18\u00a0 reasons to trash the timesheet.\u00a0next, read\u00a0the case for timesheets<\/a>.<\/span><\/strong><\/p>\n
value-pricing or hourly-billing: which works better and why?<\/strong><\/span>
\nsound off: join the survey, get the answers.<\/a><\/span><\/p>\n
if you’ve read the “the case for timesheets<\/a>,” you might think i couldn’t live without timesheets.\u00a0 but i know many firms use their timesheets differently than i do.<\/p>\n
but first:\u00a0 the business model of not using timesheets recognizes there is a new way accounting services are being delivered to clients and so we need a new way of managing the accounting firm.\u00a0 this new model is explained and charted excellently in a logically understandable book that i highly recommend which is\u00a0from success to significance: the radical cpa\u00a0guide<\/a><\/span>\u00a0by jody padar.<\/em><\/p>\n
however, today i want to trash the timesheet and present my reasons for value-pricing.<\/p>\n
1. timesheets are an excuse for poor management<\/strong> and oversight by managers and partners.\u00a0 using timesheets for many partners\u00a0replaces<\/em>\u00a0a closer hands-on management and awareness of what the client is getting based on what they need.<\/p>\n
2. timesheets foster a compliance mentality<\/strong> rather than a service and value providing mindset.<\/p>\n
3. when the only thing timesheets are used<\/strong> for is billing, staff and partners become less aware of the purpose of what they are doing and more concerned with the \u201chours\u201d spent.<\/p>\n
4. there is a tendency to reward staff who\u00a0work high hours<\/strong> greater than staff with low hours, irrespective of the quality of the work done.\u00a0 for instance, an error-prone staff person would usually work more hours than one that does not make errors. also, the error-making staff person is seen working late, while the more effective staff person goes home earlier since they do not need to make up the time to correct errors.\u00a0 that late-working staff person is wrongly considered more diligent and a better team player.<\/p>\n
5. the client with the error-prone staff person would be billed a higher amount<\/strong> on a time-based billing system.\u00a0 this is just not right and it doesn\u2019t make sense.<\/p>\n
6. it’s simply not logical<\/strong> to base staff bonuses on hours worked rather than on the quality of the work, the results, or the value conveyed to the client.\u00a0 i know those timesheet advocates will disagree with what i just said because, as one of them might say, of their \u201cclose and diligent management of the work done and value conferred.\u201d but i am willing to bet that their \u201cclose and diligent management” is a myth.<\/p>\n
7. using timesheets\u00a0for any reason<\/em>\u00a0confuses the staff and partners<\/strong> and turns the focus away from staff performance and delivery of client value.\u00a0 timesheets create the fences around which thoughts are contained and ideas cannot percolate freely.<\/p>\n
8. when timesheets are used, everything is \u201con the clock.\u201d<\/strong>\u00a0 no matter what partners say, every minute, or tenth, or a quarter of an hour gets recorded.\u00a0 clients do not like being billed for off-the-cuff discussions or telephone calls. such billing practices inhibit free-thinking discussions and calls.\u00a0 the last thing i want is to have a client not call me because they are watching the clock.\u00a0 it is important to make clients aware that they will not be billed for phone calls, unless it is a prearranged meeting to discuss a substantive matter.\u00a0 i feel so strongly about this my most recent book is titled call me before you do anything<\/em><\/a><\/span>.<\/p>\n
<\/p>\n
this column has primarily been concerned with the pros and cons of using timesheets and the billing benefits of not using them, and i think that this is a perfect reason to consider not using timesheets.\u00a0 timesheets frame the discussion.<\/p>\n
15. timesheets are obsolete. <\/strong>they are a drag on practice growth, management, and innovation.\u00a0 most service businesses do not use timesheets but many professional firms are locked into them.<\/p>\n
physicians, dentists, veterinarians don’t use timesheets, yet their services are fully managed, overseen and billed for.\u00a0 hospitals and large medical groups employ hundreds and even thousands, and that is done without timesheets.\u00a0 no one who works in a restaurant, bowling alley, car dealership (except the mechanics), construction contractor, waste management company, movie theatre, production company, a rock group, a church or house of worship, not-for-profit, or a governmental unit keeps timesheets.\u00a0 neither do investment managers, authors or movie directors.\u00a0 timesheets are not pervasive except in the small world of certain professional service firms that are still mired in the timesheet model<\/p>\n
let me close with a glimpse of the future but also the present reality for many forward-thinking accounting firms, or as jody would say,\u00a0“radical” firms.<\/p>\n
16. technology has changed the way we provide services to clients.<\/strong>\u00a0 when i started my career i would spend a day at a client’s office writing up their books a week or two after a month ended.\u00a0 today the books are maintained in real time as a byproduct of the accounting and bookkeeping process.\u00a0 yet, there is still work for accountants. we just don’t do the bookkeeping work anymore.<\/p>\n
17. instead, we provide insight<\/strong> to clients based on our analysis, checking and reviewing the reports generated instantly by the client\u2019s own systems. and we use what we see to project, predict, alert and strategize.\u00a0 we provide critical thinking that takes us minutes rather than hours.\u00a0 should we bill for the minutes and go broke?<\/p>\n
18. a better model is the annual relationship price,<\/strong> based on value-added. in this method, have various team members versed in the client\u2019s affairs provide their insights on a regular, real-time, basis.\u00a0 the amount of time we spend is not relevant \u2013 the results are. and that’s the value provided.<\/p>\n
let\u2019s face it, everyone \u2013 the client and us \u2013 has instant access to the records.\u00a0 we are armed with valuable perceptions we can provide to our clients.\u00a0 billing by the minute is totally ridiculous. an annual all-inclusive price or relationship fee is the better business plan.<\/p>\n
likewise, measuring staff performance on their value to the client and relationship is the more appropriate way for that.\u00a0 as jody padar says in her book we are not selling a service; we are selling a solution.<\/p>\n
there’s much more to say about pricing and billing, but that’s enough for now on timesheets and value-pricing.<\/p>\n
\nnext, read\u00a0the case for timesheets<\/a><\/span><\/h3>\n<\/blockquote>\n
<\/p>\n
<\/p>\n
.<\/p>\n","protected":false},"excerpt":{"rendered":"
18\u00a0 reasons to trash the timesheet.<\/b><\/p>\n
by ed mendlowitz<\/i><\/p>\n","protected":false},"author":1341,"featured_media":54701,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_relevanssi_hide_post":"","_relevanssi_hide_content":"","_relevanssi_pin_for_all":"","_relevanssi_pin_keywords":"","_relevanssi_unpin_keywords":"","_relevanssi_related_keywords":"","_relevanssi_related_include_ids":"","_relevanssi_related_exclude_ids":"","_relevanssi_related_no_append":"","_relevanssi_related_not_related":"","_relevanssi_related_posts":"129943,136551,134808,131604,123621,128625","_relevanssi_noindex_reason":"","footnotes":""},"categories":[2274],"tags":[4278,3958,4281,4283],"class_list":["post-54697","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-pricing","tag-billing-rate","tag-cpa-billing-rates","tag-fee-structure","tag-pricing-rates"],"acf":[],"yoast_head":"\n
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