If you bill your clients on a fixed or actual time and cost basis and/or pay employees by the hour or by salary, you need to accurately record and track employee time. You probably use timesheets right now – whether they’re paper or online – and have your team track their time against a job’s specific tasks. This critical data can help you understand where your resources are going and how your business is operating.
The best way to gather the most valuable time tracking information is to use time tracking software. From standalone apps and widgets to larger job management systems, time tracking software comes in many shapes and sizes. For example, WorkflowMax gives you eight different ways to track employee time while managing all of your jobs and projects.
Unlike inconvenient paper timesheets or siloed solutions, the right software makes it easy for employees to keep a detailed record of what they’re working on. You should look for these features in a time tracking tool:
- More than one way for employees to enter time – including a stopwatch widget in their browser, a mobile app and manual online entry
- Dashboards that show logged time per employee and projects, and an easy way to see what everyone is working on at any given time
- Custom reports based on time tracking data by task, employee, job or time period
- The ability to integrate with your job management system so data can flow seamlessly throughout your job cycle – including your work in progress, cost estimations, and quoting and invoicing
With good software and accurate time recording in place, there are five ways that you can use employee time tracking data to achieve better productivity, profitability and overall operational efficiency.
1. Create more accurate cost estimates
Cost estimates predict the quantity, cost and price of the resources that are needed to complete a job. They’re used to bid on new work and to inform your clients about your job and budget planning process. When employees track their time on a job, that time goes against what you budgeted in the cost estimate.
Having access to historical timesheet data will help you take the guesswork out of estimating and quoting new jobs. You can review past projects to see if your estimates were correct and adjust as necessary. You’ll also see how much time employees spent on similar tasks so you can produce new estimates faster and more accurately.
Your projects are more likely to be delivered on budget and schedule, which will help you realise your target profit margins, and you’re more likely to gain repeat business from happy customers who don’t have to deal with any cost surprises.
2. Bill clients appropriately
Typically, service businesses bill clients for a job based on the time spent working on its tasks, plus the amount of any costs. Alternatively, billing can be based on fixed quote prices.
If you bill by actual time and costs, time tracking data helps you pinpoint exactly how much time your team spent on specific tasks so you can charge clients for the exact services delivered and be sure you’re being paid for your worth. You can also use your time tracking data to add greater detail to invoices, including the breakdown of final charges and any overages.
If you have a fixed price model, it’s incredibly valuable to know how much time you’re investing into a project so you can verify if your prices are appropriate for the work you’re delivering. If actual costs – of which time is a major contributor – are more than what you quoted, it’s a sign that you might need to raise your prices. And, you’ll have the data to back up your reasoning when you explain any price increase to your clients.
3. Understand & improve team productivity
Timesheet reports give you insight into your team’s productivity. For example, timesheet data lets you see how much time is spent on billable vs non-billable tasks, how much revenue each person brings in vs how much their time costs, and total hours worked.
If the data tells you that non-billable hours are high or productivity is low, there are a few things you can examine and adjust:
- Check that everyone understands processes, and knows who to ask to upgrade their tools and where to go for training on how to complete work more efficiently
- See if people are at risk of burnout because they’re handling non-billable work such as management and training in addition to their usual work
- Look out for team members who have taken on more work because they’re capable but it’s outside their job description – is it time to hire more specialists?
- Make sure work is distributed evenly between team members to balance capacity
Time tracking data lets you analyse the reasons behind all these circumstances. The goal isn’t to micromanage employees, it’s to help your team work smarter. You’ll discover whether there’s new training or staff required, or if it’s a case of spreading the work around so people can get on with what they do best. When you’re having feedback sessions with your team to support better productivity, you’ll be prepared for a more effective conversation with reliable time tracking data.
4. Analyse & increase profitability across jobs
To understand how much your employee labour is really costing you, you need employees to complete their timesheets with every increment of time they spend on both billable and non-billable time. This data is essential for getting an accurate picture of profitability.
In WorkflowMax, the Job Financial Summary report pulls in time tracking and cost data from each job to give you details about how each employee and the business are tracking at any point in a project. This data will help you compare which activities or clients are most profitable and which have a low return on investment.
Here are a few things to keep in mind when examining profitability:
- If one of your streams of work (called “job categories” in WorkflowMax) takes a lot of time or resources yet contributes little revenue, it’s probably time to have a close look at that category and see where you can improve efficiencies or consider removing it from your service offering entirely
- Compare your billable value and your quoted value – if the billable value is higher, you’ve underquoted the job and should adjust estimates for similar jobs in the future
Timesheet notes and details can help you see why tasks took longer than expected and affected your profitability.
5. Measure job progress & keep projects on track
With accurate time tracking, you can compare actual project costs at any given point in the project’s lifecycle with estimated costs to see how well you’re doing.
This information helps you identify issues before they become problems. For example, if your project is halfway through but you’ve used more than half of your estimated budget, you can examine the reasons why and fix things internally. You can also proactively let your client know what’s happening and why there might be a cost increase.
Track employee time with the right tools
There is a better way for your team to record their time and for you to get the data you need to make better decisions. Never miss a second of chargeable time again with WorkflowMax’s powerful, flexible time tracking that gives you the real picture of your team’s productivity and each job’s profitability.