If you’ve never kept track of your time, you might be startled to learn that many seasoned time keepers view it as the foundation of their company. It’s one of the most crucial things they do, just as critical as project management, payroll, or accounting.
This is because time tracking affects some of the most crucial aspects of your company. If you bill by the hour, it not only aids in payment but also provides you with an X-ray vision of your tasks. It reveals if you are earning money from your work or depleting your financial resources. It reveals whether items are on schedule to meet their spending limits and completion dates, as well as whether your team is producing quality work.
Here are seven reasons why keeping track of your hours might benefit your company:
1. Billing your clients
Time tracking is necessary if you charge your clients by the hour. How else would you calculate the price to charge your customers?
Instead of assuming, it’s critical to actively keep track of your time. You don’t want to unintentionally sell yourself short by underestimating how long it took you to finish a project. Additionally, overcharging your customers could sour your relationship with them.
Tracking time might also lessen the burden of billing, depending on the method you employ. The arithmetic is handled for you by some systems (like Harvest), which allow you to automatically pull your billable hours into invoices.
2. Keeping projects profitable
Time tracking is crucial even if you don’t bill by the hour. No of how you set your pricing, if your company provides client services, you are in effect selling blocks of time for a specific amount.
Every project consists of a specific number of hours, and depending on how much you pay the individuals performing the task, each hour represents a cost. You must ensure that the total amount you charge the client exceeds what it will cost your company to complete the project in order for your firm to remain viable. figure out how many hours went into the project is the only way to calculate expenditures. The use of time tracking is then necessary.
Many firms would not be aware that some of their projects are truly not lucrative without time tracking.
Let’s imagine you manage a company that creates mobile apps and charges $25,000 for each sprint of work. Since you already know how much you’re going to charge your client, there is no need to track time in order to bill them. You do need to be aware of the amount of effort your team is putting into these sprints, though. Suppose you give your devs a $40 hourly wage. That’s fantastic if it takes them 400 hours in total to complete the sprint. You got paid! However, if they run into a problem and unanticipatedly need 750 hours, you wasted money on this job.
Many firms would not be aware that some of their projects are truly not lucrative without time tracking. While the project is still in progress, time monitoring allows you to determine if you’re on schedule to finish under budget. Additionally, you can see if you’re going through your hours faster than you intended, giving you the chance to consult with your team and make necessary course corrections before the project goes off the tracks.
3. Improving your pricing
Pricing projects while your organisation is just getting off the ground probably involves a lot of guessing. Pricing needs to be competitive so that you can attract customers, but you also need to make enough money to pay the bills. It’s a balancing act that many companies struggle to master.
Setting a pricing necessitates calculating how much effort you believe will go into a job, unless you’re billing by the hour. If you don’t estimate properly, your team can be forced to work on a project that will take a lot of time and yield little return.
By enabling you to create a library of previous projects, time tracking helps to solve this issue. You will be fully aware of the duration and financial impact of every past project. Additionally, you’ll be able to determine whether or not these efforts were profitable.
This data is essential for fine-tuning your price because it illustrates the typical costs associated with various project kinds. You’ll be aware of the price associated with developing an app or redesigning a website. When you begin a project of a similar nature, you can utilise this information as your base price.
This gives you a far better starting point, but it doesn’t guarantee that you’ll generate money (you still need to be watchful to prevent a project from going off the tracks). Additionally, as you track more, you’ll have more projects in your project library to refer to for more precise pricing. That serves as a strong motivation to keep those clocks going.
4. Making more accurate estimates
You may use the same project library to estimate how long a project will take to complete. When you overpromise and miss the deadline, no client loves it. Maintaining a positive connection with your clients requires setting reasonable expectations up front.
When you have a general idea of how long a project will take, you can arrange your team’s schedule and staff various tasks more effectively. This implies that you’re less likely to overbook someone as a result of an unforeseen project overrun. And with a more precise timetable, you can be sure that you’re only assigning tasks to your team that they can do.
5. Managing your team better
Your team’s productivity may be seen through time tracking. You can determine whether specific people or perhaps entire teams are frequently operating above their capacity. If so, you can relieve them of some tasks before they get overworked.
Your staff is more likely to view time monitoring as a useful tool and put it into practise if they are aware that you are using timesheet data to maintain a positive work-life balance. Not to mention, you’ll profit from all the additional advantages that come with having a motivated, happy crew.
For this reason, time tracking might be helpful even if you don’t work for an agency or other client services company. Some divisions within a larger organisation keep track of their time so they can push back when too much work is assigned to them or support a new recruit. Having information like this elevates the discussion to a more fruitful area. The higher-ups may be more sensitive to your issues if you have objective timesheet data to support you.
6. Creating a record of your work
Time tracking not only creates a record of exactly what your team worked on but also offers important summary data. This is really useful in some circumstances.
Clients will occasionally request a thorough justification for why something took so long. They want to be certain that the time they are paying for is being utilised effectively. All you need to do to get the details is make a report using the appropriate time tracking programme. Due to the ability to demonstrate to clients how long excellent work takes, it is simpler to conduct difficult conversations with them using this data. Defending yourself against any demanding or excessive demands is another option.
Additionally, keeping track of your time helps you keep a crucial record of the work you accomplished when you operate in a field where you might be audited. In order to demonstrate that government funds weren’t spent, it’s imperative for government contractors, for instance, to keep an exact record of everything that was done and how long it took.
7. Improving how you work
How long do you really spend in meetings each day? Do your primary priorities get neglected in favour of managing your inbox? It can be difficult to gauge how productive you truly are in the absence of concrete facts.
People are frequently shocked by what their timesheets actually reveal about their team’s and their own work habits.
People are frequently shocked by what their timesheets actually reveal about their team’s and their own work habits. Unsurprisingly, a lot of teams find significant inefficiencies. The benefit? Once you have that information, you can start enhancing the efficiency of your workforce. Does your staff spend a lot of time in meetings? Reduce the number of meetings or the attendance at each one. Are there any internal processes taking up billable time? Work on streamlining them with your team.
Additionally, time tracking might help individuals become more productive. People usually become aware that they are switching contexts too frequently and not allotting enough time for deep work once they see their time being logged. Or they see how they could plan their day more effectively. Long-term effects on total efficiency can be significant when small changes to individual procedures are made.
When looking for a time tracking solution, the majority of firms don’t consider all of these factors. They typically have one urgent need, such as charging a new hourly client they recently acquired. What they fail to comprehend is that by solving this particular issue, they are actually creating a window into their entire company.
Making more informed decisions about how to manage and price projects, plan your team, and even organise your day is possible with time monitoring.
Only the worry that their team won’t respond favourably to the proposal prevents some businesses from moving forward. It’s typical for some team members to object to or feel awkward about keeping track of their time. However, there are methods you can use to allay their concerns and win them over.
If you’re using a platform like Harvest, which is made to make time tracking as pleasant as possible, your team could discover that time tracking isn’t all that horrible once they get the hang of it. For 30 days, you may test it out for free.