Accountants often think time tracking is 100% necessary for service based businesses. How else will you know what projects are profitable and what employees are performing? Project managers feel itâ€™s necessary to see how their projects are doing. Your employees hate it, but itâ€™s the â€œonly wayâ€.Â
I get the accounting and project management point of view. Hell, Iâ€™ve spent time in my career extolling the virtues of time tracking. However, I also see that itâ€™s a culture killer.
Great employees feel stressed to be super efficient, but also do excellent work. You know what happens when faced with that conundrum? They work longer hours without recording it. They slowly burn themselves out. They begin to resent the job and everyone who clocks out for the weekend. Eventually, they will move on.
If youâ€™re billing hourly, employees see no point in finding a better way, being more efficient, or stopping the clock for non-client work. Non-performers can look like heroes in this environment. Continue down this path for long and youâ€™ll end up with a culture of non-performers and find it difficult to win work.
Every once in awhile, we all come across a situation in the office that turns us into Estelle Castanza. When we need something from George, we usually start with â€œhey George, can you get me those TPS reports by Noonâ€. At Noon, as usual, the nagging commences.
How can you be less naggy and get what you need in a timely manner?
The right approach really will depend on the person involved and the reason they never seem to meet your needs. Youâ€™ll need to consider the obstacles and find ways to solve them before lobbing in your request.
Recently I’ve been asked to attend a daily 15 minute project status meeting. So far, each day at least one person has kept the group waiting 5 minutes. That’s 1/3 of this meeting, but I digress.
At first glance, you think “It’s only 5 minutes, what’s the big deal?” Well I have a couple of issues with tardiness to meetings. First, where I come from, punctuality is a sign of respect. I know sometimes there are traffic or other issues and I am certainly not 100% perfect. Occasional lateness is understandable and 5 minutes late for a one time meeting is not that big of a deal (but do apologize!). However, when it’s a phone meeting that is every day of the week, being late every day is unacceptable in my book. It’s disrespectful to those who are waiting for the tardy attendee to show up.
Now let’s move on to how much money this costs. In the case of the project meeting I’m attending, at least 2 people are waiting every day for others to show. 2 people, 5 minutes a day, 20 days in a month. That’s 3.33 hours of WAITING. Is that in the project budget? I doubt it. Assuming a minimum bill rate of $100 per hour, that’s $333 per month because one person hits their snooze button every day. What a waste.
Time tracking is an area that most creatives vehemently oppose.Â “It’s a creative process, we don’t know how much time it will take.”Â or “It depends on the person and the project.Â Sometimes it’s quick and sometimes it’s not.”Â These are valid arguments.Â These arguments can be applied to other service based businesses as well.Â I can assure you, I don’t like time tracking either and when I hire bookkeepers, some are faster than others.
Even though the argument is valid, you still have to find a way to price projects appropriately, track work in process, and measure profitability.Â Like it or not, time is the best measure.Â That’s not to say there aren’t other ways of estimating.Â You have to figure out the easiest, best way to reasonably approximate how much effort each project takes.
Like many others, I am in pursuit of the paperless office. There are many solutions out there, but finding the right solution is difficult. For my purposes, mac compatibility and an online solution were a must. In addition, I needed a solution that would accept emailed receipts, since75% of my receipts are in email format. I explored three solutions: Dropbox, Shoeboxed, and OfficeDrop. Keep reading to find out the pros and cons to each….
At this time of year, a lot of my conversations revolve around tax saving strategies. I’ve spoken with several CPAs recently and the advice for cash basis tax payers is consistent. If you are showing a net profit for the year, here are the top 3 strategies for reducing your 2010 tax bill:
Defer income – If you can, push income into 2011. Delay the invoicing, ask your clients to hold payment until January, and/or be less aggressive with your collection efforts.
Accelerate Expenses – Buy needed items before the end of the year and pay down your accounts payable. Cash basis tax payers don’t get deductions until the money is spent, so pay as many of your outstanding bills as possible. Some accountants caution that prepaid expenses (like rent) are not deductible until the period they are used. Check with your tax accountant before pre-paying regular bills.
Buy Needed Equipment – If you are going to need equipment next year, buy it before year end to take advantage of the Section 179 deduction.
Of course, talking with your tax accountant and reviewing your specific tax situation is advised.
A relatively simple Microsoft Excel spreadsheet is usually the best tool for predicting cash flow.Â This spreadsheet will track when you expect your revenue to hit the bank account and when your bills and payroll will leave the bank account.Â The first column (each column represents a time period, usually a week) in your spreadsheet will begin with your bank account balance, then add incoming cash, subtract outgoing cash, and finally total to what you expect to have left in the bank.Â That ending bank balance will be the beginning bank balance in the next column (time period)…wash, rinse, repeat.
Sample Cash Flow Forecast
(Invoices are kept on a separate spreadsheet in this sample.Â Forecast would normally extend numerous weeks)
Most business owners have too much on their plate, so much in fact, they end up throwing cash and profit away. It’s not that they are so profitable and have so much cash they don’t know what to do, it’s that they “save time” by skipping the financial review. Here are 3 common places to quickly reclaim lost cash and profit (it’s like looking between the couch cushions for your business!):
1.Forgotten Subscriptions – Free trials and automated renewals are often forgotten. Almost every business I have ever worked with has some automatic charges happening on their credit or debit card for subscriptions they don’t even use.
Solution: Review all bank and credit card statements. Have your bookkeeper research any charges that are questionable. Also ensure that the subscriptions you want to keep are for the right amount. If you’ve changed the number of users, for example, you might not be on the right rate plan.