CEO & Founder, Smart WebParts
If your firm relies on booked hours for billing, it’s virtually guaranteed that your firm is also losing revenue to “leaked time,” which is time worked but not booked.
The good news is that you can plug these leaks with a time capture system: a low-risk, low-investment and highly effective option. And, not only does time capture find these lost hours, but it also helps to improve management of the entire timekeeping process.
Q: How does leaked time happen?
A: In our experience, the biggest sources of leaked time are obvious, but without time capture, hard to fix:
- Small units of time the timekeeper simply forgets about
- Work that the timekeeper underreports
As we delve deeper, we see that these sources occur most often in these very common work situations:
- Mobile phone calls
- Internal phone calls from colleagues
- Time in the office when particularly busy
- On a smartphone, but out of the office
- Out of the office all day
- Work that takes place in very small increments
Q: Who leaks time?
A: You’d think that there would be “good” timekeepers and “bad” timekeepers, but it’s not quite that simple. Even the best timekeeper encounters situations that thwart timely and accurate entries.
Really, it’s more a question of timekeeping “style.” Timekeepers who keep time as they go—the “contemporaneous” approach—are less likely to leak time, but still do so despite their best efforts.
Timekeepers who enter time after work is done—the “reconstructionist” approach—leak more time, with the problem worsening the longer the delay between the entry and the time worked.
Q: What is the revenue impact of leaked time?
A: Take a look at the chart below to see the magnitude of the problem:
With a time capture system, it’s very reasonable to expect to find an additional 4 to 6 hours per timekeeper per month. So, 5 hours per month for a timekeeper with a $400/hour rate yields an additional $24,000.
For a 100-timekeeper firm, closing the leak represents $2.4 million in incremental billings. This represents about a 3% pickup in booked time over the course of a year. (Thats a 60 hours picked up on 1800 hours.)
Revenue Up, Angst Down
Firms must actively manage their timekeeping process if they are to maximize profits. With the potential for significant revenue increases for most firms, and a simple implementation process and reasonable cost, the case for trying time capture is a compelling one.
Since the billable hour was invented, two things have existed: 1) leaked time, and 2) timekeeping headaches. Time capture helps to preserve the integrity of the billable hour, plugging leaks and making timekeeping as accurate and painless as possible.