Professional services firms deal with various complex projects at the same time intending to provide the best quality services to their valued clients. With limited resources in hand, successful deliveries of projects within deadlines are arduous. Even when successful deliveries are possible, the project profitability is greatly affected in most cases. One of the prime reasons behind drains on project profitability is poor tracking and management of time and expenses.
Why do most professional services fail in time and expense management?
Given below are some of the reasons, which might fail the time and expense management process:
- Outdated methods
The foremost reason behind poor time and expense tracking is the application of outdated methods. Most businesses still rely on time-consuming spreadsheets and excel-based reporting systems. In this technological era, if firms are not resorting to online-based software tools, they will not be able to account for hidden costs and expenses. Further, spreadsheets do not provide any insights into actual expenses and how one expense is related to another.
- Over-reliance on people
Time and expense tracking processes, which put over-reliance on employees cause obstructions in the process. Being tedious in nature, these tasks are very likely to get affected by human errors. Moreover, the absence of a person in the office for a long time will affect it further if an automated process is not in place.
- Lack of a proper vision
Every project should start with a sound plan. No matter what services a firm is providing, it should devise a plan to encompass every minute detail relating to time and expense. Working without a plan leaves everyone confused with what to account for and what not to include.
Many firms adopt weekly time and expense tracking processes. This often leads to the omission of the recording of certain activities because they were not tracked when they occurred. Human minds are not capable of remembering everything that happened over a week or a few days’ time.
- Lack of motivation
Most of your employees might be doing it only because the boss wants them to. In this process, important elements are left out in a way to prepare something just to show to the managers that the work has been done. Your project team needs to understand why time and expenses tracking is important and the benefits offered. This will motivate them to perform the task with diligence.
Why time and expenses management is important?
Time and expense management is important because of the following reasons:
Importance of time tracking:
- Helps in expense management
Effective time tracking is the first step for managing expenses for projects. It helps in tracking expenses based on a decided time say on an hourly basis. Hence, it becomes easier to identify productive hours. Time tracking by employees helps in determining their productivity as compared to their individual costs.
- Tracks effort
With daily time tracking, firms can determine how much time they are assigning to a particular project. It becomes easier to keep track of time for firms who bill their clients on per hour basis. Also, firms, that charge a lump sum amount on their projects can determine if it is worth the time and effort.
- Increases productivity
Time tracking helps to determine how efficient the workflows are to identify weak performing processes. Employees’ performance could also be evaluated and managers can work closely with them to guide them on how to increase their overall productivity.
- Brings a balance in employee workload
Time logging also provides useful insights into the workload of your employees. Overburdening your employees will only hamper their productivity and output. With time tracking, their work schedule can be monitored and additional work can be assigned according to their availability. Besides, creating a balance in the workload, it also makes sure no one seats idle in the office.
- Forecast unforeseen contingencies
With proper time tracking and management, professional services firms can plan for unforeseen expenses and circumstances that might appear as a roadblock in the path of successful project completion. If the management is not aware of the chances of such issues, it will delay in taking appropriate steps, which could later prove disastrous for the project and the firm as well.
- Coordination within branches
For services firms operating through different branches and offices, it is quite inconvenient and time-consuming to keep reporting the manager sitting in a different office about the daily work progress of employees. Hence, proper time tracking is essential to keep every team member as well as a manager in loop about the progress of a project.
Importance of expense tracking
- Saves time
When the expense tracking process is automated, requests for business expenses do not take time to get approved. This, in turn, ensures that every task relating to a project gets started on time. Mangers receive instant notification when any expenses request is made, thus accepting it on time.
- Eliminates frauds and errors
With proper expense management, every penny can be accounted for. Chances of fraud and errors are eliminated. This ensures that the hard-earned money of the firm is not wasted on unprofitable projects.
- Makes room for expenses reduction
Expense tracking helps in identifying areas where expenses can be further reduced by entering into negotiations with vendors or by adopting corrective measures. You do not know if you are paying too much for a service or product unless you keep a track of every penny spent in fulfilling your business objectives.
- Works as a benchmark for future projects
With proper expense tracking, the likely cost to be incurred in similar projects in the future can also be estimated. This further helps in the budget-making process.
- Proves helpful in managing reimbursements
It is likely that your employees incur out of the pocket expenses while working on a project. These expenses are later reimbursed to them. Expense tracking will prove helpful in tracking and handling reimbursements in a planned way.
- Tax deductions
With proper expense management, there are fewer chances of expenses getting unnoticed while filing your Income Tax returns. You will be able to claim a higher deduction on your total earnings when you correctly account for all your business-related expenses.
The top time and expense tracking tools for professional services firms:
Given below is a list of the best time and expense tracking software specially designed for professional services firms engaged in taxation and accounting, legal services, engineering, consultancy, government contracting, and Information Technology:
- BigTime is an online time and expense tracking software system with added features of billing, invoicing, project management, WIP management, and workflow management. Its in-built timesheet app helps in recording every expense relating to a project.
- The option of online submission of expense requests by employees saves time in approving business-related expenses by managers.
- Further, it project management feature helps in effective project management through a proper task and resource scheduling.
- It comes with pre-built report templates to generate audit reports.
- Allows integration with accounting solutions like Quickbooks, slack, etc.
- Supported on Android and iOS devices
2. Beyond Software
- A software system tool for project management, accounting, time tracking, expense tracking, and billing & invoicing suitable for small to mid-size businesses engaged in architecture, marketing, and IT.
- It ensures proper time and expense recording by providing insights into resource allocation, utilization, and time assigned with each resource.
- It allows for smart reporting to access the performance of each area and identify weak performing areas.
3. BQE Core
- A cloud-based project management cum accounting solution with additional CRM functionalities for firms/companies engaged in legal services, architecture, engineering, accounting, consulting, interiors designing, and graphic designing.
- The solution also comes with over 200 customizable report templates to generate different invoice types: percent complete, retainer, recurring, fixed, hourly, phased, joint and more.
- Offers integration with various important third-party software like QuickBooks Online, Google Drive, Dropbox, Amazon Web Services, and more.
- A complete project management tool with functionalities for resource planning, accounting, collaboration, and Professional Services Automation suited for professionals engaged in marketing, advertising, IT services, management consulting, public relations, and educational industries solution with intuitive user-friendly project management.
- A centralized dashboard helps in keeping an eye on every aspect of the project along with resource allocation and utilization.
- Resource allocation can be done by simply tagging a person to the specific tasks or files appearing on the dashboard.
- It allows integration with third-party applications like Google, Hubspot, Salesforce, JIRA, Workday, Netsuite, etc.