The Time Billing Paradox

Posted on January 4, 2021 in Blog ,Improve Financial Management ,Increase Project Profitability ,Solutions360 by

What is the best way to get your team to buy in to the importance of time tracking?

Time billing paradoxOn this episode of the Navigator, Brad Dempsey and Brad Malone talk through the time billing paradox, and the struggle people have when they hear the two scary words – time tracking.

This is one of the biggest hornet’s nests Solutions360 deals with during an ERP implementation.

One of the main issues is that people feel micromanaged when they must be responsible for tracking their time. It is essential that an integrator understands, and makes sure everybody who is doing time tracking understands, why they are doing what they are doing.

In a previous blog, we discussed how important it is for everyone understand the purpose of your processes.

 

“We are not time billing to micromanage people, there are many reasons. And the most important one is probably that labor is an integrator’s most valuable and most restricted resource.” Brad Dempsey

 

The most successful integrators are the ones that know how to manage their direct labor force, and keep their quality and utilization up.

It is essential to understand the capacity of each member of the labor pool, because each role is going to have different levels of utilization and chargeability. And understanding time billing helps to flatten out those peaks and valleys.

What is the best way to get started with time billing?

For many integrators, it’s better not to bite off too much at the beginning.

Start with understanding where your labor costs are going. This will help you determine what parts of your integration business are profitable, which areas have the most profit, and where you get the best bang for your buck for your labor.

Then you can feed this information back into your proposal loop or your sales loop and see if you could potentially be charging more.

Who should be responsible for time billing?

Basically, everybody who does direct work with customers, should be tracking their time.

This includes PMs project managers, technicians, installers, engineers and trainers.

These are all people who are directly related to revenue that the integrator gets from the customer.

Roles that do not need to do time billing include people in invoicing, accounting, overhead, warehouse personnel, and definitely not salespeople. These are all allocated costs that can be run through the company in different ways.

We have talked about culture, and you don’t want to use time tracking as a stick. You don’t want it to be a punitive measure.

You really need to share with everybody that it is to everybody’s benefit if we know where we are spending our money. When we know how we’re using our direct labor, and our time, it creates more opportunity for an integration business to be profitable.

And you don’t want to work for an integration company that’s not profitable.

Time billing is not the end in itself, but rather the means to running a really profitable company. It will give you a foundation to make some significant differences in the way you manage your business.

Imagine what you can do with that information.

 

Listen to the podcast for all this and much more!

The Time Billing Paradox

 

 

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Handpicked Related Content:

Does Everyone Understand the Purpose of Your Processes?

 


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