If you have a service-based business, you most likely bill
clients for your time. Even if you charge a fixed price, it is probably based
on how much time it takes to do the job. So it's crucial to your success that you capture that information for effective billing!
Time is the one completely inflexible
resource we all have. There are 24 hours in a day, and you can’t bargain with
that fact or rationalize it away. So it’s important that you keep track of your
time so you capture all the billable hours. If you don’t bill by
the hour, it’s still important to know where that time is going so you know what
activities are most profitable, and if your prices need to be adjusted if an
activity takes more time than you anticipated.
I charge for my time, and I wish I could say that I had the
perfect system in place for capturing all my hours. Truth is, I don’t, but
after giving away big chunks of time over the year, I have learned to be more
disciplined in tracking my time, (especially the billable hours!).
There are a lot of tools for time tracking out there, and I
use a combination of those tools. One trusty tool is my daily planner. If I’m
working at a client’s site, I’ll just make a note of the time I arrived and the
time I left on my paper calendar. It’s portable and it’s easy.
I also have a free app (I useToggl) that is both on my smart
phone and on my PC. It’s handy in that you can start and stop the clock, and
even pause it when you get that phone call. Then it will spit out a report upon
request. There is a paid version that I believe gives more complex reporting,
but the free version works for me—when I use it. Truth is, I’m more of a
paper-and-pencil kind of gal, and when I’m working at home, I tend to use a
paper time log to track time by client and make notes about what I was doing
that I can include on the bill (you can do this in Toggl, too).
There are also billing and accounting apps (FreshBooks,
QuickBooks) that will capture your hours and automatically create a bill for
them. I use QuickBooks a lot, and I do enter my time in the Timer in my own
QuickBooks file to create invoices. The
QuickBooks timer can be used stand-alone, without my needing to be in my own
company file, and then I could import the data using an IIF file, but for me it’s
just as easy to enter it manually (although now that I’m writing this, I may
try the import feature).
I recommend tracking your non-billable time as well. This
can be revealing! You might want to set up a goal of having a certain
percentage of your time be billable, and could even budget your time as you do
your money (you do budget your money, don’t you?), with a certain percent being
billable, another percent for business development, some for administrative
tasks, etc. My personal goal is 80% billable.
As I noted, I use a wide variety of tools to capture my time
while I’m working, but then I consolidate it all into the QuickBooks timer so I
can run a consolidated report on all my time. There are lots of tools out there
that will capture all of the activites I listed above in one place, create
reports, generate bills, and even import into QuickBooks. I just personally don’t
have the patience to set one of those tools up and then use it at all the places
where I work. I don’t always have
internet access for some of the online tools, and I also find it awkward to use
some of those tools while I’m at a client’s site. So you just have to explore
the options and come up with the system that works for you.
The important thing
is to have a system that captures all your time, so you don’t miss billable
hours, you get some history on how long it takes you to do the activities you
charge for so you can set your prices effectively, and you know how much time
you spend on non-billable activities.
