A big group that discourages timesheet usage blames timesheets for everything wrong about public accounting today. I reject this and also think this is a bit of a stretch. It seems Blake Oliver had a bad experience when he worked for a large accounting firm and he broadcast about it, and like-minded people with similarly bad experiences jumped on his bandwagon and shared their experiences.
In one of Blake’s podcasts, he mentioned something I wrote, out of context, and when I “corrected” it on LinkedIn, the fans of ditching timesheets inundated the chat box. I then called Blake and after a discussion about this, he invited me to express my views in a podcast about this. While we spent considerable time on timesheets, we covered many other areas, one of which was staffing, which I
Timesheets provide a metric, but it is just one metric among many. Further, many firms use the timesheet as a basis for the fee charged rather than the exceptional service and value provided to the client: on-time delivery, responsiveness, innovative services, and continuous focusing on how a better job can be done for the client. I believe many firms have abandoned using timesheets to determine the price they should charge while migrating to better models, including value-based and fixed fees. Even the giant firms that profess to bill solely on time provide a range of the fee for a project, which really sets a “fixed” fee somewhere in the midrange, unless there are many added services, and then the high end of the range is used or, if the work turns out to be easier than anticipated, the low end.
I believe timesheets are essential for management to gather data on what staff worked on, identifying added services that were performed beyond the original scope, determining staff who were inappropriately assigned to an engagement, where there were excessive errors, where staff was not rotating or moving up on an engagement and within the firm, and even where the firm’s wide suite of technology was not fully applied or integrated into the services. Timesheets can also be used to determine the profitability of individual clients and performance efficiency of the staff. There are projects where time billing must be used, such as certain governmental or forensic projects, but these are exceptions rather than the rule.
Firms that misguidedly bill solely based on time will be penalized when they introduce new technology (at their considerable expense) that would save time, and who also bill higher fees when inexperienced or untrained staff are assigned to an engagement. In neither situation is the value to the client, the growth of the staff people and firm, and the recognition of the investment in technology recognized. That makes no sense to me.
I know some firms that bill solely by time and others that do not use timesheets at all, and that works for them and they are happy. However, from what I’ve seen, there is a drifting away from time-based billing toward value-based, fixed pricing of deliverables and even subscription models of pricing. This is a complicated area and this short column or the podcast will not resolve it, but if you work in public accounting, you should be interested in this and the more views you are exposed to, the better equipped you will be to manage your pricing, which certainly should be a near and dear issue for you.
A common argument against timesheets is that staff do not like them. No one likes filling out timesheets, but it is definitely not a make-or-break activity. I don’t like stopping at Stop signs and don’t like paying tolls when I drive into New York City, but it is part of what we need to do.
I know that opponents of timesheets say these are all spurious reasons, and that is what Blake Oliver kept prodding me to admit, but he didn’t succeed; you are welcome to listen to the entire
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