Kill The TimeSheet: Are You Still Trading Hours for Dollars
Ask any C-Level (corporate) professional what they detest most about their day-to-day tasks, and most will admit it’s their accounting of Time (timesheets). Is your firm’s Time and Billing system cancerous to your Team with no cure in sight? Every day, around the globe Professionals like you, continue to slave to the almighty billable hour. Our lives, fortunes, promotions, and self-worth have been permanently tethered to the clock, just like it was for our Fathers and Grandfathers. Like many modern-day factory workers, the timesheet assembly line never stops and never changes.
As Financial Professionals, we inherently understand that time-based billing is not connected to any real economic value created for our customers. That’s why many firms write down (discount) far more than they write up. Over the years, I have witnessed talented managing partners of top 100 firms brag about their realization rate as if it were a trophy proudly displayed on their office desk.
How Do the Professionals in Your Industry Keep Track of What’s Important
When a Financial Professional rejects public accounting and tax services and moves into private industry, we will never hear, “Wow, do I miss completing and turning in my timesheets”. Those words are never spoken.
Even worse, is when your clients detest the “Traditional” timesheet and hourly billing system, why do you think they ask, “How long is this going to take?” (How much is this going to cost me?) They ask because they want a price, and your price must be lower than their threshold of value, or else they will pass on the project, or they just want to be sincerely informed to avoid any “after-the-fact” cost-surprises. So, ultimately, you have to make an estimated best guess, and then you must live within that decision.
I solved this challenge by collaborating with some other “Innovators” along the way. People like Ron Baker; Justin Barnett, CPA, Ron’s former CPA firm partner; Daryl Golemb, CPA, a sole proprietor in San Diego; Paul O’Byrne and Paul Kennedy of O’Byrne and Kennedy in the United Kingdom. Together, these and a few other thought-leaders are determined to leave the billable hour behind, trash the timesheet and march into the unknown future, convinced there is a superior method of “Value” pricing.
Today, the process of “Conversion” is far superior to the one we originally crafted. The steps are simple.
First, decide that you want to “Change” and leave the (old-fashioned) “Traditional” firm of the past and move toward a “Modern” Firm of the Future. This isn’t “Rocket Surgery”, but it does require each firm, partner and team member to recognize that no customer desires to “Purchase Time.” As you leave the timesheet and clock-watching behind, you can focus on the Deliverables, the Value provided and Price received. If you aren’t in balance with your customer as to deliverables, value to the customer and a price that is good for you and the customer, you won’t be hired. Billing by the hour creates the challenges as customer expectations as to pricing is always a matter of the value they perceive. When price charged is different than value perceived there is conflict and customers always win conflicts.
Next, perform a Pareto Analysis of your Business, better known as the 80:20 rule. Separate the 20 percent of your customers that drive 80 percent of your Business’s revenue from the other 80 percent. For voluminous customers that drive little net Business revenue, review your past annual invoices, and add in unlimited phone calls, email support, and meetings, along with a service guarantees. Also, add a reasonable increase, and price your basic plan, which equates to your core service offering. Realize that in such a fixed-price arena, some jobs will require more effort than others, but in total, don’t focus on that, as the basic pricing should have ample cushion for outliers.
Now, to the most important step. For the top Pareto group, interview them as if they were a Brand New Client, and listen carefully to what they want from you, rather than focusing on what you want to “Say” of “Tell Them” what you provide. You must listen to your clients and glean from them their hopes, desires, and dreams. Your clients must know what and why they pay you. Simply outline a scope of services, consider some value-added options, such as a retirement preview, college planning, and estate planning, along with an unlimited meeting and service guarantee, and then agree on a price that the customer fully accepts. Then, add some payment terms and you are complete.
The typical C-Level Executive that bills by the hour spends an average of four hours a week filling out timesheets, work-in-progress reports, and billing. That’s nearly six weeks of your time spent on an administrative process that drives no customer value! Extrapolate that across your Business and your largest customer is the beast in the computer. You are a slave to a machine and an antiquated process. Free yourself, your team and your customers from this monster.
Price for value, deliver excellent results and ultimately get paid what you are worth.
Morris+D’Angelo is the industry leader for many High-Wealth Customers and Organizations.
707 SW Washington St., Suite 1100
Portland, Oregon 97205
503.749.6300 – Portland Office
408.292.2892 – San Jose Office
Ronald J. Baker, is the founder of VeraSage Institute the leading think tank dedicated to educating professionals internationally and a radio talk-show host on the www.VoiceAmerica.com show: The Soul of Enterprise: Business in the Knowledge Economy.