Subscribe to

The Unconventional Guide to Work

Life’s too short to be bored at work. We can help.

4 Reasons Why You Under Billed Your Client—And How to Avoid Doing It Again

As you pull together timesheets reports to invoice a client for your agency’s stellar work, you note that actual hours are well beyond what you originally forecasted and quoted. With the work done and delivered, you’re now in a no-win situation: You either lose money, or make a very uncomfortable call to the client asking for more budget. 

Neither are situations any agency owner or account manager wants to face.

To help you avoid these situations, we’ve come up with four possible reasons why you may be under billing your client, and offer tips on how to avoid each in the future:

Reason 1: Your Forecasts Were Estimated

Forecasting is difficult. There are a variety of factors that play into how long a project is going to take, including staff experience, client-provided details and scope. 

If your agency quotes out projects based on forecasted time, and is locked into the quoted price barring any unforeseen expenses, you might be setting yourself up to lose money. Fortunately, you likely perform these types of projects on a regular basis, giving you a potential solution.

Pull past timesheets for these projects types and calculate the average time investment needed to complete each. For unique projects, look at the timesheets of work that is similar in process and deliverables.

Create quotes using forecasts built with actual timesheet data to ensure more profitable billing. Over time your quotes will become more accurate as you have additional time reports from which to pull data.

Reason 2: Varied Hourly Rates Are Unaccounted For

Not every agency employee’s time has the same value. Based on skill-level, tenure and expertise, one staff member’s time may be billed at a higher hourly rate than another. For example, the time of a senior level executive, who has years of valuable expertise (and a bigger paycheck), may be billed at a higher rate than an entry-level professional.

If yours is an agency that bills clients at different hourly rates, keeping track of which project time is associated with which rate can be a real challenge, especially when time is tracked using pen and paper, or Excel.

Use a time tracking or workflow management tool that captures the time of professionals working on the project, and automatically associates it with a specific hourly rate. Automate the process and save yourself the headache and time of pouring back over timesheets.

Reason 3: Time is Lost in the Shuffle

It can be a challenge to collect and compile timesheets of multiple staff members at the end of the month or upon project completion, especially if several work remotely.

Web- and cloud-based technologies are easily accessible by all team members, no matter where they are located. These systems can track team member time and associate it directly with a client, job and project.

With all timesheets in one location and associated with the same project, anyone at any time can quickly pull accurate invoices to send to the client. 

If you're using a cloud-based project management system like WorkflowMax, you can easily set up staff logins so they can complete timesheets wherever they are, even from the WorkflowMax mobile app

BONUS: Get 10 tips on persuading reluctant employees to track their time

Reason 4: Set Prices Are Out of Whack

If yours is an agency that offers set pricing for specific projects or services, it is important to consistently compare cost to actual employee time rendered. Often these prices are set based on anticipated hours and your billable rate. Any discrepancy between what is anticipated and what is actually being done can lead to under billing.

Run timesheet reports to identify projects where hours are above what they are estimated to take, and then:

  • Review timesheets to identify inefficient staff members.
  • Evaluate new technologies to improve communication and collaboration.
  • Analyze processes to determine if there are optimization opportunities.
  • Rethink your project prices.

Resolutions to the above challenges are contingent on having the right technology in place. Because an all-in-one agency management system combines time tracking, project management and invoicing in one platform, it is your best option to create accurate project forecasts, identify staff inefficiencies and set more accurate prices on future projects.

How do make sure your agency is consistent and accurate as you bill clients?