How to eliminate timesheets once and for allAug 24, 2020
Do you still use timesheets in your firm? Now I know many accountants still do.
Even though, we've moved on to a different way of pricing clients on a fixed fee basis. But many accountants are still so attached to the timesheet, that even though they may not be billing based on the time and the clock because we know that is a crazy way to bill because we're not selling time.
We're not in the business of selling time. We are in the business of selling outcomes, results, and solutions to problems. But there are still some accountants out there who may not be billing based on time. but are still expecting their staff to use timesheets to clock time in those six minutes or 15-minute intervals.
Now I was the same. A few years ago, we used to use timesheets and it's because I came from a Big Four background where that was how it's done. So when I took over my firm, I thought that's just how you do things. And then I came to the realisation that actually timesheets are CRAZY. People make them up, it's not a good measure of productivity, and it's measuring completely the wrong thing. If we are in the business of delivering value for clients and that's how we price, then the metrics by which we should measure our employees should also be based upon the outputs, the outcomes, and solutions, not the inputs, i.e. the time they're putting in. I guess, there is the reason why some accountants perhaps still keep a timesheet is that they think it's a measure of productivity.
But there is no correlation between the time expended and the value to the client. There is a correlation between price and value. This thinking that I came across in terms of don't expect to receive a uniform return on investment on each of your clients. It won't happen. And the reason being is that there are some clients that you will provide masses of value to. Therefore, their price will be higher. There are some clients in which the value you provide will be lower, in which case, the price should be lower. We're not a commodity. So because we're not selling time, we're never gonna have a set percentage mark-up on our costs as it were, which is why time-based billing and timesheets do not apply in the current age.
You see, instead of thinking of your team, your staff costs, as you know, a cost they have to bill out at a set percentage, instead, think of your clients as a basket of currencies, or you know, a basket of shares, whereby you generate a return on each of those clients, and those returns will be different. So in your basket, you will have a diversified portfolio. You will have you know, say, we're talking about stocks and shares, and your investment portfolio. You will have some low-risk investments, government bonds, guilds, that sort of thing. You know, your steady-Eddies generating a base level of return. But really secure capital as it were. And then you'll have something which will generate your steady return. You know, your Shell's of this world, your BP's generating those regular dividends on a year on year basis. Then you'll have, those stocks and shares in your basket which will be high risk but then generate you an even greater return.
So think of your clients in that way, that your clients will generate you different returns on investment, depending on the amount of value that you provide to them. Your price will be relative to that value. I hope that that helps to kind of change the mindset, change the way you think about using timesheets in your firm because they're not even needed to measure productivity. Rather, use metrics that measure the outcomes, the results, and solutions that your employees are providing for your clients.