In the fast-paced business environment, every minute counts.
It determines how you charge your clients, allocate your resources, and measure the progress of a project. Therefore, when time tracking goes astray, it leads to chaos.
Consequences of Inaccurate Time Tracking
Inaccurate time tracking can lead to significant ramifications. Although it may appear inconsequential, the effects of inaccurate time tracking can permeate your business and create various challenges. Let's delve into some of the potential consequences businesses might encounter when time tracking goes wrong:
Lost Revenue
When time tracking is not accurate, it leads to a failure in recording all the hours that can be billed to your clients. As a consequence, you may not charge for all the work completed and end up losing potential revenue. This could have a detrimental effect on your business's financial stability in the long run.
Overworked Team Members
If your team members do not accurately record their time, it becomes challenging to distribute resources efficiently. Consequently, certain team members may end up with an excessive workload, leading to burnout and undue stress on the team.
Inaccurate Client Estimates
Having accurate time tracking is vital for being able to give clients realistic estimates for upcoming projects. If you don't have a clear idea of how long similar projects have taken in the past, you run the risk of underestimating or overestimating the amount of time needed for future work.
Insufficient Project Insight
Precise time tracking enables you to gather important information and understand your company's projects better. When time tracking is unreliable, you are unable to analyze project performance and make informed decisions to enhance project management and profitability.
Limitations of Using Timesheet Spreadsheets
While it may be tempting to continue relying on spreadsheets for timesheet management, the truth is that there are still significant drawbacks to using this method:
Entry and Formula Errors
Error-prone entries, times that are entered wrong or don't fit the pattern, and formulas going haywire - it's enough to waste time and resources in a jiffy!
Entry or formula errors are always lingering in the shadows, ready to put a major pain in your billing plan.
Don’t Store Historical Changes
How can you keep up with all the changes - changes like team member rates, task rates, or reassignment of a team member to another project (phew!).
So unless you’re some kind of superhuman, it’s best to have all the historical changes and notes there to help you manage your projects and team members.
Don’t Consolidate for Billing
Trying to consolidate all the individual timesheets and determine which hours to invoice for is no joke.
One second you're trying to make sense of the hours logged, the next you're questioning which rate the client should be billed at. Not even the best spreadsheet template can help.
Don’t Tell You Anything About Capacity or Availability
If only flipping through a timesheet could tell you if a team member has the capacity to complete a particular project or task. Sure, you can get the hours they spent on it last week, but it still doesn't answer the question of their availability or capacity - which active projects a team member is working on and for how many allocated hours so you can confidently allocate or assign them to another project.
They also don’t tell you the project or team member timeline - the dates the project is due to end or the dates the team member assignment is coming to an end.
Don’t Tell You Anything About Utilization or Productivity
Tracking your team’s utilization rates is essential for getting an accurate picture of your agency’s chargeability and productivity.
Knowing how your team is spending their time lets you identify underutilization and overload and ineffective task allocation, enabling you to manage resources better and ensure that projects are delivered on time and completed within budget.
Timesheet spreadsheets won’t give you any insight into how your team resources are being used.
Don’t Tell You About the Profitability of Projects or Team Members
Ah, spreadsheets - they’re great for tracking what hours were worked that week and on what day, but they’re not going to show you if your projects and team members are profitable.
If you want to make sure you’re in the green, it’s essential to keep an eye on those numbers.
You need to measure utilization, productivity, profitability - you know, the all important KPI’s - not just historical hours.
Why You Should Implementing a Time Tracking System
You have to implement a rock-solid time tracking system that inspires confidence in your team. Equip them with user-friendly tools that simplify the process of logging time.
But don't stop there – analyze the data to gain valuable insights. By harnessing the power of accurate time tracking, you can steer clear of challenges and preserve your company's excellent reputation.
Billing
When clients are billed based on a predetermined project budget, billing is relatively simple. This might be done at the end of the project or in instalments, such as receiving 40% upfront and invoicing the remaining amount at specific milestones or agreed-upon time intervals.
However, not all projects have a predetermined budget.
Now that you have implemented an accurate time tracking software, the challenge arises in determining the appropriate rate to bill for those hours. Should it be based on the team member rate, set-hourly project rate, or task rate? And didn't one of the rates increase? When was that? Furthermore, as a global business, billing clients in different currencies adds to the complexity of the situation. All of these factors can be quite overwhelming.
Businesses can simplify their lives by selecting the perfect timesheet software. Look for one that offers comprehensive features for task rates, project rates, and team member rates. Find timesheet software with the ability to handle different currencies, allowing you to easily bill clients in their preferred currency. It should also be able to accommodate changes in rates, with billing automatically updated from the effective date, and maintain a history of those rates. With the right timesheet software, agencies can generate accurate billing reports for clients quickly.
Choose wisely and say farewell to billing headaches!
Critical Team Member and Project Insights
Understanding the financials is crucial for effectively monitoring project performance and team member productivity. It is important to regularly monitor KPIs such as utilization, productivity, and profitability to ensure that targets are met.
While many timesheet apps provide basic insights, comprehensive reports are often lacking and many agencies are forced to rely on multiple spreadsheets to track these KPIs, leading to errors and wasted time.
Additionally, most timesheet apps lack the ability to handle multiple currencies for billing and costs, making it difficult to track profitability accurately. For agencies that operate in multiple countries with different currencies, it is essential to choose software that can handle currency conversions and provide useful insights for financial management.
Conclusion
You could stick with those old-fashioned spreadsheets if you want, but let's face it – we're living in the digital age. Why waste your time on hour-devouring, error-prone sheets when, with the right Timesheet software like Teami, you can do it all for you with a few simple clicks?
And let's be real, who wants to spend extra money? Make sure the software doesn't charge a premium for essential features that you would expect in a timesheet software.
