It has been said that the process of recording time, if not managed properly, can be worse than not having any recording system at all - like the old adage "garbage in, garbage out!" Some firms have come to the conclusion that it is not worth the effort.
Opportunity Cost
Some argue that the time captured through having a Time Recording system readily available doesn't always compensate the opportunity cost of recording it. Certainly, It is relatively easy to quantify the time taken to capture and process time worked. The cost of someone on a hourly charge-out rate of say 50.00 spending 15 minutes every day inputting their time will be in the region of 3,000 per annum; multiply this up by 20 staff and that is 60,000 in lost time!
Conversely, attempts to quantify those elements of time worked and not charged are extremely subjective. "What you don't know...you never miss!" or so the saying goes. So, by not recording your time you are actually saving money!? Moreover, so the argument goes, it is pointless to record work undertaken on a fixed fee basis because nothing else can be billed.
Don't record your time?
If you're not recording your time at all, then you have two options; you can either invoice a similar fee to the previous one for the particular job or agree a fixed fee based upon fees charged for similar work done for other clients. The information will be there, because it is a part of your accounting system that you have to maintain properly to satisfy regulatory bodies; i.e. an outside influence is forcing you to do it!
If your firm doesn't feel the need to record the work done by it's employees, do you have some method of recording when they are in attendance at work? Not many professional firms require their employees to 'clock in and out'; but some professional firms, that don't record work done or record when employees are in attendance, suffer because of it. Some employees, of professional firms, fall into patterns of becoming late, or provide the excuse 'I'm working from home today'. So how do you know how much time has been lost if you don't record it?
Those who do not record their time may have a suspicion that some jobs are paying better than others, but won't know for sure how well or how badly they are doing on individual jobs. If their company is in profit, they will believe that they are doing well. They could possibly do better, but they don't know where the improvements need to be made. Conversely, if their accountant has the sad duty to inform them that the company is making a loss, then the first order of business is usually to cut costs (down-sizing etc. etc.); perhaps the first order of business should be to analyse the work done in the past to see how efficiency can be increased now and in the future?
So, how can you analyse the work done in the past to see where improvements need to be made if you aren't recording the work you do?
So, record your time by writing it all down?
If you are recording the work you do, the cheapest option must be to record it in your diary. This may be OK if you're a one-man band and have only a couple of clients, but getting hold of all the diaries from twenty or so staff on a Monday morning can be a little fraught with difficulty. Recording on bespoke Time-Sheets seems a better option, but there is still the difficulty of obtaining them from all your staff on time, so that the process of collating the information can begin.
How are such Time-Sheets to be designed? Should they be designed so that information can easily be obtained for payroll purposes, i.e. one person, one Time-Sheet? Or should they be designed with the purpose of collating them for billing - perhaps one Time-Sheet per job per person? With the former, manual collation of Time-Sheets for billing purposes is fraught with difficulty. If Time-Sheets are designed so that there is one sheet per person per job, then you may have several Time-Sheets for each person for any particular week and certainly several Time-Sheets per job. How would you know if one was missing?
Recording time manually, regardless of the individual charge-out rate, takes, on average 15 minutes per day. The actual time is dependent upon the type of work done, with some staff recording one job for the whole day, while others record a couple of dozen jobs in one day! If you're only recording one job per day, you're less likely to miss recording it than someone who is recording a couple of dozen jobs.
Making sure that you don't miss recording time requires that some checks be carried out. If your employees are paid according to the hours on their Time-Sheet, then one check could be the employees themselves. If some staff time has not been recorded then the member of staff concerned would receive a lower amount than they expected and would, perhaps, complain? Would they complain if they got more than they were expecting? Payroll departments of professional practices rarely use Time-Sheets for the purposes of calculating gross pay; they simply divide annual salary by twelve. So without employees or the payroll department providing a check on the time recording process, what other checks can be done?
To do it properly, someone would have to take every item on every sheet and record it in a client or job-specific ledger, then close off those ledgers for the period and check the ledger balances against a control account balance (Opening Balance plus sum of all new Time-Sheets less sum of Invoices in the period should equal the Ledger Balances). I don't need to tell you that this is very time consuming work; especially if it doesn't reconcile.
So, record your time but collate it all on a stand-alone system?
Those who believe that having a computerised standalone system is a cheaper option have a point, but it is not as clear cut as it seems. Let's paint a picture of a small, but growing firm whose staff record their work on Time-Sheets and pass them over to an administrator early the following week for entry into the computer. Firstly, there is the time taken to process everything. Only one person can use it at a time; data entry of twenty or more Time-Sheets, with all the attendant records, takes a considerable period of time. If Time-Sheets are late in or not available, the whole Billing Process is delayed. Secondly, note that you are a week behind with the information that you are going to use, then ask the question "How do the management know that everything has been posted correctly?" Well, the main check has to be a comparison between the original Time-Sheets and the entries made in the computer. Some computerised systems will be better than others in this regard; but not!
e that there is an assumption that has been made here, and that is that individual staff members have recorded their time correctly, in unambiguous terms and legible writing. There are some professionals out there whose handwriting is not always very clear; although, I believe this to be the exception rather than the rule. Nevertheless, mistakes are sometimes made and this is not always picked up straight away through comparison with the original data source, and sometimes the mistake isn't discovered at all! Staff must be made responsible for checking their own Time-Sheets. Ideally, though I am not aware of this happening in any firm that I've had contact with, staff members should be provided with a hard copy of the facsimile Time-Sheet from the computer so that they can check and verify the entries made on the computer.
Then there is always the possibility that management don't agree with the employee's original recording on their Time-Sheet. I have known instances where staff have recorded work done to "Office Time" when it was for a specific client, especially where budgets are involved. Conversely, I have had experience of managers wanting records changed from Office Time to specific clients, or from one client to another. In these instances, the staff member concerned isn't always informed of the change; often discovering the evidence of it at a later date. Moreover, the ease with which the computerised system allows such changes to be done is not often considered when choosing a Time Recording programme; the only thing that matters is whether it can be done or not! Some systems require that two postings are done for every correction; one to eliminate the incorrect entry, the other to effect a correct posting. Sometimes such systems create their own problems as the incorrect entry and c!
orrecting entry often still appear in Work in Progress Reports and have to be "matched off" with each other before they are truly dealt with.
Another problem is that administrators count themselves lucky if they have the opportunity to receive training on the use of Time Recording programmes and often struggle to use the often complicated software. In such circumstances, adjusting incorrect postings can send stress levels through the roof! Not very good if that person is also the only member of staff who knows how to use the software!
Standalone systems, can work well, if the Time-Sheets arrive on time, everything is clear and legible, and the correct checks are made to ensure that everything is posted as it was originally intended.
So, record your time on a networked system?
The is arguably the most expensive option. Not only is there the actual cost of buying and installing the software on every machine required, there is the cost of training each member of staff to use it, both in terms of paying an outside entity and the opportunity cost of the lost working time. If no training is given then, the opportunity cost is sometimes greater. Staff often resent being asked to post their own time into bespoke software; even in the case where they were recording it manually before. Some even resort to active resistance! Records being incorrectly posted deliberately! Manual Time-Sheets still being completed (hanging on to the old system) before being entered into the Network System! Result - disgruntled staff, loss of earnings, and poor quality information!
This isn't always the case however, if a Time Recording programme is chosen for ease of use, so that staff can easily enter records, check their entries, and amend them if necessary. The time taken to learn how to do this, and how to print out the reports they need, should be, and is minimal. The real training should be for the administrator responsible for day-to-day maintenance of the Time Recording programme and perhaps for management who often need a greater range of reports and analysis of records. A well designed Time Recording programme should assist the user in every regard. Help on any area should be available at the touch of a button. Manuals should be clear and concise. Some software providers do not feel they are providing value for money unless their manual is at least 300 pages long! How many of your staff want to search through such documents? Do you have the time?
Is the Networked Time Recording System 'live'? i.e. can you record work done in the morning and use the information for billing in the afternoon? Do you have to stop recording work at any stage so that the administrator can carry out specific procedures? Can you obtain correct reports as at any historic date? If you have a system that can provide such flexibility of use, then there are distinct cash-flow advantages. You can also subtly change the culture from one of a more laissez faire - "it'll be OK next week" to a more urgent one - "let's get the job done and bill it!"
Does the Networked Time Recording System provide management with the opportunity to - analyse work done in detail? - compare effective hourly rates for each job?- see where improvements can be made? or is it simply a programme to store and retrieve records?
Even if you have such a Networked Time Recording System, mistakes can still be made. If you choose to bill before taking a controlled check of the time entered, i.e. printing off weekly Time Sheets and checking them for record accuracy, then you may subsequently find errors in data entry and may miss the opportunity for charging for all of the work done.
It seems important then, for some periodic checks to be done before the Billing Process takes place. Staff should be encouraged to check the entries they've made immediately after posting them; but blanket checks of all entries on a daily basis seems a bit excessive. Ideally staff should print out a Time-Sheets on the following Monday morning, sign it to approve the records shown and hand it in to the administrator for filing; but we live in the 'real world'. Professionals are skilled at circumventing unnecessary and unenforceable bureaucracy. Many professional's would just smile at the administrator and ask them to print off their Time-Sheet for them. Errors can go unchecked, regardless of the best efforts of others.
So, to make the time recording process function properly on a network, what should we do?
The best option is perhaps for individual managers, or Team Leaders, to print off the Time-Sheets for members of their Team and to check through the entries made, with the individual Team Member if so required. This can be an effective management tool. Some managers might begin with the opening remark "I notice you've put down over four hours last week to ....... Was there a problem with the job?" Team Members take responsibility for the work they do just as Team Leaders take responsibility for their team and the work they do. Team Leaders can then keep hard-copy Time-Sheets for members of their team as a safeguard. Team Leaders can then indicate, to the person responsible for the Billing Process, that the records for his team are accurate and complete so that the client can be billed for the completed job.
It is possible to go one step further and have Team or Project Leaders carry out the Billing Process, but I make no recommendations about delegating the task of negotiating a price for a job to every Team Leader. If there is detailed information readily available to Managers about work done on jobs, then they know exactly how many hours will need to be worked, by whom and exactly how much this will cost if a similar job is to be undertaken again. The Manager knows exactly how much leeway there is to play with; and in a competitive marketplace, this can be the difference between getting the job and making a profit, and getting the job and making a loss.
Essential Points
A firm may continue in existence for many years, even making a profit for all of that time, but if work done is not analysed to see where improvements should be made, then any attempts at changing the way that jobs are done can only be assessed with their effect on net profit. There is no detail in this figure and no further scope for analysis and resultant recommended action. If a firm does record work done, then periodic checks should be made to ensure the accuracy and completeness of the records.
Manual collation of Time-Sheets is very time consuming; checking them to a control account, even more so. Computerised collation on a Standalone System can speed up the process, but it is still comparatively slow, Time-Sheets may not always be available, may be ambiguous and have unclear or illegible writing. The Billing Process may also be delayed. In addition, some Computerised Systems do not make it easy for an administrator to adjust entries made.
Networked Time Recording Systems should be chosen for ease of use, having the ability for employees to easily enter records, check and amend entries made as necessary. Such systems can suffer from a failure to check records properly. However, Team Leaders can use Networked Time Recording Systems as a powerful management tool and can not only check Team Records, but can play a major part in the Billing Process and make it happen more quickly after a job has been completed. Senior Management can also analyse work done so as to obtain better information about job performance and be able to quote accurately for new work.
Any Time Recording System that doesn't involve periodic checks on records, for accuracy and completeness, is likely to result in billing errors that may prove costly. Having everyone record their working time, and performing checks to ensure that it is accurate and complete, ensures that if any work is not charged to a client, then it is a management decision rather than by failure to capture the data in the first place.
In conclusion, if you don't record work that you do, then you don't have enough control over your business. If you do record the work you do, and have people checking the records, then your business has the control it needs to move forward in a competitive marketplace.
Tom Jacobs writes for
http://www.superbtimesheets.info where you can find out more about timesheets and other topics.
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