From the Nov. 2008 Issue
I remember the time when I managed my accounting firm without tracking everyone’s time. We have always value billed most services in our firm. But early in my career, I thought I knew everything that was happening. After all, we were a small firm, and I thought tracking time wasn’t necessary. Boy, was I ever wrong.
I came to think of time as widgets, and it sure seemed like I was giving a lot of widgets away. Don’t get me wrong, we still value bill most everything. The difference now is that I like to know how many widgets it takes to produce that fixed-fee engagement, how many widgets we are billing at hourly rates, and just how many widgets we are letting walk out the door for free.
The one thing I have noticed is that it’s becoming more and more difficult to track our time. We live in a multi-tasking electronic world. At any given time, you may find yourself on the phone and answering e-mails, and those occurrences happen one after another before you ever get the opportunity to turn on a timer. Next thing you know, the day is gone and you’re left wondering where you spent your day.
Whether you fix-fee bill, bill by the hour or use a combination of both, tracking time is important. We track everyone’s time in real-time. It’s important to know how much time we are spending on all of our engagements. As an example, let’s say your firm prepares a 1040 and charges the client $400 for the preparation. Does your current system provide you the information to bill the client when the return is completed? Is all the time entered? What was last year’s fee? Is there a reason you should be charging more or less this year? What is the actual realized rate on this 1040 for the firm based on time incurred? The answers to these questions provide valuable information as you grow your practice.
Time and billing systems include the ability to invoice your client, track the payment, age your receivables, and assess interest charges and sales tax. You should be able to e-mail invoices from your time and billing system directly to the client. All the systems I looked at included some communication capabilities such as templates for collection letters.
Reporting is key to managing a practice. Most offerings provide several key reports as a part of the system, where some will allow customization capabilities. Time and billing systems serve as a valuable component to running a practice today. Tracking time, invoicing clients, collecting receivables and reporting were the key components I considered in this review. But I think today’s time and billing systems have to do more. Firms are looking for programs that allow them to integrate well with other components of running their office.
Most of today’s systems offer some level of integration back into small business accounting market programs like QuickBooks, Peachtree and, in many cases, Micro-soft Office Accounting. Many also provide integration with Outlook for contact management. This is important as firms look to minimize the number of databases they are trying to maintain.