It has been said many times that time is our most important commodity. There is a finite amount of time in a day and how we use it determines if the day is productive or not. For project-centric businesses that rely on employees charging their time, this is especially true. Since time is an important part of their success, it’s essential to have the right time tracking software. Good time tracking software will give you the ability to bill for your employees’ time and understand how time is being spent so you can manage your business.

In order to bill for your employees’ time and know how time is being spent, you first have to accumulate the time. Not only do you need to do this as a basic part of your business, but having the systematic ability to track time can result in increased revenue. I have had experience where giving our employees the ability to easily track their time resulted in about a 10% increase in revenue. This was due to the employees accurately recording how they spent their day as well as them coming to the realization that some of the work they were doing was actually for a customer and therefore billable. Good time tracking software will facilitate time collection from employees. When collecting time you want to make sure that it is easy for employees to enter their time. If it is too cumbersome, employees will resist. Along with the system to capture the time, you also need to have some standard procedures around collecting the time. When are timesheets due? Does anyone approve them? Having the procedures and following them are important to your success.

To understand how time is being spent, the time tracking software should have the ability to track time by individual project in as much detail as desired. For some smaller projects, time is best captured at the overall level, as breaking down time by tasks doesn’t give you any more information and can be more of a hindrance to record and analyze. On larger projects, keeping track of time at the overall level may not give you enough detail and specific tasks are required to really understand the project. The time tracking software should give you the ability to track both levels of detail, letting you decide by project.

Since time is important and you want to ensure your employees are working as efficiently as possible, the time tracking software should allow you to report on measures important to your business. One of the basic measures for a project-centric business is employee utilization. For those who don’t know, employee utilization is the amount of time an employee charges to billable projects compared to the overall time available. The utilization is then compared to some goal. The idea of tracking utilization is to ensure your employees are charging time to the type of projects you need in order to sustain a business.

Another measure to track is realization. This is the amount of time that was charged to a billable project that was actually billed versus what should have been billed. When calculating this, there is typically a standard rate that is billed and you multiple that rate by the amount of time charged to the billable project. The result is then compared to the actual amount charged. While utilization told how much time is being charged to a project, realization measures the efficiency of that time. An employee could have high utilization due to doing a poor job and having overruns on the project. By looking at the realization, you can see the inefficiency in the work, and since you can’t bill the overages, the realization rate will be low. The time tracking software should have the ability to track both measures.

While utilization and realization are both important, you also want the time tracking software to be able to report on other information as well. Profitability of projects is an example. You obviously want to know which projects are profitable, but you may also want to know if certain types of projects are more profitable than others. Assuming some types are, you would want to obtain more of the most profitable ones. Good reporting will also allow you to compare actual results to budgeted results. This helps in analyzing what went right during a project. Where things didn’t go so well, you can understand why and correct them if it was a performance issue or change your budget for future projects. The time tracking software should allow for various types of reporting and analysis to be performed so you know what happened on each project.

Project-centric businesses are all about time – billing as much time as possible and understanding how it is being spent in the business. Good time tracking software can facilitate the accumulation and billing for time and give you the tools for managing your business. If you don’t have good time tracking software, you probably are not maximizing your company’s performance.

Author Bio: Joe Young is President of Beyond Software, publisher of time tracking software for small firms. Beyond Software brings project functionality, such as project management and time and billing, to users in an easy-to-use way that allows you to run your business more efficiently. For more information go to beyondsoftware.com.

Category: Business Management
Keywords: time tracking software