Imagine you’re an artist. You’ve drawn this impressive design for the ceiling of a new chapel, and hired a team of apprentice painters to help you hold the ladders and mix the colours. Your employer has agreed to your highest fee ever. Everything is looking great and you reckon you’ll come out of this with enough money to retire to a cottage in the south of France with all the wine you can drink.
Except … reality is never as simple as that.
It turns out, painting the underside of a chapel ceiling is a bit more time-consuming than you’d originally anticipated. That’s not to mention dealing with all the cardinals, bishops, and historians who wish to weigh in on the design, the fact your apprentices would rather frolic in the fields then mix colours for you, and the shortage of sable paintbrushes currently on the market.
It takes you four years, but you finish your glorious work, and receive your cheque. You are now the most famous painter in the world. Unfortunately, the amount of money is so low for the time you’ve spent on the job, you’re now in terrible financial straits.
This example is completely made up, and may or may not be based on Michelangelo's experience painting the Sistine Chapel. But it represents the reality for many small business owners who neglect to accurately track their time, costs and expenses.
If this artist had been using a time tracking system like WorkflowMax, then they could have given the client an accurate bill reflecting all the costs associated with the job. They would’ve been able to justify all additional expenses and ensure they were fairly compensated for their time.
And, what’s more, they could have gained valuable insight into their business, by comparing data from the chapel job to other jobs and adjusting quotes, timelines and milestones to reflect actual hours worked. They could’ve ensured their next chapel job ran much smoother and actually turned a profit.
When it comes to your time billing and job management, are you a savvy business owner, or a starving artist? In this article we show you how to get your time billing in order so you can see the big picture of your company.
Are you painting the big picture?
Time tracking is about more than just ensuring every hour is accounted for. Many business owners neglect to time track, because they feel it’s a hassle. But it’s a “hassle” that could save your business.
To carry our artistic analogy even further, think of time tracking like standing back from your work of art and admiring it from a distance. When you are up close, zeroing in on little details – an arm here, a fig-leaf there – your mind is laser focused on getting those details exactly right. But it isn’t until you step back and see all those little details together that you realise you’ve drawn the fingers around the wrong way.
When you’re involved in a job, you’re focused on getting the work done, and ensuring the quality is top notch and the client is happy. Each part of the job exists as a separate entity. It’s only when you step back and look at the job as a whole (and as a part of your entire process) that you can see gaps in your process and areas for improvement.
For example, tracking your time enables you to see:
- Which employees are performing above or below expected.
- Which stages of a project produce bottlenecks.
- Which types of jobs regularly run over time or over cost.
- How much time a job really takes versus your estimates.
- An overview of contractor’s hours so you can pay them accurately.
For more information on the benefits of time tracking software, check out our blog post: 20 Instant Benefits of Using A Time-Tracking Software.
Choosing your palette – the right time management tools
If you want to start painting the big picture of your business, you’re going to need the right tools in your toolbox. For the modern business owner, this will include time management software based in the cloud.
Cloud-based software has numerous advantages, not least of all it enables everyone in your team to work from the most up-to-date dataset, and ensures your business can be mobile – an important factor in today’s competitive landscape. For more information about the advantages of cloud-based software, check out our blog post on the topic.
What other features should you look for in time management tools?
- The ability to integrate time management with other products/features – for example, timesheets can be integrated with payroll and invoicing for seamless business flow.
- The ability to add, edit, and customise quotes and invoices based on time tracking information, for truly accurate invoicing you control.
- The ability to run robust reports, so you can draw conclusions about business performance.
- The ability to track time in your preferred way, with different options and types.
- The ability to see what individual staff are up to with timesheet management capabilities.
- The ability to break jobs down into tasks, where time is tracked separately. This enables you to drill deep into jobs for accurate time billing and reporting.
WorkflowMax is a complete project and time management solution from the team who brought your Xero accounting. WorkflowMax can do all this, and more – it’s a complete solution for job-based businesses. Check out the time management features here.
Putting on the finishing touches – creating an accurate bill
As a job gets underway, you’re probably not thinking much about sending the bill. After all, you’re not worried about varnishing the painting until you’ve applied all the paint first! But thinking carefully about your billing practices can help your business produce accurate invoices that reflect the quality and quantity of work you’ve completed.
There are different ways you, as a business owner, can bill a client. Seeing where time is going on a job can help you figure out the best way to invoice. For example:
- If certain types of jobs are being done over and over again for very little profit, consider a value-pricing strategy, where a single price is quoted for the job based on the value the client receives from you for having that work completed.
- If jobs are drawn out over many months and causing cash flow issues, you should consider invoicing by progress payments, to spread your cash flow risk. This also helps the client to plan and track their own spend.
- If you’re completing several jobs for one client, being able to bill them all together helps the client to track payments made and ensures no job is missed.
Accurate billing is about more than just how you invoice. It’s about being able to capture all the time spent on a job, as well as every cost. With a system like WorkflowMax, all this data is stored in one place – not on scraps of paper, spreadsheets, and receipts scattered over the office or lost at the bottom of a pocket.
Over time, this accuracy gives you unprecedented insight into your business. You can see trends and patterns emerging that can help you grow your business. For example, you might notice:
- certain types of jobs bring in considerably more profit than others – you could refocus marketing to attract more of these jobs.
- certain client industries bring in the most profit – you can target these industries in your marketing.
- which members of your team are responsible for jobs running overtime or over budget - you can give additional training or guidelines to prevent overruns in future.
- which months of the year are usually busy and which are quiet – this allows you to plan accordingly for seasonal fluctuations.
- certain clients fail to pay on time – so you can tighten their terms or trade or follow-up on their invoices.
Hanging in the Gallery – Value for Clients
It’s clear how improved billing can help ensure your business is functioning smoothly, but it also has numerous benefits for your clients. Much like hanging your painting in a gallery for the world to admire, improving your time management can brighten your client’s day, too.
How does improving time and project management benefit your clients? There are five key areas:
- Accurate quotes: As you narrow down your margin of error for the time required to complete each task, your quotes become more accurate. From the client’s point-of-view, this means no nasty surprises come invoice time.
- Improved service delivery: As you improve your processes and streamline your admin, your clients experience the benefits of your team being faster and more accurate.
- Collaboration: Your clients can check in on, approve, and comment on documents and job details though the cloud-based system. This enables them to feel a part of the process.
- Total transparency: Clients can see a total breakdown of a job, including all the associated tasks and costs. You can account for every cent spent, and this helps the client to see you as trustworthy and accurate.
- Adding value: With all this data stored in your system, you can run off reports for clients in minutes and show them their own data in yearly or monthly reviews. This is a simple value-add you can use to delight your clients.
For more information, check out our blog article, 5 Awesome Benefits Job Management Software Will Deliver to Your Clients.
Is your business a “starving artist” when it comes to accurate billing? Improving your ability to track time and costs for your jobs can help your company to flourish. You don’t have to stifle your creativity and innovation, you just have to bill for it.