The Basics of Timekeeping at Professional Services Firms
For as long as I can remember, professional services firms such as public accountants, Lawyers, and consultants, have been required to keep track of their time at their respective firms. While this aspect of professional life is universal among professional services firms, it's not intuitive for most newcomers and professionals outside the space. Today, I'm going to explain the basics of how timekeeping works at professional services firms, so you don't make yourself look silly in your first year of employment.
Why Do We Have to Track Our Time?
Outside of possibly specialty lawyers that work on contingency, most revenue and professional services firms comes from two specific types of fee arrangements with clients:
Variable fees - Billing and the client directly for the professional's time spent working on engagement
Fixed fees - some firms charge a fixed fee for certain types of services based on how long they think it takes them to do it. The basis of that fixed fee is usually the expected number of hours of the professionals who do the work multiplied by their respective billing rates.
In either circumstance, understanding the amount of time billed to a job is critical for evaluating progress or actually billing the client.
Managers, partners, and administrators can log into the timekeeping system and view the time that you have submitted. It is often the case that this time keeping system is integrated with the billing system so that they can bill the clients for your time. This time information is also used to support various internal metrics such as professionals’ utilization and the realization of a given job.
What are Some Common Timekeeping Mistakes?
Timekeeping is not intuitive and there are some days where I don't do the best job of it. Having to keep track of every minute of my day certainly add some stress to my job. Over the years, I've Made and witnessed quite a few mistakes with timekeeping, such as:
Not putting in your time at all - for some reason, young professionals don't follow instructions and just forget to put in their time when it's due. Forgetting to put in your time means that three different people will be contacting you and asking you to put it in so they can Bill clients at the end of the month. The best practice to avoid this mistake is putting in your time daily and keeping a spreadsheet handy so you can track your time throughout the day instead of trying to remember everything at the end of the week.
Eating time - this is a phrase used to describe professionals putting less time on their timesheet than they actually spent for a given project on a given day. This is usually done to make the project look like it's completed under budget. While this is usually done with good intentions, it usually puts the professional in a worse situation. It's important to understand that there's a fine line between eating time and only billing for productive time. Spending 6 hours. Trying to figure out a problem and then only billing four is eating time. Working all day but taking a lunch break and not billing for that lunch break is not eating time.
Not putting in descriptions - many firms require each time entry to be accompanied by a description of the time spent working. This will allow billing managers to understand what is being worked on and in some cases, what time might be out of scope or not worth billing for. Firms that require these descriptions often rely on them to help make these important decisions, and putting in time without a description is an easy way to get an email from a manager or partner. The best way to avoid this mistake is to get in the habit of providing an accurate description of time spent along with the time entry.
If you are a young professional who is encountering timekeeping for the first time, my best advice is to develop these good habits early because they make a huge difference. Keep track of your time in a separate spreadsheet and enter it daily!