-mail anytime, anywhere, can greatly help you stay on top of your inbox.
I never realized how much time I lost while running day-to-day errands – even something as routine as standing in the grocery store line. Now, instead of scanning National Enquirer headlines, I'm cranking through e-mail. Best of all, my device automatically synchronizes with my desktop e-mail client. Pre-Android, I had to wrestle my large Windows laptop into operation just to get to e-mail. Now, it's right in the palm of my hand, available on demand.
Find Your Best Solution
The trick to accurately managing time is to find a series of solutions that work for you – not solutions modeled after someone else in your office or through other best practices.
Since most of us take time for granted, any differences in "time spent" and "time tracked" leads to lost profits. To increase billable time, accountants must accurately track time. Keeping tabs on this also leads to a more efficient and productive environment, as well as a truer picture that illustrates great clients versus clients who demand too much of your time.
It's About Time is a series of articles devoted to practice management techniques that focus on efficiency and productivity. The next article will discuss how to successfully manage a "to-do" list."
About the Author
Brett Owens is CEO and co-founder of Chrometa, a Sacramento, CA-based provider of time-tracking software that records activity in real time. Previously marketed to the legal community, Chrometa is branching out to accounting prospects. Gains include the ability to discover previously undocumented billable time, saving time on billing reconciliation, and improving personal productivity. Owens is also blogger and founder at CommodityBullMarket.com and ContraryInvesting.com, as well as a regular contributor to two leading financial media sites, SeekingAlpha.com and BeforeItsNews.com.